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Recent purchases: First REIT, AIMS AMP Capital Industrial REIT and Healthway Medical.

Thursday, November 25, 2010

It is a wet evening and the stock market wasn't all that inspiring either. So, I decided to look at what I have bought recently and how they are doing.

First REIT
I bought some at 95c and again at 96.5c. Volume expanded today as price closed at 97c. It looks as if the rising 20dMA is pushing the price higher. Of course, FA proponents would say that the CR status is causing its unit price to stay bouyant which I believe too.

At the purchase price of 95c, my average price would be 95c x 4 + 50c x 5 /9 = 70c.  DPU of 6.4c in 2011 means a distribution yield of 9.14%.  At the purchase price of 96.5c, my average price would be 96.5 x 4 + 50c x 5 /9 =70.67c. Distribution yield would be 9.06%. Pretty attractive.

If I were to be successful in my excess rights application, the distribution yield would improve, of course. I am actually somewhat tempted to buy more. I might put myself in the buy queue at 96c which is where we find the rising 20dMA now.


However, a word of caution from the TA side: the MACD has formed a lower high while price formed a higher high on 9 Nov. This is a negative divergence and price could come down in time. Of course, we know that date is probably 1 Dec when the counter goes XR. Although I do not see any reason why it would trade below the TERP of 70c, it could.  If it does, I would buy more. Simple.

AIMS AMP Capital Industrial REIT
I bought more of this REIT and I blogged about it recently on 23 Nov. At 21.5c and an annualised DPU of 2.08c in 2011, the distribution yield of my latest purchase is 9.67%. This is very attractive to me. I am in the buy queue at 21c as well but with the rising 100dMA providing support at 21.5c, the chances of price going down to 21c aren't all that high.


Of course, with the MACD dipping into negative territory, we could see momentum remaining weak. Stochastics has similarly dipped into negative territory. Overall, the suggestion is that although we might not see much upside in the near future, the downside is similarly limited.  This is a great investment for anyone who is investing for income.

Healthway Medical
Although I have told myself before that I do not have to trade the market anymore and I could just sit back while waiting for dividends to come in from my investments, I just could not resist buying some Healthway Medical shares when I saw the positive divergence between price and MACD. I blogged about it on 22 Nov.


Well, it still looks rather promising. Volume is drying up as price consolidates at 15c. Immediate resistance is at 15.5c as provided by the 20dMA. Breaking this would give us an immediate target of 16.5c.  17c is where we find the downtrend resistance while 18.5c is the eventual target if the potential double bottom is a valid pattern. Now, if the downtrend resistance remains unbroken, there could be more downside to come. So, my strategy is to divest at resistance. This is purely a trade.

Related post:
Healthway Medical: Prime for a rebound?

14 comments:

Singapore Stock Analysis said...

Ak :) excess rights = 60+ cents

I am trading golden ari warrants
http://singaporelstockanalysis.blogspot.com/2010/11/golden-agriculture-warrant-analysis-on.html

AK71 said...

Hi SSA,

Could I call you SSA for short or would you like to leave me your name or initials in your next comment? ;)

I guess you must be vested in First REIT too. It is a compelling proposition, is it not?

You could make a lot of money trading warrants. Good luck. :)

WK said...

any comments on sabana reit?

yield on a mid 8%.. also quite attractive...

AK71 said...

Hi WK,

The last I looked at Sabana REIT, the yield is closer to 8%. See following blog post:

Sabana REIT

A distribution yield of 8% is pretty good. If one would like to diversify one's passive income sources, this could be an option.

I have yet to look at it in detail. I might later.

WK said...

poor performance on the REIT now...

cannot move up... maybe due to poor sponsorship?

Anonymous said...

AK

About FR, after the rights issue, will the DPU be diluted as well ? I am unsure of how to see this.

If one were to wait for the post rights, then to go thru the work of buying more mother shares, participate in the rights and Q @ ATM, will the yield still be as good - assuming the TERP is @ 70 cents ?

I hoped that we can soon get to the ATM before I spend the $$ on something else (yeah. discipline et all).

SnOOpy168

Just thinking.

AK71 said...

Hi WK,

I looked at it. Touched a low of 97c and closed at $1.02. Traded at $1.03 or lower the whole session. Looks weak.

People hoping to make some fast money are disappointed, it seems. After all, MIT and GLP did do quite well on their debut.

Reason for Sabana's weakness? Your guess is as good as mine.

AK71 said...

Hi SnOOpy168,

From my blog post dated 11 Nov: "At 95c, the yield, with an annualised DPU of 7.62c is 8.02%. At the TERP of 70c and an expected annualised DPU of 6.18c, XR, the yield is 8.83%. So, this acquisition is distribution yield accretive and is good for current unitholders."

First REIT: Rights issue

The annualised DPU for 2011 was later amended to 6.4c.

So, the DPU will decline from 7.62c to 6.4c. However, the distribution yield will actually go up and this is what we should look at when thinking of returns.

The question to ask is at what price would First REIT be trading at, XR. Answer? Your guess is as good as mine. ;)

If it trades below 70c/unit, I am buying more. As I very much doubt that it would, it makes sense for me to buy now, especially when I believe it would trade higher than 70c, XR. :)

Anonymous said...

AK

I am a bit blur here.

If I read your suggestions right :

If I already own the mother shares and can afford the rights + round up excess + a little bonus tikam excess. Then go for it. Yes ? I will be.

If I like to top up some more mother shares, then perhaps - as you would have done @ 95c, as a good entry. Otherwise, wait till XR and see how - esp if it falls below 70c or thereabout.

Still unsure of the dates for XR and queuing @ ATM.

Huat ah, with thanks...

SnOOpy168

AK71 said...

Hi SnOOpy168,

Yes to point number 1. I won't sell away my First REIT units. This rights issue is a good thing for current unitholders.

As for point number 2, I even bought some units at 96.5c. At 96.5c, the average price is about 70.67c. Still a good price with DPU at 6.4c, that's a 9.06% yield. :)

I will see what's the price at XR. If it is below 70c, I will definitely buy more.

It goes XR on 1 Dec and nil paid rights start trading on 4 Dec, if I remember correctly. We should be able to accept and pay for the rights once the nil-paid rights start trading. :)

Anonymous said...

just got this

"the Manager wishes to announce that the Transfer Books and Register of unitholders of First REIT (“Unitholders”) will be closed on 3 December 2010 at 5.00 p.m. for the purpose of determining the provisional allotments of Rights Units of Eligible Unitholders under the Rights Issue...... Eligible Unitholders whose securities accounts with CDP are credited with Units on 3 December
2010 at 5.00 p.m. will be entitled to participate in the Rights Issue."

In other words, we can Q @ ATM after 5pm on 3rd Dec ? Huat ah....

SnOOpy168

AK71 said...

Hi SnOOpy168,

I do not think that they are so efficient. There is no harm going to the ATMs to check on the 3rd, I guess, but I won't bother. I'll just go on a day when the nil-paid rights are trading. :)

Anonymous said...

You would consider rethinking your distribution yield analysis from the REITs point of view. The increase in share volume will result in a dilution of price and will also mean that First REIT will have to distribute it earnings to more shares. At a 5 to 4 rights issue, going at a 6% return of the unit price (based on 0.695/share), the annual distribution yield stands a risk of dropping by as much as 50%, at least till the REITs new acquisitions complete and income is made from the new ventures.

Nonetheless, 9% distribution yield is hard to find at this point of time.

AK71 said...

Hi Anonymous,

The guidance from the REIT's management is for a DPU of 6.4c, post rights and acquisitions. This is the basis for my calculations of the distribution yields at various price levels.

Could you include your name or initials in future comments? :)

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