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AIMS AMP Capital Industrial REIT, First REIT, Golden Agriculture, CapitaMalls Asia and Sabana REIT.

Thursday, December 9, 2010

AIMS AMP Capital Industrial REIT: For some time now, I keep saying that this REIT is undervalued. A reader sent me a little snippet from Kim Eng and I would like to share it here with everyone:

One of few undervalued players around. AA-REIT is still trading at a 20% discount to book even after a steep $41m write‐down in the value of its investment properties in FY Mar10. The capital values of industrial properties in Singapore have since recovered from the global financial crisis. AA-REIT’s gearing ratio is comfortable at 35%, with no near‐term refinancing need. Any further write‐down is unlikely. That AA-REIT is still trading at a discount to its peers is likely due to its relatively small market capitalisation and turbulent history in 2009 which saw AMP Capital Investors and AIMS Financial Group emerging as Manager after a major equity cash call and asset injection.

Near‐term catalyst. Asset enhancement opportunities abound for AA-REIT as at least half of its 26 properties have plot ratios that are under-utilised. Capital recycling exercise is ongoing and the potential sale of its single asset in Japan could be a near‐term catalyst.

Technically, we could see the unit price of this REIT trading sideways for a few more weeks with support at 21.5c and resistance at 22.5c. It seems that a symmetrical triangle is forming and it would not surprise me if its unit price trades higher in 1Q2011. I bought more recently at 21.5c and I am in the queue to buy more.

First REIT: I bought some First REIT units at 69c today. This gives me a yield of 9.28% based on the annualised DPU of 6.4c for 2011.  The next support level is at 67c which is where we find the rising 200dMA. Going by the trading volume in the last two sessions as long black candles were formed, we could see 67c tested in the next session. I have entered my buy queue. Why am I so bold? Fundamentally, this is a REIT with a strong track record. Technically, buying at supports in an uptrend is the way to go.

Many could be holding off their purchases in spite of the attractive yield at current price levels. If my guess is correct, they are probably conserving their resources to apply for as many excess rights as possible. Why buy at 68.5c if we could get excess rights at 50c? They should remember, however, that how many excess rights we are likely to get depends probably on how many mother shares we hold in the first instance. Those who fail to get the excess rights they want could cause a strong bounce upwards for First REIT's unit price once the rights exercise is completed.

Golden Agriculture: Its price continues to defy gravity as it rose on low volume to break the previous high of 78.5c to close at 79c. Volume is the fuel which drives a rally. I question the sustainability of the recent levitation act. Of course, Mr. Market is always right and I could be proven wrong this time round and if it does happen, it won't be the first time.

Immediate support in case of a pull back is at 74c and I see strong support at 70c. The MACD has formed a lower low and it remains to be seen if it would form a lower high. The negative divergence between rising price and falling volume is still valid. However, the rising MFI and RSI show that momentum is positive and support is strong. Any pull back is probably a good opportunity to accumulate.

CapitaMalls Asia: Price closed lower at $1.92 on higher volume. All technicals point to a high probability of price moving even lower in the near future. Any rebound, however unlikely, would be a chance to reduce exposure. For shortists, rebounds could be salivating opportunities for them to make some money here.

Closing at $1.92 is at support provided by the 138.2% Fibo.  38.2%, being one of the 3 golden ratios, is quite strong and if it breaks, the other 2 golden ratios are 50% and 61.8%.  The 150% Fibo and 161.8% Fibo lines are at $1.88 and $1.85 respectively. If the selling pressure keeps up, we could see prices go to those levels. Then, I would be sorely tempted.

Sabana REIT: Closing at 93.5c is exactly where I mentioned that 138.2% Fibo line would be providing support. Selling pressure is not letting up although volume has reduced on this down day. It recorded the second lowest daily volume since the REIT started trading.  This should be a relief for unit holders.

Could it really test the 150% Fibo line at 92.5c? Your guess is as good as mine but that is where I have entered my BUY queue. Wish me luck.

Related posts:
AIMS AMP Capital Industrial REIT, Golden Agriculture, Sabana REIT.
First REIT
CapitaMalls Asia


Anonymous said...

Congrats AK.

I also picked up some FR @ 0.685 today. Yeah.

Huat ah.


AK71 said...

Hi SnOOpy168,

Congrats! You got yours one bid lower than me. :)

My next BUY queue is at 67c. Are you gonna queue to buy more at 66.5c? ;p

Anonymous said...

Hi Ak,

I just bought 20 lots of First Reit today, can I apply for excess rights at 50cts? If yes, how do I go about applying? And how many lots am I entitled to buy?


AK71 said...

Hi Confused,

You bought First REIT after it went XR. So, you are not entitled to any rights.

I am not sure if you could get any excess rights if you apply for them. You could go to the ATM machines (DBS, POSB, UOB or OCBC) and try applying for some.

There shouldn't be any limit to your application for excess rights but I am not sure if you would be given any.

Anonymous said...


I think 66cents will be a tempting target price. FA or TA or lines or not.

Lets see how it goes.


AK71 said...

Hi SnOOpy168,

At 67c, the yield would be 9.55%. At 64c, the yield would be 10%. I would have to break my piggy bank. ;)

Anonymous said...

Hi AK,
why dont you buy the rights and convert to mother share?
Thought it will be cheaper this way?

C said...


I am in a dilemma between FR & AIMS? Both have equally good yield. Whats your review on their capital appreciation?


AK71 said...

Hi Anonymous,

Unless I buy plenty of nil-paid rights, the savings won't amount to much.

Could you leave your name or initials in future comments? Thanks. :)

AK71 said...

Hi C,

Both are equally promising. You have a tough choice. Why not get both?

Disclaimer applies, of course. ;)

Anonymous said...

Hi AK71,

I am new to right issue.

I have been entitled for some First REIT right issues. Should I get more right issues by buying from the open market (during the trading window of the right issue), or by applying for excess rights? Who will buy right issues from the open market?


Anonymous said...

hi AK,

thanks for reply.
do you know when will the rights trading end?

thanks again,

AK71 said...

Hi KokHua,

Congratulations on being given some nil-paid rights. You should try to get some excess rights. If you are successful in getting these, at a cost of only 50c/unit, you will enjoy a yield of 12.8% (expected DPU of 6.4c in 2011).

However, there is no guarantee that you will get all the excess rights which you apply for. So, if the nil-paid rights are trading at an attractive price, it makes sense to get some if you are thinking of increasing your investment in the REIT.

For example, if First REIT is trading at 68c per unit and the nil-paid rights are trading at 16.5c per unit, it makes more sense to buy the nil-paid rights and exercise them later on by paying 50c per right. Total cost: 66.5c.

The willingness of some to sell the nil-paid rights cheaply is causing First REIT's price to decline. Some might be selling off their First REIT units to buy the cheaper nil-paid rights to make a quick buck.

This situation is likely to correct itself once the rights exercise is concluded.

AK71 said...

Hi Confused,

Trading of nil-paid rights will close on 16 Dec.

la papillion said...

Hi AK,

Haha, I got some more new rights at 0.165 cts today, equivalent to 0.665 in mother shares after XR. To Kok Hua, who would buy rights off the open market? Me loh!

I wanted to get more because of the uncertainty in subscribing for the excess rights. It's cheaper but it's certain, whereas if you buy from the open market, it's yours, though it's more expensive. So, I do both - I buy some from open market and subscribe some excess rights.

There's also a discount buying the rights rather than the mother shares. Quite interesting, not sure why though. Is the mother shares over priced or the rights underpriced? But I guess it's not for me to question why, but to act accordingly :)

AK71 said...

Hi LP,

Congratulations! We can always depend on Mr. Market to be irrational. ;)

66.5c is a great price. Annualised DPU of 6.4c means a distribution yield of 9.62%! :)

Anonymous said...

Congrats LP

Perhaps I should have waited a bit longer.

Still anything below TERP 70cents seems positive to me. My holdings are low, that the 0.xx% difference in yield would barely pay for the brokerage.

The rights trading so low, something to this that we should know ?


Anonymous said...

Hi, AK

Thanks for explanation and advice. Have bought some Fist REIT right issue. Will apply for excess right next.


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