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First REIT: A bullish harami.

Tuesday, December 14, 2010

Volume expanded again today with a total of 12.21m units changing hands. This time, a white candle was formed. With price opening at 67c and closing at 67.5c, this is a wickless white candle. Also, this formed right in the mid-section of the previous session's black candle.

Remember, I mentioned yesterday that "the black candlestick formed this session is not as bearish as the three black candlesticks before it. It actually started in the middle of the previous session's candlestick and it also formed a lower wick unlike the previous three candlesticks. Support is at hand." What we see today is a textbook example of a bullish harami, a bullish reversal candlestick setup. As with all technical analysis, this will need confirmation in the next session.

It is my personal belief that the 200dMA support at 67c has been recaptured.  Further upward movement in price would find immediate resistance at 68.5c.  This will be followed by 70c and 71c. In due course, if these resistance levels were cleared, the counter could cover the gap at 73.5c. There are some who are still waiting to see how low the price could fall before buying in. Their hands could be forced in the next two days if price continues to be resilient and this would contribute to a further strengthening in price.

I count it fortunate that I managed to collect some rights at 16c yesterday (effective cost = 66c). I queued for more mother shares at 64.5c last night in case price weakened further today. 64.5c now seems rather remote as a possibility. With the OBV turning up sharply, the suggestion is that accumulation is back in force. Let us see if the long term support at 67c holds up from now.

Related post:
First REIT: Good bad news.


Anonymous said...

Hi AK,

A bullish harami - wicked! Makes me want to read up more on TA. Did you self learn? Any good books you can recommend?

I live in Hong Kong, and only ventured into Singapore stocks this year after finding out there is no dividend withholding tax (I LOVE dividends). Singapore REITs are definitely attractive. Your blogs have given me some insight into the local market and I feel I am learning from them. So thanks!

Now that I have purchased small parcels of First REIT and AIMS AMP, it's more fun to follow your commentaries. Audience participation :)


AK71 said...

Hi Victor,

I am mostly self taught in TA as I didn't want to pay $X,XXX in fees. That was during the last bear market.

I find the DUMMIES series quite easy to digest. The two books I read in the series were "Technical Analysis" and "Candlestick Charting".

Lately, I read "Technical Analysis Explained" by Martin J. Pring, which I found to be rather dry and old fashioned. I also read "Technical Analysis: Plain and Simple" by Michael M. Kahn and, this, I highly recommend.

I used to read The EDGE, a weekly publication in Singapore too. Michael M. Kahn was a regular contributor. So was Daryl Guppy and Goola Warden. I picked up some gems from these writers. :)

You are right about Singapore REITs being attractive. When I found out that REITs in the USA are mostly giving about 3% yield, my eyes popped! REITs in Japan average about 5% in yield. Again, rather low. I don't know about REITs in Hong Kong though.

Even the lowest yielding REIT in my portfolio, Saizen REIT, has a 6.5% yield, taking into consideration full dilution from its warrants!

I am glad you have found some undervalued REITs in Singapore through my blog. I am sure they would contribute nicely to your passive income stream. ;)

Anonymous said...

Thanks AK for the book recommendations, I'll check them out. I like Dummies series as a rule :)

REITs is a hobby of mine. The idea of "owning" properties in different countries appeals to me, and as HKD is pegged to USD, receiving "rents" in different currencies provides an extra hedge. I am convinced that REITS, together with blue chip dividend stocks, is the way to achieving my goals - financial freedom and early retirement.

I have a small portfolio of international REITs. For me it's almost a bit like stamp collecting :) This is a peculiar hobby that nobody else seems to share.

Mind you, the yield of US REITs is currently low yes, but when I bought them in 2008 many were yielding 7-9%. They have appreciated a lot in price since then, some of them by 70-80%.

HK REITs are yielding between 4 - 7.5% right now - not attractive enough for you no doubt :) Prices have also gone up quite a bit.

BTW, apart from yield and gearing, do you pay much attention to pay out ratios? Both FR and AIMS pay out 100%, compared with say 70% with Suntec. Is there any concern about sustainability of dividends?

Sorry about the long post, I need to shut up. Feel free to answer just a couple of lines, I won't be offended :)


AK71 said...

Hi Victor,

You have a most unique hobby. ;)

Back in 2008/2009, I bought some units in First REIT at 42c/unit. At that price, the yield was 17.7%. Still beats the 7 to 9% yield from the US REITs at the time. ;p

First REIT: This one is for keeps.

I am not interested in US REITS not only because of the low yields but also because of the currency. So, I agree with your strategy to invest in assets priced in strong currencies like the Singapore Dollar to guard against wealth erosion.

When investing in REITs, I usually look at 3 things first: Distribution Yield, Gearing, Discount to NAV (if any).

High Yields: Successes, failures and the in betweens.

Then, there are other considerations such as interest cover ratios:

Saizen REIT: 1Q FY2011 results

and whether the land is freehold or leasehold, counter party risks, management's track record and so on:

AIMS AMP Capital Industrial REIT and Singapore's 5.8% growth in October exports

AIMS AMP Capital Industrial REIT: Revised DPU and fair value.

Don't worry about long comments. I will do my best to reply in a timely manner. :)

AK71 said...

Hi Victor,

A small part of my last comment was left out. Please insert the following before the two links to AIMS AMP Capital Industrial REIT. This is towards the end of my last comment:

"Sabana REIT: Fundamental Analysis

"As for sustainability of income distribution, there is no reason to think that it won't be sustainable especially with economies improving:"

Anonymous said...

Hi Victor,

The REIT market in Singapore is still pretty young and most REITs here only own Singapore properties so they are fairly concentrated. I guess this is why S-REITs trade at a premium to take into account the risk involved. This is unlike US REITs which tend to be larger and around for much longer. Moreover, USA is a super-power while Singapore is a little red dot haha ! The business trust asset class here is even younger. The oldest in PST and it listed not more than 4 years ago ! So such a class trade at an even higher yield. I tend to be a little contrarian in my yield investments. I guess AK is as well since nearly all of his yield stocks are not favoured by the market at the moment. Since you are from HK, perhaps you might be interested in Fortune REIT which has assets in HK and share price is quoted in HK$. Personally, I tend to look at Management track record first before looking at its assets.

I am sorry for rambling or if I am not making much sense...down with a flu :(


Disclosure: Vested in PST.

Anonymous said...

Thanks guys :)

AK, a couple of the links on your last post don't seem to work... Anyway, I have ordered some books, will do some reading during the X'mas holidays :) And, 17.7% yield?? Wah :D,,,, (saliva drooling)

Hi Nick, I have enjoyed some of your excellent comments on AK's website too. From what I understand, Singapore has favorable tax policies for REITs, and despites its small size its REIT market is one of the best developed in Asia. Certainly better than HK. Most HK REITs just group together low quality properties. That's why I don't particularly like Fortune REIT.

One of the reasons why I like REITs is because they own real assets, which can be a hedge against impending inflation. I think the quality of the property assets is an important factor to consider. That's why I like some of the Japan REITs too. Despite their lower yield, some J-REITs hold prime properties. I know high quality properties do not necessary equate to higher occupancy and rental income at all times, but...well it makes me feel happier :)

Nick I hope your flu gets better soon, and AK's allergies too!


AK71 said...

Hi Victor,

Thanks for sharing your insights on the REIT markets in Singapore, Hong Kong and Japan. :)

Here are the links again:

Saizen REIT: 1Q FY2011 results

AMPS AMP Capital Industrial REIT and Singapore's 5.8% growth in October's exports

Hope they work this time. ;)

Nick will recover from his flu in time but I have to live with my allergies. :(

Thanks for the well wishes. :)

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