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Market malaise and First REIT.

Monday, December 27, 2010

I guess it is safe to say we can take the whole week off and we would not be missing anything. The STI rose 15.56 points on thin volume (total value of S$559.8m) to close at 3,159.36. Thankfully, I was rather busy at work today. Otherwise, I might have been quite bored.

So, what am I looking at in the stock market now? Apart from thinking of what would I be doing in 2011, nothing much. Actually, I have started writing but I am still adding some finishing touches to the blog post. I would definitely put it up before the end of the week. Look out for it.

However, there is one counter that is on my mind: First REIT. It would complete issuance of the rights units (including excess rights) on 30 Dec (Thursday) and the rights units would start trading on 31 Dec (Friday). At an exercise price of only 50c, successful applicants of excess rights would make approximately 40% capital gain immediately!




Related post:
First REIT: Dragonfly doji at 71c.

17 comments:

Lizardo said...

On the other hand, given that the dilution, the opening price would see a corresponding drop?

Dal said...

Hi Ak71!

Been following your blog for sometime (Thank you for your insights). Here's my first comment.

I am a little confused with regards to, "the rights units would start trading on 31 Dec (Friday). "

What is the difference between the excess rights that were applied via ATM and the right units that would start trading on 31 dec?

Thanks & Happy New Year!
-Dal

AK71 said...

Hi Lizardo,

In the case of REITs, a large part of valuation is based on distribution yield. So, although the number of units in issue would more than double, the distribution yield would ultimately guide unit price.

Current unit price has already priced in the effects of a larger number of units in issue. Any decline in price would be an opportunity to accumulate. :)

AK71 said...

Hi Dal,

The excess rights which we applied for, if we are successful in getting any, would be rights units (or units that came about from the exercise of rights) and are ready for trading on 31 Dec.

Happy new year. :)

la papillion said...

Hi Lizardo,

AK is right. The current price had already factored in the dilutive effects of the issued rights. In fact, there's a drop in price from 90+ cts to the current 70+ cts upon the counter turning XR. It shouldn't drop (theoretically) upon trading of rights shares as ordinary shares, unless people are cashing out. Possible?


You can't check this on chartnexus (or any other charts) because the price trading prior to the rights exercise had been adjusted too.

la papillion said...

Ak,

Hmm, I noticed that if now when I comment on your post, there's a checkbox to 'email follow up comments' to my email address. Remember there was a time when I asked if you had switched off this nifty feature? This is what I'm asking.

Interesting that I've just noticed it today. I remembered wanting to click on such a checkbox in the past so that I don't have to keep looking at the post to see if there's reply.

Good that it's there now :)

AK71 said...

Hi LP,

I changed the settings for "Comment Form Placement". Previously, it was "Embedded Below Post". I changed it to "Full Page" and we have the little box you were asking for.

Actually, under the old setting, this function was present too but it wasn't so clearly indicated. It was just a line.

Anyway, I am glad you like it now. ;)

Anonymous said...

Go First REIT Go !!!!

Eagerly awaiting the Q4 distribution of around 0.8 SG cents and hopefully a big boost in fair valuation to further reduce gearing organically haha ! Not sure whether they will book in fair value gains for the 2 newly acquired assets in Q4 or in Q1.

Cheers,
Nick

AK71 said...

Hi Nick,

The future looks good for First REIT. I'm happy. :)

Dal said...

Thanks AK! I misunderstood what you said earlier :)

Dal

AK71 said...

Hi Dal,

I am glad things are cleared up. :)

Anonymous said...

FR's rights issue announcement

http://firstreit.listedcompany.com/newsroom/20101228_171112_AW9U_8C4C2180DDC7A3B94825780300169C30.1.pdf

SnOOpy168

AK71 said...

Hi SnOOpy168,

You are so on the ball. Thanks for sharing this. :)

Wow, Valid Acceptances at 97.7%. Not many excess rights to go around.

The balance of 7,790,838 Rights Units which were not validly accepted will be allotted to
satisfy excess applications. In such allotment, preference will be given for the rounding of
odd lots.


Total number of excess rights applied for: 88,002,026. It seems that I will be getting a refund from my excess rights application. ;p

Chu Yeow said...

Hi AK71, I guess the excess rights refund will only be given tomorrow, right? I haven't gotten anything yet. This is the longest I've had to wait to get my money back from a rights/IPO so far!

AK71 said...

Hi Chu Yeow,

The rights units would only be issued tomorrow but the refund for unsuccessful excess rights application could take up to 2 weeks to find its way back to us or so it's stated.

Chu Yeow said...

Ah yeah I remember reading that. Thanks!

AK71 said...

Hi Chu Yeow,

Hey, no problem. Not to worry about First REIT. Solid as a rock.

You try to enjoy Bangalore. ;-p

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