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Charts in brief: 16 Jun 2010.

Wednesday, June 16, 2010

Golden Agriculture: Price rose and met resistance at 55c as expected. The falling 50dMA and 100dMA both approximate 55c which makes this a strong resistance.  If this could be taken out, we could likely see a target of 57.5c which is where we find the 138.2% Fibo line.  This is also a gap resistance.

AIMS AMP Capital Industrial REIT: The fourth gravestone doji in seven sessions.  21.5c is being tested vigorously as the immediate support. MACD has dipped into negative territory while the MFI and OBV have flattened.  The loss in buying momentum is obvious.

LMIR:  Second doji in a row as price closed at 47.5c, resisted by the flattening 50dMA. If this is taken out, resistance is provided by the falling 100d and 200d MAs. These are approaching 48c, which perhaps explain the dojis which reached a high of 48c.  The negative divergence between price and volume is obvious and suggests that LMIR is rising on weak technicals.

SPH: Volume expanded today and is the highest in seven sessions but all that could be managed at the end of the day was a doji with price closing at $3.75, suggesting weakness.  If price could rise further, it would find resistance at $3.82 as provided by the flat 100dMA.

Saizen REIT: I looked at the weekly chart just now. It seems that price is moving above the declining 100wMA.  This is good news.  There are of course two more days before the week ends.  So, let's see how it would end on Friday. I also like the up channel I see.

Related post:
Charts in brief: 14 Jun 2010.

CapitaMalls Asia: Triangle resolved.

CapitaMalls Asia's triangle has resolved itself to the upside, breaking resistance at $2.14, reaching a high of $2.18 before closing at $2.17.  Volume expanded nicely as well. The MACD has crossed into positive territory while the MFI formed a higher high.  The OBV has turned up slightly too.

Immediate resistance is at $2.19, an important support level created in February this year. The declining 100dMA is another resistance level at $2.21.  This coincides with another downtrend resistance line with its peak on 12 March 2010. So, the resistance band from $2.19 to $2.21 is likely to be a strong one. 

The rise in price today probably galls people who have cut their losses or taken profits earlier at lower highs but is a boon for people who have been holding on to their shares.  It is probably also tempting for some to go long now thinking that we are seeing the start of a new uptrend.

What do I think? Well, although volume expanded today, technically, I still see a negative divergence between price and volume.  This does not mean that price cannot go higher. However, the upside might be limited by the resistance band from $2.19 to $2.21. The MFI has been forming higher highs and higher lows and at 71.3% is not far from the overbought region.

Saizen REIT: Refinancing of loan from Soc Gen.

Tuesday, June 15, 2010

The Board of Directors of Japan Residential Assets Manager Limited, the manager (“Manager”) of Saizen Real Estate Investment Trust (“Saizen REIT”), wishes to announce that Godo Kaisha Choan (“GK Choan”), a TK operator of Saizen REIT, has entered into a facility agreement on
15 June 2010 with Societe Generale (the “Facility Agreement”) for the refinancing of its JPY 5.9 billion (S$90.2 million1) loan (the “Refinanced Loan”), which was originally obtained from Societe Generale and due to mature in July 2011. The completion of the Facility Agreement and related loan documents are subject to the fulfillment of the conditions precedent, such as the registration of mortgages of the properties.

The Refinanced Loan is for a term of 3 years up to 15 June 2013. The refinancing terms include the collateralisation of the property portfolios of two TK operators of Saizen REIT, namely GK Choan and Yugen Kaisha Kokkei (“YK Kokkei”), as security for the Refinanced Loan. The property portfolios of GK Choan and YK Kokkei are valued at an aggregate of JPY 11.8 billion (S$180.4 million) based on valuations as at 30 April 2010. The Refinanced Loan is non-recourse to Saizen REIT.

Although the Refinanced Loan is subject to a variable interest rate, GK Choan intends to enter into an interest rate swap arrangement to fix the annual interest rate on the Refinanced Loan throughout its term. Further details on the applicable interest rate will be announced when it is fixed. The Refinanced Loan also has an amortising feature with an initial principal repayment of JPY 140.5 million (S$2.1 million) in June 2010 and quarterly principal repayments of JPY 40.5 million (S$0.6 million) thereafter. Societe Generale will also charge an up-front fee of JPY 59.0 million (S$0.9 million).

The Management Team is pleased with the successful refinancing of this loan as it enables Saizen REIT to further strengthen its capital structure. Particularly, in view of recent financial turmoil in Europe, the risk appetite of international lenders has become less predictable. The Management Team deems it prudent to refinance this loan, which is Saizen REIT’s second largest loan, as soon as possible while the opportunity remains open. Other than the JPY 7.1 billion (S$108.6 million) loan of YK Shintoku (which is currently in maturity default) and the JPY 0.45 billion (S$6.9 million) loan of GK Chosei, Saizen REIT has no further loans that are due to mature in the next two financial years. This will allow the Management Team to focus on the refinancing of the loan of YK Shintoku.

Courage Marine: Triple bottom?

An old friend from University asked me out for dinner earlier this evening. We met up and he asked if there are any good penny stocks now to go long on.  Without hesitation, I asked him to look at Courage Marine.

Courage Marine has confirmed the long term support of 17.5c again and again.  Today, it broke resistance provided by the declining 20dMA at 18.5c.  This incidentally is a many times tested resistance level.  Closing at 19.5c, it is resisted by the declining 100dMA.  The way upwards might be difficult as three MAs have to be overcome.  Without an expansion in volume with any upward movement in price, it would be difficult to have a breakout.

However, in terms of chart pattern, Courage Marine might well be forming a triple bottom. If this reading is correct, the neckline is at 21.5c and the target is 25.5c.

I am currently vested in Courage Marine and might add to my position if it confirms that 18.5c is resistance turned support.  For anyone thinking of going long, 18.5c is a fair entry price.  The downside seems limited with the long term support at 17.5c.  The risk reward analysis provides an attractive proposition.

Related post:
Courage Marine: Riding the waves of recovery.

Charts in brief: 14 Jun 2010.

Monday, June 14, 2010

LMIR: Price continues to be resisted by the 50dMA at 47.5c. Volume was very low today and continues a picture of negative divergence between price and volume. As MFI rose gently higher, the OBV is flattish. This is not a bullish sign either.  Immediate support at 45.5c which approximates the position of the trendline support as well as the 20dMA.

AIMS AMP Capital Industrial REIT: A one lot buy up at closing prevented the formation of a gravestone doji. 21.5c has been established as the immediate support.  This REIT is still trading within a range and I would buy more if it trades closer to the support of the trading range at 20c.

CapitaMalls Asia:  Symmetrical triangle has yet to be resolved. Negative divergence between price and volume is glaring. MFI has been rising but OBV has been flattish. MACD is rising but is still in negative territory.  All these make the buy signal shown in MACD histogram suspicious.  $2.14 is the resistance to watch.

FSL Trust: I was wondering if this counter might form a bullish harami today.  Unfortunately, it's a gravestone doji. This counter is oversold.  In the event of a rebound, I see resistance at 39c and 44c.

Golden Agriculture: Nice up day.  We might see the price continue to rise tomorrow as there is respectable volume and price closed at the high of the day at 53c. Immediate support at 49c.  Immediate resistance at 55c.

FSL Trust: A crisis or an opportunity?

Saturday, June 12, 2010

I still have units of FSL Trust which were bought at an average price of S$1.00 per unit.  By any stretch of imagination, I cannot foresee FSL Trust trading at S$1.00 per unit in the next few years, if ever.  I have kept these units in a frozen portfolio together with a few other stocks to remind myself of the mistakes I made.

As FSL Trust enjoyed a recovery in unit price and was trading at an average of 60c for about a year till the first few days of May 2010, reaching a high of 69.5c in July 2009, I advised potential investors that it is still a risky investment. The primary reason why I consider FSL Trust to be a risky investment is its indebtedness.

As of 31 March 2010, it had bank loans of US$484.6m. This has been reduced to US$ 477.1m after another loan payment was made in April 2010. FSL Trust makes quarterly loan payments. About half of the loans will mature in April 2012 and the rest are maturing in March 2014.  Although its vessels are valued at US$826m, it only has US$56m in cash and cash equivalents as of 31 March 2010.

In 1QFY10, FSL Trust's revenue was US$24.43m.  The two ships which were leased to Groda, Verona I and Nika I, contributed 15% to FSL Trust's revenue.  Assuming a total cessation of contribution (which is not very likely), quarterly revenue would decline to US$20.77m. Then, assuming cost of operations remain the same and assuming that US$8m is used to make quarterly loan repayment as usual, what is left would be US$4.77m.  This could then be distributed to unit holders.  This would give a dpu of about 0.8 USc (or 1.08 Sc).

Based on the current unit price of 37c, the yield would be 11.68%.  If the unit price declines to test its historic low of 32c, the yield would be 13.5%.  Remember that this is based on the most abject scenario that contributions from Verona I and Nika I would cease completely.  That is why I said on 9 June: "It seems to me that a test of 32c as support would be overly pessimistic and if it should come to that, I would probably buy in again."

In all probability, FSL Trust would be able to secure the release of the two vessels by paying US$4.8m in total.  It would be able to fund this internally as it has US$56m in cash and cash equivalents. A resumption of operations of the vessels would continue to contribute to revenue although much reduced.

As of 31 March 2010, NAV is 62 USc per unit.  That is about 83.7 Sc (based on US$1 = S$ 1.35).  Buying at 37c represents a 56% discount to NAV while buying at 32c would represent a 62% discount to NAV.  Compared to buying at 60c, which represents a lesser 28.5% discount to NAV, there is a greater margin of safety now.

For sure, FSL Trust's high gearing is still an issue.  However, as its unit price continues declining, risk reward analysis suggests that it might be rewarding to enter with a long position.  I did so but was probably too early as I anticipated a bottoming of the unit price instead of waiting for clearer signs using TA.

Panic is still running high and fear is palpable, judging by the relatively high volume of trade as price declined. I am sure that there is no shortage of short sellers as well (please pardon the pun).  Once short sellers begin to cover their positions and once the last bearish investor throws up his arms in despair, we will see a reversal.  We must see a base forming and it would be ideal to see that base retested and holding.  That is a good time to add to long positions.  In crises, we find opportunities.  This crisis might just be an opportunity.

Related post:
FSL Trust: A new low.

Charts in brief: 11 Jun 10.

Friday, June 11, 2010

CapitaMalls Asia: A trading halt in the morning was called for as the sale of three malls to its REIT in Malaysia was announced. The response to this announcement was vapid. The symmetrical triangle has yet to resolve itself while the negative divergence between price and volume is still quite obvious.

AIMS AMP Capital Industrial REIT: Closed at 21.5c. MACD continues its decline and looks set to leave positive territory. Rising MFI suggests positive buying momentum while a falling OBV suggests distribution.  This divergence could limit upside in the near term.

FSL Trust: The decision to wait and see even as the price plunged two sessions ago has paid off. OCBC Research has terminated coverage of all shipping trusts and DBSV has advised avoiding FSL Trust for now. Using Fibo lines, we see that closing at 37c today is at the 123.6% Fibo line and if this should give way, price could decline to 33.5c as the 138.2% Fibo line is at 33.7c.

Healthway Medical:  Formed a doji today, unable to break the high of 19c as volume declined.  MFI peeked into overbought territory while OBV has flattened. The doji is a reversal signal but it needs confirmation although the technicals support a reversal. A correction downwards should find support at 16c, a many times tested support in the past.

LMIR: Closed above 47c resistance but is met with resistance provided by the 50dMA at 47.5c.  The candlestick formed today is that of a hangman.  The negative divergence between rising price and declining volume is still valid.  LMIR is rising on weak technicals.

LMIR: Testing resistance.

Thursday, June 10, 2010

LMIR has risen on declining volume. MACD is rising in negative territory and the MFI continues to rise towards 50%. Without a significant expansion in volume as price pushes higher, it will be hard to overcome immediate resistance at 47c.  In the event that 47c is taken out, there is a band of resistance provided by a cluster of MAs from 47.5c to 48.5c.  Upside seems limited which might explain the lack of enthusiasm from market participants in adding to their long positions here.

I would like to accumulate units in LMIR again but will wait to see how things unfold.

AIMS AMP Capital Industrial REIT: Weakness.

I have been waiting to buy back some units in AIMS AMP Capital Industrial REIT. Price formed a gravestone doji at 21.5c today. The MACD is declining towards zero.  The OBV is also declining, suggesting some distribution is ongoing.  The MFI is still rising suggesting positive buying momentum but matching that against price action, we see that the price has not been rising as enthusiastically.  A rising MFI with price unchanged is not positive and suggests weakness.

I might get my wish to accumulate again at the support of the trading range.

SPH: A floor or a base?

Remembering the recent lesson learnt from FSL Trust, I should not anticipate but wait for clearer signs of basing or a reversal before adding to my long positions.  It would seem that SPH is basing with $3.68 as a many times tested support.  However, we cannot be sure until price stays above the 20dMA and confirms the MA as support.  This is a stringent requirement.  $3.68 might just be a floor.

That the MACD has made a bullish crossover with the signal line is not persuasive as it is still in negative territory which means what we see might just be a rebound before price continues to move lower.  As MFI moves up, the share price has stayed more or less stagnant, testing the support at $3.68.  This is not a good sign.  I see immediate resistance at $3.80 in case of a continuing move in price upwards while immediate support remains at $3.68.

Healthway Medical: More upside?

Healthway Medical overcame resistance at 17.5c today to close at 18.5c but not before touching a high of 19c.  Volume expanded significantly today. 19.5c could be tested next as the bearish divergence between price and volume was corrected three sessions ago.  MACD is rising in positive territory.  MFI and OBV are rising in tandem with the rise in price. 

Although I believe that Healthway Medical's fundamentals do not command the high share price we are seeing now, the market does not care about fundamentals.  Price is about market sentiments.

Related post:
Healthway Medical: A weak first quarter.
Healthway Medical: An updated valuation.

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