K-Green Trust: A stable source of passive income.

I spent some time recently looking into the latest trust to list in the stock market here: K-Green Trust (KGT). This is an infrastructure business trust listed by Keppel Corporation recently. Initially, it only has three assets:

1. Senoko Waste-to-Energy Plant

(Concession period: 15 years from 1 Sep 09)

2. Keppel Seghers Tuas Waste-to-Energy Plant

(Concession period: 25 years from 30 Oct 09)

3. Keppel Seghers Ulu Pandan NEWater Plant

(Concession period: 20 years from 28 March 07)

The Waste-to-Energy plants treat close to half of Singapore's incinerable waste while the NEWater plant is one of Singapore's largest.

The main attraction of this trust is the stability of its non-cyclical cash flows and a lack of counter-party risks as its customers are NEA and PUB.

Using the usual metrics for analysing trusts, we find that KGT has zero gearing, has an estimated dpu of 7.82c (which translates into a yield of 7.38% based on the last traded price of $1.06) and is currently trading at a 5.5% discount to its NAV of $1.12. Although the small discount to NAV is unattractive, the zero gearing is.  There is room for KGT to gear up to, say, 40% and improve its dpu in time.

Stable cash flow, low risk and room to grow.  This sounds like a good addition to my passive income portfolio. It diversifies my income stream and injects a higher level of stability at the same time. The lower yield is acceptable because of its debt free balance sheet.  When a balance sheet is heavy in debt, the risk is higher and, consequently, I would demand a higher yield.

I would like to buy some units of KGT but how much would I pay? On its first day of trading, KGT started off at $1.17 and hit a high of $1.33 and closed at $1.11. Usually, I would depend on TA here but being so new in its listing, four days old, to be exact, TA is impossible. However, we can see that it reached a low of $1.00 on 1 Jul and formed a white candle with a long upper wick on 2 Jul as it closed at $1.06.  This suggests some selling pressure.

Why the selling pressure? If we remember that KGT units were actually given to existing shareholders of Keppel Corporation as a special dividend, the reason becomes apparent. Some shareholders are monetising their "dividends".  If this continues to play out and if the buying interest does not strengthen to counter balance the selling pressure, KGT unit price could go lower.

I would be quite happy to collect some units at $1.00 which would give a yield of 7.82% to begin with.

K-Green Trust rated hold
Monday, 28 June 2010

© 2010 - The Edge Singapore

China Hongxing: Bottoming?

In an earlier analysis on 14 March, I mentioned that "A broader head and shoulders pattern which stretched over a duration of about nine months is now quite obvious.  This, coupled with the obvious downtrend of all the moving averages suggest that more downside is on the cards.  Accumulating at supports in an uptrend is a good idea.  Accumulating at supports in a downtrend is a different story as supports could quickly become resistance.

"Using Fibo lines, we see that 14.5c is a 123.6% support.  Unless there is an upmove with meaningful volume in the near future, a test of the 138.2% Fibo support is most likely and that is at 13c.  Thereafter, the 150% Fibo support is at 12c. Further downside cannot be discounted as a valid head and shoulders pattern would see the ultimate downside target somewhere at 10c."

Although 11.5c is now a many times tested support since 24 May, is it the bottom or just a floor?  On 15 Jun, volume expanded as the 20dMA resistance at 12c was taken out. The following session saw a follow through that tested the resistance provided by the 50dMA at 13.5c. The euphoria was short lived as the 50dMA proved too strong to be taken out and price has been pushed down since.  The 20dMA is once again resistance at 12c and, in the last session, a gravestone doji was formed as price closed once more at 11.5c.

A very interesting fact is found in the OBV.  Although the price is clearly in a downtrend, OBV is flattish. This suggests a lack of heavy distribution. Also, as price fell, volume has generally declined with the exception of one or two sessions. These observations suggest that most of the sellers are probably done selling by now.

The 20dMA has flattened which suggests that the short term downtrend has halted. However the longer term MAs are still declining. So, the trend is still down. However, if we look at the MACD, it has formed a higher low and has recently flattened.  Despite being in negative territory, this positive divergence between price and MACD is an indicator that the downtrend is losing strength.

Should we jump back in and go long here?  Looking at the momentum oscillators, we see that the MFI is down both over the shorter term as well as the longer term. This suggests a lack of demand.  The RSI shows the same picture which suggests a sustained momentum in the decline in price. These indicators are not spotting any positive divergence with price.

So, the conclusion is that although the speed of decline has slowed and the counter seems to have found a stronger support at 11.5c, the trend is still down and the momentum is negative. The price action of this counter has proven treacherous before and unless there is a clear sign of bottoming, I would avoid going long.  Any long position taken here should be a smallish hedge and nothing more.

Related post:
China Hongxing: Downside target?

Charts in brief: 2 Jul 10.

AIMS AMP Cap Ind REIT: Volume rose today as more shares changed hands at the 21.5c support.  MFI declined sharply as short term demand seems to have disappeared. In spite of this, there is no sharp decline in the OBV.  Instead, it is flattish which suggests a lack of heavy distribution activity. From the high achieved on 3 Jun, price seems to be doing a low volume pullback to support.  If 21.5c support should break, I would be happy to buy more at the long term support of 20.5c.  Based on FA, I think that is a very attractive price. TA is more mutable and needs to be looked at again at that point in time.

According to DTZ Research, the improving Singapore economy has caused industrial rents in Singapore to rise for the first time after quarters of decline since Q3 2008.

DTZ’s latest report on industrial property stated, “Average monthly gross rents of first-storey private industrial space edged up 2.6% quarter-on-quarter (QOQ) to $2.00 per sq ft and 3.2% QOQ to $1.60 per sq ft for upper-storey space per month. Since the height in Q3 2008, average monthly gross rents of first-storey and upper-storey private industrial space have fallen 14.9% and 22.0% respectively.”

However, the research consultancy reported that “rents for hi-tech industrial properties, which include business park and science park space, were unchanged at $3.15 per sq per month in Q2 2010.”Article here.

Healthway Medical: Clinging on to support at 19c while forming a gravestone doji is ominous. The rising 20dMA is exactly at 19c now.  Will it push the price higher in the next session or will it fail as support? The MFI, which accounts for price and volume and is a measure of demand is clearly in decline.  The OBV shows the sharpest drop in three weeks, suggesting that distribution is heightening. MACD continues to decline below the signal line. It is obvious that upward momentum and demand have both weakened. If 19c breaks as support, next support is not far away at 18.5c which was a resistance formed in March as price tried to advance higher then.

SPH: A friend asked me if he should sell his SPH shares today. Let's look at the chart.  With today's expansion in volume on a white candle day as price hit a high of $3.88 before closing at $3.85, SPH looks like it might be able to go higher. MFI has been forming higher lows, suggesting rising demand. RSI has been rising as well.  The MACD is still in positive territory.  In short, SPH is seeing some underlying strength. $3.88 is the resistance to watch.  If it breaks convincingly, I see an eventual target price of $4.08. I would be happy to sell more of my remaining shares in SPH then.

Related post:

SPH: Reading the lines.

CapitaMalls Asia: Downtrend continues.

CapitaMalls Asia: I warned that the retest of trendline support on 25 Jun could turn treacherous. On 27 Jun, we looked "at the MFI which accounts for both price and volume. Here, we have a less optimistic picture as the MFI has clearly broken its uptrend. This suggests that demand has dropped and that more selling is underway.  This is a major difference from when the trendline support in question was tested twice before. In those earlier tests, the MFI was still uptrending strongly. Technically, the picture is weaker now."

Anyone who heeded the warning delivered by the MFI would have been spared some losses. Has the picture changed? Well, if anything, it has deteriorated. As price declined from the high of 23 Jun, volume has expanded. MACD has dipped into negative territory while all the momentum oscillators continue to decline. Momentum has turned negative. MFI suggests that demand is much reduced.  RSI suggests that the speed of decline has accelerated. OBV suggests ongoing distribution. Immediate resistance at $2.07 and the next support is at $2.00.

Related post:
CapitaMalls Asia: Weakening technicals.

STI: 2400 is still a real possibility.

It has been a while since I looked at the STI. Looking at it again today did not reveal anything alarming. Well, not alarming as in I did not see anything I did not expect to see.  The picture is still more negative than positive.

The MACD has been closing in on the signal line and is now set to do a bearish crossover. MFI, a measure of demand, has been in decline. RSI has also been in decline which suggests that the attempt to continue the longer term uptrend is sputtering.

Using the high of 15 April and the low of 25 May, if we draw some Fibo lines, it is interesting to see that the move up in the STI in recent sessions has met with resistance at the 38.2% line which is at 2,890.  This same resistance capped gains earlier in May.

If the STI is unable to break resistance at 2,890 this week, we would probably see the formation of a lower high on the weekly chart.  Two more sessions to go.  This has implications where chart patterns are concerned.  We might see the formation of a head and shoulders pattern which would be very bearish.

The rising 200dMA at 2,800 approximates the 61.8% Fibo line. This might give the STI some bounce but the bias is for a move downwards if resistance at 2,890 is not taken out convincingly. 

Breaking the previous low at 2,648 would probably see the STI sinking to the eventual target of 2,400 which, incidentally, is not a number plucked from the air but is provided by the 161.8% Fibo line.

Related post:
STI: Falling through the 200dMA.

NOL: Downtrend.

After hitting a high of $2.35 on 15 April, NOL was in a downtrend which was broken on 16 Jun on relatively high volume. Price hit a high of $2.13 on 21 Jun while forming an inverted white hammer, a reversal signal. This reversal signal was promptly confirmed in the next session. Forming a high of $2.13 on 21 Jun created a bearish picture because it was a lower high compared to the high of 13 May at $2.18.  This was a warning sign.

The MACD histogram turned red on 22 Jun while the RSI and OBV turned down the same day. Price has broken through various supports since then.  Price is currently resisted by the merged 20d and 100d MAs at $1.97.  With the 50dMA declining just above these merged MAs, it would be a difficult resistance to overcome without a buy up on massive volume.  Any upside could be resisted by the 50dMA just a few cents higher at $2.00. It seems that there are more sellers too if we notice how volume has increased as price declined since 21 Jun.  This is confirmed by the lower highs on the OBV which suggests that distribution activity has increased.

The MACD has formed a bearish crossover with the signal line and a retest of the flattening 200dMA which is currently at $1.83 seems likely.  As a support, the 200dMA was breached on three consecutive days in late May. So, this makes it somewhat unreliable and it is, therefore, a very important support to watch now.  If it manages to hold up, we would have a higher low formed.  A symmetrical triangle could then be in the works.  If the 200dMA support breaks, we could see the previous low of $1.75 tested.

Given the bearish technicals, I would sell at resistance at $1.97 if I have the chance to do so. If luck is on my side, I might even be able to sell at $2.00 on a possible whipsaw. Prices do not go down in a straight line and there could be little bumps up along the way.  So, a retest of the 100dMA as resistance again is possible. Of course, it might not be at $1.97 then. We want to sell at resistance and buy at supports.  Use the prevailing trend as a guide. Good luck.

Tea with AK71: iPhone with private videos.

I was surprised to see a Nuffnang ad in my blog just now offering a $10,000 reward for the return of a lost iPhone with private videos. Owner: Mr. Eddy Sun.  This guy must be in his early 30s going by his email address: eddysun77@gmail.com.  He lost his phone at Borders last night.

He has put up a blog just for the purpose of recovering his iPhone and it comes with a video clip of him making a personal appeal:



His blog: http://helpfindmyphone.blogspot.com/

I am posting this to help the poor guy spread the word since his Nuffnang ad comes and goes. I don't make any money this way but what the heck. Just trying to help.

If this is real, I wish him luck.  If this is a prank, it is in very bad taste and it's not even Earl Grey!

Charts in brief: 29 Jun 10.

CapitaMalls Asia: $2.14 looks like it is support turned resistance. We will need confirmation tomorrow. Price touched a low of $2.07 (the 138.2% Fibo line) before closing at $2.11, just 1c shy of the 50dMA at $2.12. The MACD has completed a bearish crossover with the signal line while the MFI continues to decline. There is a lack of demand at the moment and OBV suggests that distribution is ongoing.  It is also clear that as price fell from $2.22 five sessions ago, volume has expanded.  Immediate resistance is at $2.14 and immediate support is at $2.07.

Golden Agriculture: Formed an ugly black candle that is almost engulfing. Closing exactly on the 52c support after touching a low of 51.5c suggests that we might see continuing weakness, especially with momentum oscillators downtrending.  The MACD is about to form a bearish crossover. Next support remains at 50c.

Genting SP: It has been a while since I did a TA for this counter but Citibank says that this is one of their biggest SELL recommendations right now. That got me curious enough to look at the charts. For more than a week, this counter has been generating reversal signals: dojis and spinning tops. Today, volume expanded tremendously as price touched a high of $1.20 before closing at $1.15, forming a black candle.  MACD is about to form a bearish crossover. The RSI is at 87% and suggests that the rate of increase in its price has been too rapid.  MFI, on the other hand, is not in overbought territory yet and is still uptrending. OBV is flat which suggests that any selling is well absorbed. At the moment, the uptrend is still intact and immediate support is at $1.12 as suggested by candlesticks and the uptrend support line.

Citi says Genting Singapore is a “top sell”
Tuesday, 29 June 2010

© 2010 - The Edge Singapore

LMIR: Another lower high on the RSI as price formed a wickless black candle today, breaking the support at 47c to close at 46.5c. The lower Bollinger band is at 45.5c while I see a natural support at 45c. For anyone who wants to own some units of LMIR, buying smallish numbers at these prices could be good hedges.  I see 44.5c as a stronger support.

Related post:
Charts in brief: 28 Jun 10.

Charts in brief: 28 Jun 10.

CapitaMalls Asia: This is hanging on to support at $2.14 but barely so as price touched a low of $2.11 today.  The 20dMA which is providing support at $2.14 seems to be flattening. More significantly, I would like to draw attention to the fact that closing at $2.14 today is different from closing at $2.14 last Friday because the uptrend is now broken.  MFI continues its decline and the MACD looks set for a bearish crossover with the signal line.  I would not go long at $2.14 now.  The downside risk is too high.

Golden Agriculture: An inverted white hammer on lower volume. Momentum oscillators are flattish.  There is just no oomph in the upward movement in price today as it touched a high of  54c before closing at 53c.  Immediate support at 52c as provided by the 20dMA.

Healthway Medical: Its price is showing resilience as trading volume declined. 19c has been established as the immediate support. OBV is flattish and there is no sign of distribution. However, MFI and RSI are both hugging the borders of their respective overbought zones.  Might this exert some downward pressure on price or is this counter just doing a correction using time and would resume its uptrend once the 20dMA catches up?

SPH: This counter has been delivering pleasant surprises lately. Today, it closed at $3.88.  This effectively overcame the declining 50dMA as resistance. $3.88 was the eventual target of a mini double bottom I identified some time back.  I also divested some shares at this price not too long ago. The move up today was not accompanied by an expansion in volume.  So, I am doubtful about its strength.  However, the MFI and RSI are both rising and their uptrends are intact.  Momentum is good and if the price continues rising to hit certain Fibo lines, I might sell more of my remaining shares.

Related posts:

CapitaMalls Asia: Weakening technicals.

Golden Agriculture: Inverted black hammer.

SPH: Reading the lines.

CapitaMalls Asia: Weakening technicals.

CapitaMalls Asia broke out of its symmetrical triangle on 16 Jun on higher volume. It then went on to break resistance provided by the declining 100dMA which coincided with the trendline resistrance on 21 Jun. It was not able to advance much further and I suggested looking at the 100dEMA which made it clear why it was so.

In the last session, support was provided by the rising 20dMA and a short white candle was formed. The 20dMA in recent sessions has merged with the trendline support and, theoretically, should be a strong support.  This is the third time this trendline support has been tested.  If a trader had bought some shares of CapitaMalls Asia each time its price tested this trendline support, he would have made some nice gains.  So, is it time to buy again?

If we look at the RSI, the uptrend is intact, which suggests that price is rising at a sustainable pace. However, a lower high was formed recently. So, a loss of momentum is being registered.

In recent sessions, volume rose as price retreated. So, let us look at the MFI which accounts for both price and volume. Here, we have a less optimistic picture as the MFI has clearly broken its uptrend. This suggests that demand has dropped and that more selling is underway.  This is a major difference from when the trendline support in question was tested twice before. In those earlier tests, the MFI was still uptrending strongly. Technically, the picture is weaker now.

Resistance has been established at $2.22 and immediate support is at $2.14.

Golden Agriculture: Inverted black hammer.

CPO price has been in a downtrend since forming a double top in March this year. Following this, Golden Agriculture's downtrend started in early April. We have to remember that this company remains most dependent on CPO's price as it derives most of its profits from upstream activities. So, weakening CPO price is a big negative for it.

Resistance provided by the 100dMA proved too strong to be taken out and price formed a lower high at 55.5c on 21 Jun. In the last session, volume expanded as an inverted black hammer was formed, closing at the 52c support provided by the 20dMA.

MFI has formed a lower low, suggesting a lack of demand for the stock in the immediate term.  OBV has turned down. Clearly, distribution is taking place.

If the 20dMA support fails, using Fibo lines and drawing a trendline support from the low of 25 May, we derive an immediate downside target of 50c which happens to be a round number too.

The fundamentals are not supportive and the technicals are not strong. Cautious market participants who have resisted the temptation to buy in recently on a possible breakout at 55c should be breathing a sigh of relieve.


Related post:
Golden Agriculture: Resistance remains at 55c.

FSL Trust: Land ahoy?

On 18 June, news of the release of Verona I was greeted with some relieve.  However, price has closed unchanged at 38c since. I expect Nika I to be eventually released as well but would this be enough to reverse the fortunes of FSL Trust's unit price?

Obviously, FSL Trust is still in a downtrend.  Is the current phase forming a floor or a base? Would the declining 20dMA push the price down further? These questions are hard to answer definitely.  However, TA can provide some clues as to the psychology of market participants.  Let's see.

The MFI has been rising since 7 May.  This happened as the price continued its decline. MFI is derived from the combination of price and volume. A rising MFI is a sign of demand as money flows into a stock. Looking back, the MFI was declining from March to April this year while the unit price of FSL Trust was rising.  That negative divergence was a warning sign as smart money was flowing out of the stock. Another reason why I was warning people to stay away from FSL Trust back then. The opposite is happening now with MFI rising, money is flowing back into the stock as price declined.

OBV has been rising since 11 June and this suggests that accumulation is back. All this while, the RSI has been more or less flat and hugging 30%, no longer oversold.  This suggests that the speed at which the stock is being sold down is very much slower or, indeed, has stalled.

Immediate support is a band between 37.5c to 38c.  Immediate resistance is at 40.5c.  If price retests the recent low of 36c, I would pay attention to the volume.  If it is much lower than what was achieved on 11 Jun (5.64m units), we could have the first hint of a bottom.

Related post:
FSL Trust: Verona I.