K-Green Trust: 3Q 2010 results.

K-Green Trust announced the following today:

1. The profit after tax achieved for the period from date of listing on 29 June to 30 September 2010 was $4.6 million, 26.5% higher than forecast.

2. Profit after tax for the third quarter was $4.4 million.

3. EPS for the period from date of listing to 30 September 2010 was 0.73 cents.

4. Free cash flow for the third quarter was $19.2 million.

5. Net asset value per unit as at 30 September 2010 was $1.15.

The strong set of numbers is encouraging. Read announcement here.


Related post:
K-Green Trust: Possibly stabilised.
K-Green Trust: A stable source of passive income.

Golden Agriculture: Upmove sputtering.

A valiant attempt pushed price higher by just 0.5c today.  Price touched a high of 70c before closing where it started the session at 67c. That this was achieved on the back of much higher volume compared to the previous session is ominous. This suggests strong selling pressure as buyers turned sellers and locked in gains.  In fact, a case could be made to say that we are seeing the formation of a negative divergence between price and volume over the last six sessions.

However, the higher highs on the MFI and RSI suggest strong demand and buying momentum. Keep in mind that these are lagging indicators and being in overbought territories, we could see the situation corrected and the share price retreating.  In the event of a correction, the immediate support at 66c would most likely give way and a stronger support could be found at 60c. This is also where the rising 20dMA is approximating.

The 20dMA, however, has been an unreliable support in the past. More likely than not, it would give way and the 50dMA, currently at 58.5c is a stronger support.  What if this gave way? Well, the merged 100d and 200d MAs could likely hold up as it is also where the uptrend support is approximating.  This could be ideal as an entry point to go long.

Related post:
Golden Agriculture: Going higher?

Healthway Medical: Testing 16c support.

It is quite clear on the OBV that Healthway Medical has experienced three continuous days of distribution. Volume today was the highest of the last three sessions as price closed at 16c, an important support level identified earlier.

On 14 Oct, I mentioned that "16c is likely to be psychologically important as a support.  So, if it could hold up, it could provide the base for a rebound" and "if the support at 16c breaks, the uptrend is well and truly over.  We could witness a massive selling down to 14c then (the 138.2% Fibo line), followed by 13c (the 161.8% Fibo line).  So, all eyes would be on 16c."

With the lower highs on the MFI and RSI suggesting weakening demand and buying momentum, it is likely that we would see price weakening further.  The chances of a rebound look poor especially when the weakening share price is accompanied by higher volume. The negative divergence between the uptrend in price and the downtrend in the MACD has yet to play out in full.

Keep an eye on 16c and if it breaks on high volume, we could see 14c tested as support sooner than later.  Any rebound in price from the current level is likely to be met with strong resistance at 17c, formerly a strong support and it is also where the merged 20d and 50d MAs are declining to.

Related post:
Healthway Medical: Uptrend threatened.

Portfolio diversification.

An email from another reader:

Hello AK

I was thinking about the investment portfolio and its exposure to the various countries and sectors.

S-REIT is good for the high dividends payout but I feel that there will be a time that I will have a high exposure to the property sector.

While the % of sector/counters per $10,000 to be invested is up to individual, what will be a recommended spread of counters that we could look at for portfolio diversification.

Note that I am still newbie to FA (still dunno what 200dma means) and will not watch the market like a hawk for the buy-sell quick profits.

Your thoughts appreciated.

Thanks
J

My reply:

Hi J,

My strategy is quite simple.

-There is a time to buy and a time to sell. When I hit my targets, I sell.
-If I cannot find any bargains, I don't buy.  I keep cash until bargains present themselves.
-I try not to be vested in too many sectors/countries for the supposed safety that would come from diversification. In fact, I would be burdened with the need to monitor too many things.

Just my way. ;)

Best wishes,
AK
P.S. 200dMA is "200 days moving average" and is part of TA, not FA.


Related post:
Risks and rewards: TA and FA.
Conspiracy of the Rich.

Investing for income or growth?

Here is an email from another reader recently:

For pple with substantial capital, they can just buy div stocks and  hold. For those with less, it's not so simple..Cheng must be really  bullish..99% in the market, I'm only 30+% in the market..

I am surprised by LMIR, it hit a high of 53c today. Despite, the so-so management , i guess pple are still attracted by the yield.  This one is for keeps..

My reply:

I do not think that investment strategy is totally a function of how much capital we have, it is also a function of how much we want. If a person with $10,000 wants to double it within a year, of course, investing for income could disappoint.  An active trading strategy is more appropriate.  If this person is happy with 10% yield per annum, then, my current strategy is OK. Question what do we want and employ the appropriate strategy.

With LMIR, I still have a substantial position in the REIT although I did pare it down to increase my position size in AIMS. What's left in LMIR, I would just hold for its quarterly income distribution since I doubt it could go lower than 4c per annum. Fundamentally, this is a safe and stable investment.

Related post:

Roads to wealth creation in the stock market.

How to choose stocks?

I received this email from a reader recently:

Hi AK,

just want to understand better with respect to the various stocks. I  understand how say a TRUST / REITS works..and noticed that the price does not fluctuate much- but in return there is steady dividends that is tied to the NAV.

How then does one determine the NAV of say a stock that is tied to a business like manufacturing, services etc etc? and also the PE ratio?

Say for e.g memstart which focuses on membranes for water treatment.  I do think that this is one sector  besides solar/ green energy that would have a strong demand in the future given the scarcity of natural resources in the  future. How does one decide whether this is a good stock to invest in. Are there  questions that one should ask if we're investing for long term vs short term?

It's good to get a FAQ on how to choose stocks for long term and  short term, and not just purely on TA or FA.

Cheers
D

My reply:

Hi D,

A FAQ on how could we value different companies in different sectors would be a gold mine.  Unfortunately, I do not have the expertise to do this.  I think we would probably have to assemble 10 to 20 different bloggers who are experts in their own stocks of interest. ;-)

Different sectors are valued differently. So, some companies could have PEs of 30 and is considered cheap compared to other companies in a different sector with PEs of less than 10.  So, comparing against peers in the same sector is something I do often.

If you are asking questions about NAV and PE, you are doing fundamental analysis (FA) and likely to care more about values (i.e. you are a value investor). These numbers are easily obtained in a company's financial report (quarterly) or annual report. NAV is usually found towards the end of the reports.

I believe that the idea of long term investment is actually flawed and made into a legend by stories of how Warren Buffet kept adding to his investment in Coca Cola, for example.  If Coca Cola's fundamentals should take a turn for the worse one day, I am sure Warren Buffet might sell out. Stay nimble because circumstances are very fluid.  They could and often change from time to time.

If you really like the idea of long term investment, you would need the kind of foresight that Warren Buffet has.  Take note that even he makes mistakes. You want to look for companies with big "moats" (strong competitive advantages which are hard to replicate). To this end, there are many books available about how Warren Buffet picks winning stocks for the long term. :)

Best wishes,
AK

Related post:
Looking for value.

Tea with AK71: My new car's fuel consumption.

My Mazda 2 is more than a month old now and I am still trying to get 15.5km per litre out of it.  This is the official number from Mazda.  Initially, I got only 12km and now, I am able to get almost 14km but it seems that I have hit resistance, so to speak.

With my old Mazda 6 which had a 2.0 litre engine, I was able to do 11km+ per litre which from the reactions I got from friends must have been pretty amazing.  In fact, the salesperson at Mazda was amazed as well.  Then, why am I not able to get 15.5km per litre out of the Mazda 2 which has a 1.5 litre engine?

This was one of the things I thought about over the weekend and I compared what I did to the Mazda 6 that I might have to do to the Mazda 2.  Precious little since I am not the type to spend money on bodykits, sound systems and HID lights. I did spend money to run my Mazda 6 on synthetic engine oil and I did spend money on some good tires which were supposed to reduce CO2 emission.  There, I have my answers.

Running my car on synthetic oil reduced internal friction and I didn't have to wait for the engine to warm up before I drove.  Since, my Mazda 2 is new and has a free service by the agent at 5,000 km, I would just have to live with mineral oil till the car hits 10,000km.  That's when I would make the switch to synthetic oil.  This should improve the performance of the car.

New cars are usually bundled with OEM tires.  Apart from keeping tires properly inflated, swtiching to better tires could reduce resistance when driving. There could be less friction and we could cover more distance without stepping on the accelerator as much. Hence, the claim that good tires could reduce CO2 emission. Since tires usually last for 2 years or so, I would not be changing them in a hurry.  Will make a mental note.

I am rather light footed and do not rev the engine.  So, in terms of driving behaviour, I think I'm safe.  I am not sure if there could be other ways of improving my car's fuel consumption. If you have an idea, please feel free to share it. :)

Related post:
Tea with AK71: Bought a new car!

AIMS AMP Capital Industrial REIT: Excess rights.

A friend who applied for 2,500 excess rights was given 100% of his application.

Another friend who applied for 365,000 excess rights was given 39,000 rights or 10.7% of his application.

A reader, SnOOpy88, commented this morning:
"Results are out in CDP A/C.
I got only 17% of excess over my rights. Good start for me.
Wonder what will be the pricing direction now, given that some of us had got shares at $0.155 ?
Huat ah..."

SnOOpy88 did not mention how many excess rights did he apply for.

From my friends' experience, it seems that the less excess rights we applied for, the larger the percentage of our application would be successful. I wonder how many excess rights I would be alloted.  I would know this evening when I open the mailbox, I guess. ;)

Congratulations to fellow unitholders who are successful in getting some excess rights.  Each lot of excess rights secured is equivalent to an immediate gain of S$65.00 based on the current market price of 22c per unit. That's a 42% gain! In the money! :-)

Related post:
AIMS AMP Capital Industrial REIT: Results of rights issue.

Healthway Medical: Uptrend threatened.

On 11 Aug, I blogged about how Healthway Medical's support at 18.5c had been compromised and that price could go lower. I said that "It is likely that 17c could be tested as a support sooner than later".  Then, for a few days in late August and early September, price actually sank below 17c before recovering.

Today, the support at 17c crumbled on high volume.  That 17c was taken out when it is where the rising 200dMA is approximating is very bearish since the 200dMA is supposed to be a rather strong support. The last time this happened was in the second half of May this year but price rapidly recovered.  How high are the chances of such a recovery this time round?

Take note that the volume today was very much higher than back in May as the counter was sold down.  Back in May, the MACD was also poised to do a bullish crossover with the signal line while, this time round, it is dipping into negative territory. Lower highs spotted on the MFI and RSI, suggesting a weakening demand and slowing buying momentum.

Drawing a trendline support connecting the lows of 30 Dec 09 and 25 May 10, we see this support approximating 16c which happens to be a many times tested support from March to April this year.  16c is likely to be psychologically important as a support.  So, if it could hold up, it could provide the base for a rebound.

If the support at 16c breaks, the uptrend is well and truly over.  We could witness a massive selling down to 14c then (the 138.2% Fibo line), followed by 13c (the 161.8% Fibo line).  So, all eyes would be on 16c.

I have a very small position in Healthway Medical left which consists of rights shares and scrip dividends, average cost should be in the region of 12c, having divested >95% of my investment in the company earlier this year.  Good luck to all shareholders.

Singapore to allow stronger currency; economy shrinks: Update
Thursday, 14 October 2010

© 2010 - The Edge Singapore

Related posts:
Replies from AK71: Entry price for Healthway Medical.

Saizen REIT: Divestment of 3 properties.

Saizen REIT divested 3 more properties in its YK Shintoku portfolio:

Higashi Hakushima Y Building was sold for JPY 145,000,000 (S$2.3 million).  This property is located in Hiroshima, was built in March 2003 and comprises 19 residential units and 4 car park lots. It has an annual property income of approximately JPY 15.1 million or a gross yield of 10.41%. This was sold at a discount of approximately 7.1% to valuation.

Otemachi Y Building was sold for JPY 170,170,000 (S$2.7 million). This property is located in Hiroshima, was built in March 2001 and comprises 24 residential units and 2 car park lots. It has an annual property income of approximately JPY 17.0 million or a gross yield of 9.99%. This was sold at a discount of approximately 5.5% to valuation.

Kinyacho Y Building was sold for JPY 180,542,826 (S$2.9 million).  This property is located in Hiroshima, was built in February 2002 and comprises 24 residential units and 2 car park lots. It has an annual property income of approximately JPY 18.3 million or a gross yield of 10.14%. This was sold at a discount of approximately 4.0% to valuation.


A total of JPY 495,712,826 (S$7.9 million) was fully paid up by the buyers on 13 October 2010. The proceeds will be used for partial repayment of the YK Shintoku CMBS.

Read announcement here.

Related post:
Saizen REIT's properties: Would I buy?

SPH: Negative divergence.

SPH's volume exploded as it declared a dividend of 20c to be paid in December. However, the explosion in volume only managed to produce a doji yesterday.  Not good.  Higher volume but price remained stagnant which means that the bears were too strong for the bulls.  Today, price plunged below the 20dMA ($4.20) to close at $4.18 on comparatively high volume.

I guess the market does not like the announcement that SPH "will restore the remaining portion of the pay cuts introduced in April 2009. In addition, SPH will give a special one-off sum to staff to thank them for the sacrifice and contributions they have made. These payments will take effect by January 2011 and will effectively restore the pay cuts in full. They will be paid together with the usual increments, and profit and performance related bonuses." Read announcement here.

Looking at the MACD, we see lower highs formed as price formed higher highs.  This negative divergence is a warning that recent price appreciation in the blue chip could be unsustainable.  $4.20 could be support turned resistance.  This needs confirmation.  

Next support is at $4.13 which is underpinned by the rising 50dMA on top of being a natural candlestick support level.  The uptrendline approximates the 50dMA and the lower Bollinger band at $4.10.  A break below this trendline would signal the end of the existing uptrend.  We could see a new and gentler uptrend forming if the 100dMA (now at $4.00) or the 200dMA (now at $3.91) hold up as the next support levels.

I remember someone asking me if it was too late to buy into SPH yesterday, if it was too expensive.  I guess the answer could either be found in the fundamentals or the technicals.  Technically, $4.10 to $4.13 seem to be pretty ok entry prices but if these go, there could be as much as a 5% downside which could be covered by the 20c dividend in December anyway.  Just my thoughts.  Not an inducement to buy. Vested. ;-)

Related post:
SPH: Final dividend.

>1000 unique visitors in a day!

Not too long ago, I was impressed when a local investment blog proclaimed it was visited by 1000 unique visitors on that day. That was really something! After all, local investment blogs are usually not known for generating high traffic. We are in a very small niche and, to make it tougher, it is a very small niche in a very small country. ;)

Anyway, yesterday, on 13 October 2010, Wednesday, A Singaporean Stockmarket Investor (ASSI) was visited by 1069  unique visitors.  This is another milestone for my blog and I sincerely thank one and all who helped to make this a reality! I hope you enjoy reading my blog as much as I enjoy blogging. :)

14 Oct 2010 (Thursday)

 

Raffles Education: Golden cross.

On 4 Oct, I mentioned that "it looks to me like a positive divergence is forming between the downtrend in price and the MACD.  As price formed lower highs, the MACD has been forming higher lows". This picture has not changed.  The positive divergence is still quite obvious.

Price has been moving in a tight range between 28c and 29.5c of late.  The declining 100dMA is adding pressure to resistance at 29.5c.  To move higher, the resistance provided by the 100dMA would have to be taken out decisively.  Could this happen soon?

The rising 20dMA which recently completed a golden cross with the 50dMA tells us that the shorter term price movement has an upward bias.  The 20dMA is still rising and seems on track to form a golden cross with the declining 100dMA next. 

Today, volume expanded as a doji was formed, a hint that a reversal could be on hand.  This happened as a higher low was formed on the MFI, suggesting strengthening demand, and the RSI shows a similar pattern, suggesting stronger buying momentum.

The Bollinger bands are squeezing and the channel seems to be pointing upwards.  If price does break through the 100dMA to move higher, it would meet with initial resistance at 31c.  This is followed by the eventual target of 34c.

Related post:
Raffles Education: A trading opportunity.

Golden Agriculture: Going higher?

On a day that saw the STI broke the 3,200 mark, Golden Agriculture's share price shot through resistance to touch a high of 66.5c, closing at 65.5c as CPO made a new high at RM 2,930 (up RM30 or 1.03%). 65.5c was the high reached on 11 Jan 2010.

The question on many punters' minds is whether it would go up higher.  The upmove is accompanied by explosive volume (>60% higher than the volume two sessions ago).  Volume is the fuel that drives rallies. The MFI, a momentum oscillator based on volume and price, although has moved higher has yet to reach overbought levels.  Demand could push price higher but it is definitely riskier to go long at this stage.

The longer term uptrend is intact but I would be wary of a correction which could bring the price to test the 200dMA as support in time. To those who are still vested, stay nimble and good luck.

Palm oil companies rise on firm prices
Wednesday, 13 October 2010

© 2010 - The Edge Singapore

Related post:
Golden Agriculture: CPO at a new high.

SPH: Final dividend.

SPH is declaring a final dividend of 20c per share, comprising a Normal Dividend of 9c per share and a Special Dividend of 11c per share in respect of the financial year ended 31 August 2010. These dividends are on tax-exempt (one-tier) basis and will be paid on 23 December 2010. Together with the Interim Dividend paid during the year, total Dividend payout for FY 2010 will be 27c.

SPH remains my largest investment in a blue chip company. I continue to favour SPH amongst blue chip companies because of its generous dividend payouts.  At $4.22, the full year payout of 27c represents a 6.4% yield.

Highlights:

1. Net investment income of S$39.3m was a turnaround from a loss of S$6.2m for FY 2009.

2. Equity holdings consist mainly of M1and Starhub.

3. Paragon was revalued at S$2.28b as of Jul 2010.

4. Rental income increased by S$11.3m (9.2%) mainly from Paragon.

5. Final profit of S$154.2m was recognised for Sky@eleven, which obtained its Temporary Occupation Permit in May 2010.

6. Print advertisement revenue surged S$84.8m (13.1%) to S$733.1m.

7. Circulation revenue decreased by S$5.1m (2.4%).

See presentation slides here.

Related post:
SPH: Closing above $4.20.

AIMS AMP Capital Industrial REIT: Results of rights issue.

Valid acceptances:
506,083,252 units (98.6 % of Rights Issue).

Excess applications:
163,926,201 units (31.9 % of Rights Issue).

"The balance of 7,226,529 Rights Units which were not validly accepted, will be allotted to satisfy excess applications. In such allotment, preference will be given to the rounding of odd lots (if any) while directors of the Manager (the “Directors”) and Substantial Unitholders1 will rank last in priority.

"Successful subscribers with The Central Depository (Pte) Limited (“CDP”, and the securities accounts with the CDP, the “Securities Accounts”), will be sent, on or about 15 October 2010, a notification letter from CDP stating the number of Rights Units that have been credited to their respective Securities Accounts."  

Read announcement here.

It seems that people who applied for massive numbers of excess rights would be disappointed, myself included.

Related post:
AIMS AMP Capital Industrial REIT: Rights issue.

AIMS AMP Capital Industrial REIT: Buying more?

A reader sent me an email saying that he bought more of this REIT at 23c recently and he is dismayed that price has retreated. He asked if I am buying more of this REIT.  Well, firstly, 23c is the upper end of the trading range for this REIT and buying at 23c is buying at resistance.  Never a good move, technically speaking.

On 8 Oct, I said "Looking at the trade summary, of the 58 trades done, more than half (36) were buy ups at 23c but the volume was only 260 lots out of a total of 2,339 lots which changed hands.  This suggests to me that the buy ups at 23c lacked conviction.  23c is still a significant resistance to watch, it would seem."

Fundamentally, however, I don't see a problem with buying at 23c. With a DPU of 2.08c per annum, it still gives a handsome yield of 9.04%.  However, I have been corrupted by TA and I use the charts to help me plan entry points.

Looking at the chart, one can roughly make out that the old trading range has been "revived", XR.  It is quite obvious that the range is still 20c to 23c with the midpoint of 21.5c being an important, many times tested support. 21.5c is also where the rising 50dMA would be approximating soon.  This should lend strength to the support. So? I would buy more at 21.5c if I feel inclined to add to my position in this REIT.

Both the MFI and RSI seem to have formed lower highs which suggest a weaker demand and a weaker buying momentum.  Volume is thinner compared to the first half of September.  This suggests that the recent upmove in price was to due to a lack of sellers and not an abundance of buyers.  Current holders are unwilling to sell and people who want a piece of the pie have to pay a higher price. However, most potential buyers are probably waiting to see what the units would trade at once the rights units start trading on the 15th.

Technically, the uptrend is intact but the momentum oscillators suggest that we could see continuing weakness in price.  Fundamentally, the yield is probably the highest amongst industrial S-REITs.  Its gearing level is acceptable and it is still trading at a big 20% discount to NAV, XR. Buying more at 21.5c? I might.

Related post:
AIMS AMP Capital Industrial REIT: Nick's FA.
AIMS AMP Capital Industrial REIT: Resistance.

Hock Lian Seng: 30c support.

I mentioned on 5 Oct that I sold off some shares of Hock Lian Seng at the 32c target.  On 8 Oct, I said "notice that the 20dMA has been guiding the price of this counter higher? See the uptrend support is in between the 20dMA and 50dMA? This would be at about 30c.  The 50dMA is at 29.5c.  I would buy more at these price levels." Today, I bought some at 30c as price retreated.

Although the uptrend is still intact, could prices weaken further? Why not? The MFI is still in overbought territory while the MACD has just completed a bearish crossover with the signal line.  We could see price weakening to test the 50dMA at 29.5c or even the 200dMA at 29c. The latter being a long term MA should provide a rather strong support and I would probably buy more at 29c, if ever tested.

Fundamentally, this company is sound and investors are accumulating shares in the company which is quite obvious when we look at the OBV.  The recent price weakness as the counter retreated from a high of 32.5c on relatively low volume is an opportunity to accumulate.  What we are witnessing is a low volume pull back which shakes out the weaker holders.

Related post:
Hock Lian Seng: Retreating.