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Suntec REIT: OCBC retains BUY call.

Friday, November 19, 2010

On 27 October, I mentioned "It would be interesting to see what kind of financing structure would be decided upon. It is my assumption that Suntec REIT would issue rights to fund the purchase instead of having a share placement exercise if it is sincere about improving the distributions for unitholders. It could also gear up to 45% (on existing properties, excluding the proposed acquisition) and get about $600 million in loans which would reduce the size of any accompanying rights issue."

See circular to unitholders here.

It seems that there will not be any rights issue as the acquisition would be financed with the proceeds from a private placement of new units and a S$1,105.0 million debt facility. I generally do not like share placements as it does not allow minority unitholders to take part. However, if the new units are issued at a price close to the market price, it is not too big an issue. The acquisition is expected to increase Suntec REIT’s DPU marginally from 8.611c to 8.699c. So, I guess I won't have to do anything here.

OCBC published this today while maintaining its BUY call:
Debt facility secured at very competitive all-in cost of debt of 3.12%; timing, issue price of private placement equity portion dependent on market conditions.

Related post:
Suntec REIT: MBFC.

Sabana REIT: IPO at $1.05/share.

The retail tranche of the IPO, which starts later on Friday, will close on Nov 24 and the units will begin trading on Nov 26, IFR added. Sabana controls 15 industrial properties in Singapore with an aggregate floor area of about 3.3 million square feet.

The manager of the REIT had forecast in a draft prospectus a distribution yield of 8.45% for 2011 and 8.48% for 2012 based on the minimum offer price of $1.00.

Based on the IPO price of $1.05/share, distribution yield for 2011 would be about 8.05%. Still respectable. Good luck to all trying their luck for this IPO.

Marco Polo: Down channel.

On 25 October, I mentioned that a relative of mine bought into this counter because of a BUY call issued by Kim Eng. Well, the uptrend which is approximately defined by the rising 50dMA was broken a couple of days later. The counter tried to recapture the 50dMA but failed to do it successfully. It has been trading under the 100dMA which is at 43c in the last couple of sessions.

A down channel is quite obvious and the channel support could see the counter test 41c next. MACD is in negative territory and just completed a negative crossover with the signal line. Any upward movement in price could just be a rebound within the down channel, therefore.

The thin trading volume is probably a consolation to bulls but without any buy ups accompanied by meaningful volume, price could drift lower.

Related post:
Marco Polo: BUY call by Kim Eng.

Tea with AK71: Harry Potter at Bugis.

Day 3 of my vacation. I sent my car in for maintenance and took a bus to watch "Harry Potter and the Deathly Hallows: Part 1" at Bugis. I was somewhat apprehensive because I have read some not so good reviews about the movie but I was convinced by a friend that I should watch it for myself to form my own opinion. Being a fan of Harry Potter, it didn't take too much effort to persuade me.

So? I think it is quite good but the pace could have been faster and there should have been more effort to educate viewers on certain background information. Even if someone had watched all the first six instalments, without having read the books, he could have been quite lost in certain parts of the movie. Personally, I read all the books a long time ago and I had to try quite hard to remember certain bits myself. Anyway, I guess I would have to wait for Part 2 now. In the meantime, I might read the books again.

Holographic wanted poster of Sirius Black, Harry's godfather. Cool! This was angled from the left:
This was viewed head on:
This was angled from the right:
 Gallery of Harry Potter movie posters.
 Harry Potter et al flying up the escalators!

Related post:
Harry Potter and the Deathly Hallows: Part 1

Golden Agri, Kencana Agri, Healthway Medical and Genting SP.

Thursday, November 18, 2010

On 12 Nov, I mentioned that Golden Agriculture could see its support at 70c tested sooner than later. That support was tested today. Its share price bounced off the support and closed at 72c, ending the session 1c lower.

I still see a negative divergence between price and volume. The MACD has completed a bearish crossover with the signal line but being in positive territory, it suggests that the retreat in price could just be a correction. In such a case, we could see price weakening further to 65c, the next major support, if the support at 70c fails to hold up.

On 22 Oct, I mentioned that I was wary of Kencana Agriculture because its chart "seems to display classic signs of negative divergence between price and volume, price and MACD, price and MFI as well as price and RSI.  The shorter term 20dMA seems to be flattening."

This picture has hardly changed as its price declined to 42c, the support provided by the 20dMA, on relatively low volume. This was after three attempts to break resistance at 45c without success. I could be wrong but we might be seeing the formation of a rising wedge. If such a pattern is valid, the downside target could be at least 39c, which also seems to be a rather strong support.

On 13 Nov, I mentioned that "With the MACD, MFI and RSI all in their respective downtrends, a retest of the support at 15c is rather likely" for Healthway Medical. The counter ended the session at 15c today. The down channel's support in the next few sessions is probably at 14.5c and we could see this tested if the support at 15c fails. I still feel that 15c is a relatively strong support and if it holds, we could see the formation of a double bottom.

However, with the MACD having completed another bearish crossover with the signal line in negative territory and without any sign of a positive divergence, it could be rather risky to buy in at this stage. The downtrend might have to run its course.

Genting SP's fortunes have taken a turn for the worse. On 12 Nov, I mentioned that "If the price starts at $2.18 or higher in the next session and manages to break resistance at $2.21 which is the 50% Fibo line as well as the 20dMA, we could have a recovery. Having said this, the MACD has been moving lower as price moved higher, presenting an obvious picture of negative divergence. I would treat any rebound as a chance to reduce exposure."

Well, price started at $2.14 in the next session and closed lower, forming a black candle that almost completely engulfed the white spinning top. Closing at $2.05 today, it has gone below the support provided by the 50dMA. The counter had not traded below the 50dMA in many months.

The negative divergence between price and the MACD is playing out. With the MACD approaching zero, momentum could quickly turn negative as the lower highs on the RSI suggest weakening buying momentum. If price does not recapture the 50dMA as support, immediate support is at $2 with the next support after that at $1.85.

Related posts:
Saizen REIT, First REIT, Golden Agriculture, Genting SP.
Healthway Medical: 3Q 2010 results.

Tea with AK71: Marina Link @ B1.

My second day of vacation and I visited the new Marina Link @ B1. This is a relatively short underground link up between Marina Square and the Esplanade MRT station. I had to go down two very long escalators to get to the shops and on the other end is Esplanade Xchange, another underground mall.

To promote Marina Link @ B1, Marina Square is giving a $5 voucher for every $20 spent in the shops there. Good deal! If we spend another $30 in any shop in Marina Square (for a total of $50), we will get free parking for the first 3 hours (worth $4.40 on a weekday), limited to 100 redemptions a day. Needless to say, I got them all. ;)

See map here.

Here are some photos I took, of course, with my trusty Samsung mobile phone's 5.0 megapixel built in camera.

Escalator number 1.
 Escalator number 2.
 Part of Marina Link @ B1.
 This was where I had lunch.
$10.90 for Pork Cutlet and Ice Lemon Tea. Pork Cutlet was good but the mayo was too heavy. I am not usually crazy about Ice Lemon Tea but it was very good!
 Esplanade Xchange at the other end of Marina Link @ B1.
 Entrance to Marina Link @ B1 from Esplanade Xchange.
Had another one and a half hours to kill after lunch, shopping and all the redemptions. So, I went to Millenia Walk and looked the electronics and had a haircut at QB House for $10 before coming back home. Sunny day makes me drowsy. The stock market seems lethargic today too. Haha. :)

Tea with AK71: A day at MBLM.

Wednesday, November 17, 2010

What is MBLM? It stands for Marina Bay Link Mall. This is the underground mall at MBFC, the development which K-REIT and Suntec REIT would co-own with each having a 33% stake.

I was wondering where should I spend my vacation which starts today and I decided to stay in Singapore instead of going overseas. I would spend time going places here and help to stimulate the local economy. Singapore's domestic economy has been said to be tiny. So, I am doing my patriotic duty by spending my vacation money here instead of going away to a foreign land. Ahem.

So? I like the mall. Shops on both sides, it has a wide centre aisle with high ceiling. It is defnitely less claustrophobic compared to the Citylink Mall (which I somewhat dislike). In time, with the completion of the Downtown Line for the MRT, I am sure MBLM would be just as busy as Citylink Mall but the generous space allowance should be enough to cope with increased human traffic. MBLM also serves the residents of The Sail and Marina Bay Residences condominiums. In fact, half the shoppers at MBLM I saw today were foreigners, probably expatriates, with kids.

Go visit MBLM before it becomes crowded. Now till end of the year, spend $80 at MBLM and we will get $15 shopping voucher plus 4 hours of parking for free. There is also an instant lucky dip to win iPads and iPhones but that's for weekends only and I was so hoping to win an iPad. :(

So, I got my $15 voucher, free parking, wrapping paper for Christmas and 2 lucky draw chances. Hope that I would win 1st prize which is for $8,000 worth of shopping vouchers! Then, I would go to the Apple retailer in the mall and get my iPad, Macbook Air etc. Wah.... Day dreaming. Nice!

Anyway, with 4 hours of free parking, I had time to burn as MBLM is smallish with a floor plan shaped like the letter "L" and not many shops were ready for business. I walked to Marina Bay Sands (MBS) to explore the shopping mall.  It was my second time at MBS which has a much bigger shopping mall.  This time round, more shops were open and I didn't have to pay an exorbitant $10 per hour for parking my car! That makes me happy.

Apparently, MBS is now giving free parking for the first 3 hours but one would have to spend $200 at the mall to qualify. I won't qualify. Free parking at MBS costs more than MBLM, if you know what I mean. MBS is for the well heeled, obviously. I like MBLM more which might say something about me. ;)

These are some photos I took with my free Samsung mobile phone which comes with a 5.0 megapixel camera built in. Pretty good shots, aren't they? I still remember when digital cameras were 1.3 megapixel in resolution.

After spending almost 4 hours at Marina Bay, fully utilising my free parking privilege, I went back to Tiong Baru and had a bowl of freshly made bean curd (dou hua) for 60c. Where to find? Tiong Baru Market lor.

Now back in my bedroom, with the air-conditioning set at 25 deg celcius and blogging. Time for a nap! I am a happy man. :)

An email from another reader in his early 20s.

This email just came in this morning and is part of a string of email exchanges. It was a happy coincidence seeing how I just put up a blog post earlier regarding another email which I received from a reader in his early 20s too:

Hey AK, anyways i would like to take this opportunity to thank you for ur efforts to keep the blog updated. appreciate the time and i feel your posts are very enriching. Im only 21 this year :) been speculating in shares with my sibling's account.

Most of my friends are spending alot, sometimes i dont feel that im in the same league as them, im thinking stocks, investments, property and most of them are clubbing.. haha..

By the way, what do you do for a living?

Do you think 2011 will have as many investment opportunities than 2010?

My reply to the last question which I would like to share with all my readers was:

There will always be investment opportunities. Will there be more or less? I don't know but I think that is not important. Why? If there are more, could we take advantage of all of them? If I could identify a couple of opportunities and make money of those, it should be enough for me.

A letter from a reader in his early 20s.

I received an email from a reader in his early-20s.  I was very pleased to read it as this is one of the things my blog hopes to do and that is to be a positive influence in the lives of ordinary people, encouraging them to save and invest for a more secure financial future. I am sharing the email here and I hope it would encourage younger readers to plan early and be financially prudent:

:) Read your posts, about financial planning. I realised that in recent months, i have pay for focus on the need to grow my money, even though it may be just 3000/year. I used to spend a lot, sales mean must buy. Now, i focus only on spending for trips to get the experience, and less shopping. Other than that, i did not spend much, and even find reckless spending, and credit buying quite disgusting.
travel means saving on accomodation through hostel or couchsurfing.

Aiming to save 50% of my salary, ex-CPF. 2600 salary, save 1k/month, 500
monthly expenses, 300 to parents, and 200 for whatever bills/medical expenses.

i think the current generations, not a lot of people focus on saving....
 with my friends spending on branded stuff. haiz.

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

Tuesday, November 16, 2010

Singapore's economy is humming along nicely.  Manufacturing is doing well.

A REIT which I like very much is an industrial properties S-REIT, AIMS AMP Capital Industrial REIT.  With the economy chugging along and exports doing well, this REIT is likely to benefit.

At 10.43AM, there was a single transaction buying up 8,652 lots at 22.5c. That's big money.  At the end of the day, 19,221 lots changed hands making AIMS AMP Capital Industrial REIT the top volume REIT today. 15,090 lots were BUY UPs of which 752 lots were BUY UPs at 23c which is the upper limit of the current trading range and the resistance to watch.

My immediate target for this counter is 26c. How did I arrive at this value? Fundamentally, this would mean a yield of 8% with an annualised DPU of 2.08c for 2011. This, I feel, is fair for a smallish REIT with leasehold industrial real estate in Singapore. Technically, 26c would be the upper limit of the next trading band of 23c to 26c, if we believe that the current trading band is 20c to 23c which has been the case since the counter's CR days.

"Singapore's non-oil domestic exports (NODX) surged a better-than-expected 34.5 per cent from a year earlier, in line with a rebound in shipments out of Asia in October."  Read article here.

First REIT: Bought more at 95c.

Monday, November 15, 2010

Last Friday, I mentioned that "I have been waiting the whole day for someone to sell me some First REIT units at 95c but to no avail. Some people are puzzled why am I so interested in getting some at 95c when I am already vested at 40+c and 70+c. Well, with the proposed acquisitions and rights issue, buying more even at 96c could be quite rewarding. With an average price of 70c, post rights, if we were able to buy at 95c now, a yield of 9.1% is not impossible with an estimated full year DPU of 6.4c in 2011. As the XR date is 1 Dec which is almost 3 weeks away, I will continue to wait patiently at 95c. Wish me luck."

To all my readers who wished me luck, thanks! My overnight buy queue at 95c was filled. Now, I will wait to buy at a lower price if there are people who are willing to sell cheaper to me. This is quite possible since the XD date is 1 Dec.  Many things can happen within these two weeks.  When I mentioned this, someone said that he does not think it is probable since the counter is offering deeply discounted rights. I replied that there might be people who cannot afford to pay for the rights and might choose to lock in their capital gains now by selling the units they have. Never say never.

Technically, the doji formed when First REIT's price touched a high of 99c on 9 Nov was a warning of a possible reversal. It also formed lower highs on the MACD, the MFI and the RSI on that day.  This has painted a picture of negative divergence between price and all the momentum oscillators. OBV confirmed the bearish picture as it plunged, suggesting massive distribution.

So, I have suggested that I would be buying more if people are willing to sell to me cheaper. At what price would I buy more of? Using Fibo lines, I see 138.2% at 93.5c and 161.8% at 92.5c.  Assuming that I buy more at 92.5c, I would have an average price of 92.5c x 4 + 50c x 5 /9 =68.9c and a yield of 9.29% with an estimated annualised DPU of 6.4c in 2011.

92.5c, I am waiting.  Once more, wish me luck. ;-)

Related post:
Saizen REIT, First REIT, Golden Agriculture and Genting SP.

Saizen REIT: Insider buying and divestment.

Saizen REIT's co-CEO and director, Mr. Chang Sean Pey, bought 200 lots at 16c per unit on 12 Nov, last Friday. Continual insider buying is what we have come to expect for this deeply undervalued REIT.

Today, Saizen REIT announced the divestment of another property in YK Shintoku's portfolio: Reef Suite. This is for a cash consideration of JPY 123,184,249 (S$1.9 million), a discount of 6.7% to valuation. This property is located in Sapporo, was built in September 2005 and comprises 18 residential units and 15 parking lots. As of 30 June, this property had an occupancy rate of 84% and brought in JPY 13.2m in rental revenue (gross yield of 10.7% at the selling price). After this divestment, the net outstanding loan of YK Shintoku amounts to approximately JPY 4.9 billion (S$76.7 million).

Read announcement here.

The general picture of increased buying interest in Saizen REIT continued today. 16c is still the battle zone between bulls and bears. 16c remains a significant resistance to overcome as that is where we find the flat 200dMA approximating.

With most of the sell queue at 16c bought up, we just need to see a moderately high volume up day to take out the relatively shorter sell queue at 16.5c. I have an immediate target of 19c in case this happens but, before that, expect rather stiff resistance at 18c, the high in January 2010.

Related post:
Saizen REIT: 1Q FY2011 results.

China Hongxing: Testing support.

The last time I blogged about China Hongxing was on 26 Oct. I concluded by saying "The 100dMA has just completed a golden cross with the 200dMA at 16c.  This is likely to be strong support level and would be ideal as an entry to go long on this counter. In the meantime, 17c is immediate support and could be a nice hedge in case price does not test support at 16c." Since then, the rising 100dMA has moved up further and is now providing support at 16.5c which was where price closed today after having touched an intra day low of 16c.

The lowering in price has been accompanied by a lowering in volume. Looking carefully at the MFI and RSI, it seems as if they are forming higher lows of late. A low volume pull back underway? Looking at the OBV, there is no heavy distribution. The overall picture shows that China Hongxing's price might have found a floor. It is hard to say that it has bottomed since the MACD is still declining below the signal line in negative territory.

If 16.5c fails to hold up as immediate support, the next support is at 15.5c as provided by the 200dMA.

Related post:
China Hongxing: Correction.

Courage Marine: 3Q 2010 results.

Sunday, November 14, 2010

A good set of  numbers for 3Q 2010:

1. Revenue improved 54% from the same period last year from US$ 5.506m to US$8.474m.

2. For the 9M 2010, the company turned in a total gross profit of US$9.964m compared to a loss of US$3.245m for 9M 2009. If we remember, it was 4Q 2009 which saved the company, allowing it to have a small net profit for the full year.

3. EPS for 9M 2010 is at US0.85c compared to a loss of US0.27c in the same period last year. EPS for the full year would probably be more than US1c.

It would have to take a very bad 4Q 2010 to destroy whatever the company has achieved in positive numbers thus far in 2010.

A reader asked if there would be a sell down tomorrow. Although I do not see any reason why there should be a sell down, the carnage in the SSE last week could affect the STI and Courage Marine's price. After all, a large portion of the company's business is Chinese. The sell down would be due to negative sentiments, however, and not because the company's fundamentals have taken a turn for the worse. In case of a sell down, I would accumulate. Why?

Courage Marine's management has a track record for sharing the the fruits of its labour with shareholders. Last year, despite ending the year with a small net profit of only US$75,000, it declared a dividend of US0.47c per share due to its strong cash position. Net profit for 9M 2010 is already US$ 9.012 m! Even if 4Q 2010 does not turn in any profit which I believe is unlikely, net profit this year is already 120x higher than the whole of 2009!

Dividend payout for 2010 could be quite a bit higher than 2009.

See results here.

Related posts:
Courage Marine: Riding the waves of recovery.
Courage Marine: Steady as she goes.

Tea with AK71: How rich is rich?

Someone asked me how to be rich? I asked him what did he mean by rich? That got him thinking. Is a person rich if he has $1m in cash? Is a person rich if he has $1m in cash and a property worth $1m at the same time? Or is a person rich if he has a net worth of $5m? What am I trying to say? To me, rich is a relative concept.

If we keep comparing ourselves with the next richest person, it can never end. Of course, if we became the richest man in the world, then, there is no one left to compare with but how many Bill Gates can there be? Stop comparing with others.

I think the most important measure of wealth in this world has to be "happiness"!  Yes, I remember how I shared a moment with my younger sister about how our family was not doing very well when we were in our teens. She said "But we were happy."  That was a simple statement but a very poignant one. What is the point of having lots of money but be unhappy?

Having said this, we should not be so blind as to think that we can be happy without money in this modern world as money problems could surface sooner than later. So, we still need to make money, to save money and to make our money work harder for us. This is so that we do not have to worry about money matters in future. The idea is to have enough passive income to take care of our daily needs and some wants.

Of course, what each person needs is different. So, how much passive income is required is also different from person to person. Just do not forget that being happy is more important than the pursuit of money. If we can be happy every day of our lives, we are truly rich.

Related post:
Passive income: A higher purpose.

Healthway Medical: 3Q 2010 results.

Saturday, November 13, 2010

Healthway Medical's results came in rather weak, as expected:

1.  Revenue declined 6.2% in Q3 compared to the same period last year.  For the first 9 months, revenue declined 8.3% compared to the same period last year.

2. Staff cost increased 19.2% in Q3 compared to the same period last year.

3. Profit before income tax decreased 87.3% to $568k in Q3 compared to the same period last year.

4. Cash flow from operations is negative for the quarter at -$1.278m.

5. EPS for the quarter is 0.01c, remaining the same as the last quarter but down from 0.29c in the same quarter last year.

See results here.

We are still in the tunnel but do we see a tiny glow at the end of the tunnel?

A. Although revenue declined 6.2% compared to the same period last year, this is a smaller decline compared to Q2's decline of 12.3%. 

B. Staff cost increase of 19.2% is also smaller than Q2's 22.9%. 

C. Profit before income tax in Q2 was only $165k. So, Q3's $568k is an improvement. 

D. Cash flow from operations in Q2 was a negative $2.3m compared to a smaller negative $1.278m in Q3. 

Perhaps, points C and D are the most important indicators that things could be stabilising. However, it is still too early to say for sure.

Having said this, the proposed diversification could throw a spanner in the works. One could only hope that Healthway Medical is not biting off more than it could chew.

On 25 Oct, I suggested that Healthway Medical's share price could have found a floor at 15c. I also mentioned that any rebound would be a good chance for stale bulls to reduce exposure. 17c was never hit as the rebound in price went as high as 16.5c before declining again.

The last session saw Healthway Medical closing at 15.5c. With the MACD, MFI and RSI all in their respective downtrends, a retest of the support at 15c is rather likely. Consolation? Volume has been declining in the last few sessions. So, we could have a soft landing.

Related posts:
Healthway Medical: Second quarter results.
Healthway Medical: Business diversification.
Healthway Medical: A floor at 15c?

Rickmers Maritime: DPU in Q3 down 5%.

Mainboard-listed Rickmers Maritime said the dip is because of lower charter revenue from containership Kaethe C. Rickmers, as well as an increase in interest costs.

Read article here

Rickmers Maritime Trust says it will distribute 0.57 US cents (0.74 cents) per unit to unitholders for the third quarter and nine months ended 30 September 2010 (3Q2010), the same DPU as in 2Q2010.

The declared distribution, representing a payout of 13% of income available for distribution, will be paid to unitholders on 15 December 2010.

CapitaMalls Asia: Uptrend broken.

Connecting the lows of 7 May and 25 Aug gives us the uptrend support line of CapitaMalls Asia.  This support was retested on 8 Nov.  Price bounced off and went higher for a couple of days only to decline again. In the last session, the counter traded the whole day below this support line. The uptrend is broken.

The 20dMA, after completing a dead cross with the 50dMA, seems set to form another dead cross with the flat 100dMA.  The longer term 200dMA is still descending.

The MACD has formed a lower high in negative territory as it turned down away from the signal line.  Momentum is negative. MFI and RSI have both formed lower highs, suggesting a lack of demand and buying momentum. The OBV suggests continual distribution. All technicals confirm that the downward trajectory in price has some strength.

In the event of a continuing downward movement in price, stronger supports are at $2.04 and $2.00 thereabouts. Immediate resistance at $2.12.

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