Recent purchases: First REIT, AIMS AMP Capital Industrial REIT and Healthway Medical.

It is a wet evening and the stock market wasn't all that inspiring either. So, I decided to look at what I have bought recently and how they are doing.

First REIT
I bought some at 95c and again at 96.5c. Volume expanded today as price closed at 97c. It looks as if the rising 20dMA is pushing the price higher. Of course, FA proponents would say that the CR status is causing its unit price to stay bouyant which I believe too.

At the purchase price of 95c, my average price would be 95c x 4 + 50c x 5 /9 = 70c.  DPU of 6.4c in 2011 means a distribution yield of 9.14%.  At the purchase price of 96.5c, my average price would be 96.5 x 4 + 50c x 5 /9 =70.67c. Distribution yield would be 9.06%. Pretty attractive.

If I were to be successful in my excess rights application, the distribution yield would improve, of course. I am actually somewhat tempted to buy more. I might put myself in the buy queue at 96c which is where we find the rising 20dMA now.

 

However, a word of caution from the TA side: the MACD has formed a lower high while price formed a higher high on 9 Nov. This is a negative divergence and price could come down in time. Of course, we know that date is probably 1 Dec when the counter goes XR. Although I do not see any reason why it would trade below the TERP of 70c, it could.  If it does, I would buy more. Simple.

AIMS AMP Capital Industrial REIT
I bought more of this REIT and I blogged about it recently on 23 Nov. At 21.5c and an annualised DPU of 2.08c in 2011, the distribution yield of my latest purchase is 9.67%. This is very attractive to me. I am in the buy queue at 21c as well but with the rising 100dMA providing support at 21.5c, the chances of price going down to 21c aren't all that high.

Of course, with the MACD dipping into negative territory, we could see momentum remaining weak. Stochastics has similarly dipped into negative territory. Overall, the suggestion is that although we might not see much upside in the near future, the downside is similarly limited.  This is a great investment for anyone who is investing for income.

Healthway Medical
Although I have told myself before that I do not have to trade the market anymore and I could just sit back while waiting for dividends to come in from my investments, I just could not resist buying some Healthway Medical shares when I saw the positive divergence between price and MACD. I blogged about it on 22 Nov.

Well, it still looks rather promising. Volume is drying up as price consolidates at 15c. Immediate resistance is at 15.5c as provided by the 20dMA. Breaking this would give us an immediate target of 16.5c.  17c is where we find the downtrend resistance while 18.5c is the eventual target if the potential double bottom is a valid pattern. Now, if the downtrend resistance remains unbroken, there could be more downside to come. So, my strategy is to divest at resistance. This is purely a trade.

Related post:
Healthway Medical: Prime for a rebound?

MBLM, Genting SP and Healthway Medical.

Walked a lot this evening after having dinner with a friend at MBLM. Yes, it is my new favourite mall.  So quiet, cool, clean and the service staff are all so friendly. Again, I was given free parking for 4 hours and so, I took a walk to MBS and, boy, that place was a ghost town.  Salespeople were looking at me expectantly as I walked past some of the shops. I felt bad almost for just being there.

Now, my legs have a nice mildly aching feeling from so much walking and I am feeling very sleepy. So, just a short post tonight before I hit the sack.

Genting SP
Formed a short white candle today. We could see a rebound and if it does happen, resistance is at $2.10 which is where we find the 50dMA. Anyone who is thinking of reducing exposure could consider doing so here. After all, price goes down a river of hope and rarely in a straight line.

With the 20dMA turning down and seemingly set to do a dead cross with the 50dMA, there could be more downside to come. After all, the momentum oscillators are downtrending but being oversold or bordering on oversold, we could see the formation of a floor. This floor could be at $1.85 if price resumes its downward trajectory.

Healthway Medical
In my blog post last night, I mentioned that the jury is still out on this one. The positive divergence I saw a couple of days ago is still in play.

The MACD histogram has turned green again. There is a struggle going on but with the MFI and RSI going generally higher, momentum has turned up. Even the OBV has turned up today, suggesting an increase in accumulation activity. If a rebound happens, first resistance is at 16.5c, the neckline of a potential double bottom formation, with an eventual target at 18c if the double bottom pattern is valid.

This short blog post has taken me longer than usual to complete: 50 minutes! My brain is working at 50% this evening. Good night and good luck!

Related post:
Tea with AK71: A day at MBLM.

AIMS AMP Capital Industrial REIT, Saizen REIT, Genting SP, China Hongxing, Healthway Medical and Golden Agriculture.

There is much talk about the military confrontation in the Korean peninsula which took place today. Could this be the reason why the STI sank 2%? Fear is in the air?

Seoul (The Korea Herald/ANN) - North Korea fired dozens of coastal artillery shells, some of which fell on the South's Yeonpyaong Island near the tense western inter-Korean border, the Joint Chiefs of Staff said Tuesday.

"The North fired dozens of artillery rounds from its Gaemeori western coastal artillery base at 14:34 p.m. In response to the military provocations, we fired back dozens of rounds with K9 self-propelled howitzers," JCS spokesman Col. Lee Bung-woo told reporters.

In the artillery firing, one soldier was killed and four marine solider were seriously injured. The military was trying to evacuate civilians on the island near the border. Several civilians were reported to have suffered injuries.

Read full story here.

STI at new November low, off 1.4%; 3,119 support
Tuesday, 23 November 2010

© 2010 - The Edge Singapore

I would keep calm and question how would the events affect my investments. As far as I could see, my investments are relatively unscathed. If there should be some irrational selling down, I could buy more. Let us look at some counters:


AIMS AMP Capital Industrial REIT
The recent buying up of units in this REIT at 22.5c and 23c evaporated today. On 25 Oct, I mentioned that "A reader asked if I managed to get more at 22c today. No, I didn't. I am waiting at 21.5c." Today, I got what I have been waiting for. My overnight buy queue at 21.5c was filled.

Fundamentally, there is no reason for a weakening of price here. Technically, it could weaken and I decided to wait and it paid off. Now, could it weaken further and I know for a fact that someone in LP's infamous cbox is waiting to buy at 1 bid lower than my purchase price today.

21c looks like a many times tested resistance of an earlier base formation and this could be a strong support if price ever goes that low. I would buy more then. In fact, I am already in the buy queue. The MACD is testing its own trendline support and I would be surprised if price goes much lower.

Related post:
AIMS AMP Capital Industrial REIT: Accumulation price?

Saizen REIT
This REIT's unit price has been showing some resilience lately which leads me to believe that most of the people who would sell at 15.5c have sold. Despite a rather large sell down of more than 5,000 lots today, unit price remained at 16c. I believe that is a sign of strength.

Looking at the chart, it seems that 16.5c is the upper limit of the Bollinger bands and at 16c, this REIT is trading above all the daily MAs except the 200dMA. I like the rising MACD. All the daily MAs are coming together, bunching together, creating much tension. One day, the spring would have to uncoil.

Genting SP
A friend has money tied up here and I am sure quite a few readers too including someone who wrote recently that he gave up on Saizen REIT and shifted his money into Genting SP instead. On 18 Nov, I mentioned that "If price does not recapture the 50dMA as support, immediate support is at $2 with the next support after that at $1.85."

The support at $2 cracked today and it looked, for a few moments, as if it could just cling on but the bears proved too strong and a wickless black candle was formed as price closed at $1.95 on high volume. $2 could now be resistance. The gap down on 12 Nov was indeed a bad omen.

With the 20dMA turning down and the MACD dipping into negative territory, we could see a further weakening of price here. $1.85 as a support could be tested in due course. Since peaking on 9 Nov, OBV has been in decline which suggests that distribution is ongoing. This could exert further downward pressure on the share price.

Genting Singapore off 2.9%; Support at $1.85
Tuesday, 23 November 2010

© 2010 - The Edge Singapore

China Hongxing
The support provided by the 200dMA has been taken out and price closed at 14.5c. If 14.5c fails to hold, we could see support at 13c tested in due course. 13c was the neckline of the double bottom formed in June/July and should be a stronger support.

MFI could be testing its uptrend support soon. RSI and Stochastics are both in oversold region. However, the MACD histogram's buy signal has been negated.  It would be prudent to wait for clearer signs of a reversal before wading into a long position here, especially with the support at 200dMA compromised.

Related post:
China Hongxing: Testing support.

Healthway Medical
Technically, the picture remains largely the same. However, the buy signal on the MACD histogram has been negated. Volume remains low and there was some selling down at 15c, the floor identified earlier.

Immediate resistance is at 15.5c which is also where the 20dMA is approximating. The jury is still out on this one.

Related post:
Healthway Medical: Prime for a rebound?

Golden Agriculture
On 18 Nov, I said "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."

Support at 70c was taken out convincingly today. The MACD continues to decline, pulling away below the signal line although still in positive territory. MFI and RSI have been forming lower highs.  All suggest that positive momentum is declining. 65c support could be tested sooner rather than later. Buy at 65c? As a hedge, sure. If 65c breaks, the next support is at 61c.

Healthway Medical: Prime for a rebound?

Although I would not buy more Healthway Medical shares based on its current fundamentals, technically, it looks like it could be an interesting trade.

On 25 Oct, I mentioned that "Two identical dojis formed one after another. One today and one in the previous session. Both closed at 15.5c. Both with a low of 15c. It would seem that Healthway Medical's share price has found a floor at 15c."  Read blog post here.

15c is being tested once again as support. This is the fourth session in a row and volume has been declining.  The 20dMA has stopped declining and has flatlined. Price has stopped moving downwards in recent sessions. The floor at 15c has gained in strength.

Look at the MACD and we see that it seems to be forming a higher low. The MACD histogram has turned green, a buy signal. The MACD forms a positive divergence with the decline in share price. This is a suggestion that we could be seeing a reversal soon. Also, Stochastics is oversold and we could see a bullish crossover soon.

In the event of a rebound in price, we could have the formation of a double bottom with the neckline at 16.5c. If the double bottom is valid in such an instance, the eventual target price is 18c which would break the counter out of the down trending channel.

With lacklustre fundamentals, this would purely be a trade.

Related post:
Healthway Medical: 3Q 2010 results.

China Hongxing: Testing support.

China Hongxing's share price has been declining since hitting a high of 22.5c in mid September. The lower highs and lower lows formed since then have created a down trending channel. Today, price touched 15.5c, a strong support level provided by the 200dMA.

Will price decline further? Well, that momentum is negative is quite clear as the MACD is below zero and still declining below the signal line. However, the MACD histogram has turned green which is a buy signal.

However, any upward movement in price is probably a rebound and not a trend reversal. Any rebound could hit the channel resistance and could be capped at 18c or so. Before that, expect resistance at 17c, which is where the declining 20dMA and the rising 100dMA will be approximating soon.

What hints of the possibility of a rebound is the low volume pull back (i.e. as price retreated, volume has generally been reducing). The selling lacks conviction. Looking at the OBV, we do not see any signs of distribution. Stochastics currently in oversold region and looks like it could be upturning next.

Good for a trade? Possibly.

Tea with AK71: Fallen tree paralysed traffic.

These were a couple of photos I took when a tree fell across all the lanes on Jalan Bukit Merah after an early morning thunderstorm. It brought traffic to a standstill. This was on 18 May and I blogged about it in "Tea with AK71: Life".

Here, we see a car making a u-turn going back the way it came. There was also an entire line of SBS buses on the extreme left lane as they could not move on. All the passengers had to get off the buses and look for alternative transportation.

Working hard to saw up the fallen tree to unblock the road. It must have taken at least a couple of hours before the road was cleared of debris. The metal fencing on the center divider was totally destroyed.

The weather has been getting more extreme lately and we have been told that it would get a lot worse in December. Reminds me of all the movies about climate change.

See "Tea with AK71: Just storms?"

Email exchange with a reader on some REITs.

I have been receiving more emails from readers in the last few weeks. Although I try to answer all of them in a timely manner, it might get harder to do so in time. So, apologies in advance for late replies.  

Having said this, certain emails posed questions to which the answers could be found in my blog. Just use the Search function at the top of my blog and chances are you would find the answers. Thanks for helping me to help you. :-)

Here are some bits from an email exchange I had with a reader recently on certain REITs which might be of interest to some of us:

Reader (R): 

I was wondering about Saizen, with the price at 16.5c now.. is it still feasable to enter or is it too high? 

AK:

Saizen REIT? Well, at 16.5c, I am still not a seller but I am not a buyer too as I am already vested. If I were not vested in the REIT now and if I am happy with a 6.5% yield on freehold Japanese properties, I would buy some first. That's just me. Disclaimer applies.

R:

Hey ak very sorry i have so many questions :) May i know how the 6.5% yield for saizen reit is calculated? Thanks. Appreciate it.

AK: 

See this blog post for details:
http://singaporeanstocksinvestor.blogspot.com/2010/11/saizen-reit-1q-fy2011-results.html

R:

Hey thx!! Yea saizen would be more affordable for me than first REIT.. Which is stronger from ur point of view? Thx :)

AK:

Stronger? Hmm.. They are in two different sectors and countries. Cannot compare. They have different benefits and risks.

R:

Also, Another small question would be, do you think that the jpy/sgd exchange rate will affect the earning numbers for saizen reit in the near future?

AK:

I expect the JPY to stay strong against major currencies in the near future. Over a longer period, it is harder to say. Stay nimble.

R:

I see, i agree with that, lets say i have 10k investable assets atm how much would u say i put into reit?

how much of each reit do you own? Im really interested in Saizen and Aims but im not too sure which would be better.

AK: 

If you have $10k in cash and it is money you do not need in the next few years, you could consider putting all of it into REITs if you are after a regular income.

Saizen REIT is my largest investment although its distribution yield is estimated at only 6.5%. This is because I think the Japanese real estate market has limited downside from here and things would get better very soon.

It is also because the properties are freehold in nature. So, they are perpetual income generators. Once the last CMBS is refinanced, it would probably lead to an upgrade by rating agencies and we could see some capital appreciation too. It should trade at a 5% distribution yield in line with most REITs in Japan which means there could be a 20% upside in unit price.

AIMS AMP Capital Industrial REIT is my second largest investment. Its forecast DPU for 2011 is 2.08c.  At the current unit price of 22.5c, distribution yield is a nice 9.24%. This could possibly explain partially the recent buying interest. Many pension funds are invested in this REIT. These are long term investors and provide stability to the REIT's price. 

However, we have to remember that the REIT is invested in relatively short term leasehold properties in Singapore (where most industrial properties have land leases of 30 years). The REIT has to continually renew its leases but this could take the form of acquisitions to keep the average lease of its portfolio healthy. More fund raising? Yes, I think so. 

So, the yield of 9.24% is not real and we have to give some of that back. However, comparing apples with apples, if Sabana REIT is able to price its IPO at $1.05/unit which means a yield of 8% or so, we could see AIMS trading closer to an 8% yield eventually and this means there could be a 10% upside in price.

I would not put all my money in a single REIT or in any one single company. That is risky. You have to decide how much you would put in each. Good luck.

AIMS AMP Capital Industrial REIT: Buy ups continue.

Out of 2,642 lots which changed hands in the last session, 2,022 lots were bought up at 22.5c and 23c.

DTZ also said there has been a slight shift in investment prospects across sectors. Industrial properties, which have been buoyed by a strong recovery in exports, now offer more opportunities than retail. However, offices still remain the most attractive real-estate segment in Asia Pacific. Read article here.

Technically, the 20dMA has flattened while the longer term daily MAs continue to rise. The Bollinger bands have been narrowing. The RSI, a measure of buying momentum, has been forming higher lows. If I were to hazard a guess, we could see the price of this REIT going higher in the not too distant future. The immediate target I have remains at 26c. Support at 22c seems rather strong. If it should fail to hold, the rising 100dMA should provide a stronger support at 21.5c and you might see me going on a buying frenzy then.


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

Suntec REIT: OCBC retains BUY call.

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.

Suntec REIT kept at Buy by OCBC; Best office proxy. Revises issue price assumption down to $1.30 per unit from $1.50, but fair value estimate slips only marginally to $1.63 from $1.64 due to lower-than-expected cost of debt.
Friday, 19 November 2010

© 2010 - The Edge Singapore

Related post:
Suntec REIT: MBFC.

Sabana REIT: IPO at $1.05/share.

Sabana REIT prices IPO at $1.05 per share: IFR. Based on the offer size of 605.8 million units, Sabana REIT will raise $636.1 million from the IPO.
Friday, 19 November 2010

© 2010 - The Edge Singapore

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