Healthway Medical and First REIT: Good news and good bad news.

First, the good news. In my last blog post on Healthway Medical, I mentioned that "If the buying interest follows through, we could see its share price rising to test resistance provided by the merged 100d and 200d MAs and that is at 17c." The counter closed at 17.5c today on expanded volume. Momentum oscillators have all turned up. Beyond 17.5c, I expect resistance to be found at 18.5c, a many times tested support and should be a strong resistance.

I expected 17c to be a strong resistance as it is where we find the merged 100d and 200d MAs as well as the downtrend resistance line.  So, a trading position entered on 22 Nov last month at 15.5c was divested at 17c today. I made some pocket money and that is the good news. Do I have any interest left in the company? Yes, I still retain 5% of my original stake in the company and I will continue to monitor its progress or the lack of progress in time to come.

Now, what's a good bad news? Well, it is a piece of news which seems bad but which is actually good. I am referring to the declining unit price of First REIT.

I mentioned in an earlier blog post that I see long term support at 67c as this was underpinned by the rising 200dMA. We see that 67c is also where we find the 123.6% Fibo line. Price, today, touched 66c which is where we find the 138.2% Fibo line.  38.2% is one of the three golden ratios and provided a stronger support.

My original intention was to wait to buy at 67c but, last Friday, I changed my mind and queued for the rights at 16c instead at the influence of fellow finance bloggers who bought the rights at 16.5c. Guess what, my buy queue for the rights at 16c was filled today. So, my effective cost would be 16c + 50c = 66c which means a yield of 9.7% based on the 2011 DPU guidance of 6.4c by the REIT's management. I am a happy man.

Am I not worried whether the price would decline further? No. Why should I worry? I cannot do anything to influence the price movement of the REIT. If the market is willing to sell a good thing to me at a lower price, I would buy. It's simple. So, would I buy again if the price declines further. Yes, I would. When?

If we look at the chart, we find the 150% Fibo line at 65.5c and the 161.8% Fibo line at 64.5c. As 65.5c is only a half cent difference from 66c (my effective buy price today), I would not bother putting in a buy queue at that price. I have put in a buy queue at 64.5c and I would be very surprised and very pleased if it could be filled in the next few days. At 64.5c, the yield would be 9.92%!

Some may be puzzled by how someone who bought more of First REIT at 95c and 96.5c, CR, could feel pleased with the declining unit price in recent sessions. Well, it is true that the TERPs of my purchases at 95c and 96.5c are 70c and 70.7c which are now in the red. However, let's be rational.

The recent weakness in First REIT's price is due to the selling down by one of its cornerstone investors, Golden Rainbow International Limited, which owned more than 9% of the REIT. I won't be surprised if they continued to sell down today. What's the reason for their massive sell-down?  Well, only they know the reason, I don't. It is a waste of time for me to guess why they have decided to sell.

The REIT's CEO, Dr Ronnie Tan Keh Poo, who is also a director, however, has been buying up the REIT's nil-paid rights as they got sold down. I like it when a REIT's management's interests are aligned with unitholders'. Dr Tan is unlikely to throw his hard earned money down the drain.

Technically, today's volume at 8.04m units is the REIT's highest in its history. However, notice how the black candlestick formed this session is not as bearish as the three black candlesticks before it. It actually started in the middle of the previous session's candlestick and it also formed a lower wick unlike the previous three candlesticks. Support is at hand. This is another reason I said that if my buy queue at 64.5c could be filled, I would be very surprised and very pleased. Good luck to us all.

Related post:
Healthway Medical: Broke out of resistance.
First REIT: Waiting at 67c.

Saizen REIT: Insider buying continues.

Saizen REIT remains my single largest investment in the stock market and I firmly believe that it offers value for money. I also believe that investing in a REIT where the management's interests are aligned with that of the unit holders is a big plus.

On 9 Dec, Mr Chang Sean Pey, bought 200 lots in the open market at 16c /unit.  Mr Chang now has 2,600 lots. Insider buying in Saizen REIT has become more the norm than exception.

Saizen REIT has 1,119,352,395 Units issued as at 12 November 2010. Apparently, more have exercised their warrants and the REIT has 1,122,909,819 Units issued as at 9 December 2010. It has 323,447,598 Warrants outstanding as at 9 December 2010.

Related post:
Saizen REIT: Insider buying and divestment.

AIMS AMP Capital Industrial REIT: Revised DPU and fair value.

This perhaps comes a bit late, the result of my blog being a one man show. Reading the Market Update dated 23 November, "Sale of 23 Changi South Avenue 2 Singapore above book value" which is expected to be completed by January 2011, I went and found out how much this property contributed to the REIT's rental income for the year ended 31 March 2010.  It was S$1.4549 million.  This is 3.49% of total income for the year ended 31 March 2010.

Doing some back of the envelope calculation, prior to the rights issue for the purchase of 27 Penjuru Lane, the DPU was 2.15c.  Post rights and acquisition, the estimated DPU was given as 2.08c.  If we remove 3.49% from the DPU of 2.15c, that would give us 2.075c.  So, post rights and acquisition, we would get a DPU of approximately 2c.

As the sale of 23 Changi South Avenue 2 will be completed only in January 2011, its contribution to rental income for the quarter October to December 2010 is unaffected.  With the contribution from 27 Penjuru Lane coming in, I expect the income distribution that would take place in March 2011 to be 0.52c per unit as per guidance.  For subsequent quarters, it should be about 0.5c per unit, everything else remaining constant.

However, with a bigger cash balance on hand, I fully expect the REIT's management to do some asset enhancement to increase lettable space for properties which have not maximised their plot ratios or to make new acquisitions which are NPI yield accretive in nature.  The former would be easier than the latter, I suspect, given the strong recovery in real estate values in Singapore.

At the revised DPU of 2c, the REIT still provides an attractive distribution yield of 9.3% at a unit price of 21.5c which is where I hope to load up more. There are still more positives about this REIT and there is probably more upside than downside in the next 12 months. After revising the annualised DPU to 2c and expecting the REIT to trade at an 8% yield, the fair value I ascribe to the REIT is now 25c /unit.

Note that I did not take into consideration the other positive developments in the Market Update which is the 100% occupancy achieved for 15 Tai Seng Drive (85.7% as of 31 March 2010) and 23 Tai Seng Drive (84% as of 31 March 2010).  Conservatively, this should add about $400,000 to the REIT's annual rental income.

Read Market Update.

OCBC upgrades S-REIT sector to overweight. Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year.  
Friday, 10 December 2010

© 2010 - The Edge Singapore

Related posts:
AIMS AMP Capital Industrial REIT: 2Q FY2011

Sabana REIT: Touched 92.5c.

Sabana REIT touched 92.5c, the support provided by the 150% Fibo line, and I was there waiting with my overnight buy queue but not many lots were sold down at that price and I did not get any. It would seem that the selling pressure is finally easing off. Am I sure of this?

Look at the OBV and we would see a double bottom pattern forming. Distribution activity has definitely declined. Look at the candlestick formed today and we would see a dragonfly doji. Market participants tried to sell down the REIT only to see price recovering to where it started the session. The bulls are fighting back. All this happened on a day with higher volume. Encouraging.

What do I think would happen from now? Well, there is no guarantee that the REIT would not weaken in price but the selling is definitely less intense now. I am hazarding a guess that, everything remaining constant, 92.5c would be a strong support.

Related post:
Sabana REIT

First REIT: Waiting at 67c.

I was waiting at 67c, the long term support provided by the 200dMA, with my overnight buy queue but First REIT was just teasing me. It went to 67.5c and there it stayed. Market participants seemed quite happy to buy up at 67.5c which would provide a yield of 9.48%.

I was in LP's cbox and some asked me to consider buying the nil-paid rights instead since they were trading at 16.5c. Including the 50c to exercise the rights, the price is only 66.5c, 1c cheaper than the mother share's 67.5c. In fact, LP (the blog master of Bully the Bear) and JW (the blog master of Wealth Buch) both bought the nil-paid rights at 16.5c today. I will have to consider this suggestion. From the queues today, it would seem that there is relatively strong support for the rights at 16c. Getting the rights at 16c would mean a unit price of only 66c and a yield of 9.7%!

Now, why are the nil-paid rights being sold off so cheaply? I had an idea that there are probably some who do not wish to fork out more money to exercise the rights. However, JW's broker sent him an email and it mentioned: "First REIT - SGX is selling the rights for those who are not entitled to the Rights Units (Investors with Foreign addresses)". So, there are also some who are not able to accept and pay for the rights. It would seem that First REIT has many such investors. Would they be interested in buying some First REIT units to avoid dilution? They just might.

This REIT is definitely a strong buy at these levels.

Related post:
First REIT.

Healthway Medical: Broke out of resistance.

On 29 Nov, I mentioned that "I am wary of being whipsawed out. With the MACD hugging the signal line, this counter could go either way. However, with a picture of low volume pull back intact, comparing the high volume sell downs in mid October, when support at 16c was broken, to the current thin trading volume, the suggestion is that most of the weaker holders have been shaken out."

Healthway Medical has been seeing some buying interest in the last few sessions. Today, price broke out of resistance provided by the declining 20dMA at 15c and closed at 15.5c with 1,504 lots bought up at 5.05pm. A total of 13,794 lots changed hands today. If the buying interest follows through, we could see its share price rising to test resistance provided by the merged 100d and 200d MAs and that is at 17c.

It would seem that the positive divergence observed in the recent past is playing out nicely.

Healthway Medical Corp, which runs medical and dental clinics in Singapore and China, is speaking to potential investors who have expressed an interest in taking a stake, a company executive said.
Friday, 10 December 2010

© 2010 - The Edge Singapore

Related post:
Healthway Medical: Support at 15c broke.

AIMS AMP Capital Industrial REIT, First REIT, Golden Agriculture, CapitaMalls Asia and Sabana REIT.

AIMS AMP Capital Industrial REIT: For some time now, I keep saying that this REIT is undervalued. A reader sent me a little snippet from Kim Eng and I would like to share it here with everyone:

One of few undervalued players around. AA-REIT is still trading at a 20% discount to book even after a steep $41m write‐down in the value of its investment properties in FY Mar10. The capital values of industrial properties in Singapore have since recovered from the global financial crisis. AA-REIT’s gearing ratio is comfortable at 35%, with no near‐term refinancing need. Any further write‐down is unlikely. That AA-REIT is still trading at a discount to its peers is likely due to its relatively small market capitalisation and turbulent history in 2009 which saw AMP Capital Investors and AIMS Financial Group emerging as Manager after a major equity cash call and asset injection.

Near‐term catalyst. Asset enhancement opportunities abound for AA-REIT as at least half of its 26 properties have plot ratios that are under-utilised. Capital recycling exercise is ongoing and the potential sale of its single asset in Japan could be a near‐term catalyst.

Technically, we could see the unit price of this REIT trading sideways for a few more weeks with support at 21.5c and resistance at 22.5c. It seems that a symmetrical triangle is forming and it would not surprise me if its unit price trades higher in 1Q2011. I bought more recently at 21.5c and I am in the queue to buy more.

First REIT: I bought some First REIT units at 69c today. This gives me a yield of 9.28% based on the annualised DPU of 6.4c for 2011.  The next support level is at 67c which is where we find the rising 200dMA. Going by the trading volume in the last two sessions as long black candles were formed, we could see 67c tested in the next session. I have entered my buy queue. Why am I so bold? Fundamentally, this is a REIT with a strong track record. Technically, buying at supports in an uptrend is the way to go.

Many could be holding off their purchases in spite of the attractive yield at current price levels. If my guess is correct, they are probably conserving their resources to apply for as many excess rights as possible. Why buy at 68.5c if we could get excess rights at 50c? They should remember, however, that how many excess rights we are likely to get depends probably on how many mother shares we hold in the first instance. Those who fail to get the excess rights they want could cause a strong bounce upwards for First REIT's unit price once the rights exercise is completed.

Golden Agriculture: Its price continues to defy gravity as it rose on low volume to break the previous high of 78.5c to close at 79c. Volume is the fuel which drives a rally. I question the sustainability of the recent levitation act. Of course, Mr. Market is always right and I could be proven wrong this time round and if it does happen, it won't be the first time.

Immediate support in case of a pull back is at 74c and I see strong support at 70c. The MACD has formed a lower low and it remains to be seen if it would form a lower high. The negative divergence between rising price and falling volume is still valid. However, the rising MFI and RSI show that momentum is positive and support is strong. Any pull back is probably a good opportunity to accumulate.

CapitaMalls Asia: Price closed lower at $1.92 on higher volume. All technicals point to a high probability of price moving even lower in the near future. Any rebound, however unlikely, would be a chance to reduce exposure. For shortists, rebounds could be salivating opportunities for them to make some money here.

Closing at $1.92 is at support provided by the 138.2% Fibo.  38.2%, being one of the 3 golden ratios, is quite strong and if it breaks, the other 2 golden ratios are 50% and 61.8%.  The 150% Fibo and 161.8% Fibo lines are at $1.88 and $1.85 respectively. If the selling pressure keeps up, we could see prices go to those levels. Then, I would be sorely tempted.

Sabana REIT: Closing at 93.5c is exactly where I mentioned that 138.2% Fibo line would be providing support. Selling pressure is not letting up although volume has reduced on this down day. It recorded the second lowest daily volume since the REIT started trading.  This should be a relief for unit holders.

Could it really test the 150% Fibo line at 92.5c? Your guess is as good as mine but that is where I have entered my BUY queue. Wish me luck.

Related posts:
AIMS AMP Capital Industrial REIT, Golden Agriculture, Sabana REIT.
First REIT
CapitaMalls Asia

First REIT: Nil-paid rights start trading.

First REIT's nil-paid rights started its first day of trading at 22c but closed at 19.5c. This probably affected the mother share as First REIT was sold down to 70.5c. Why? Well, if we could buy the nil-paid rights at a bargain, why buy the mother share? Sell the mother share, buy the nil-paid rights and make some money on the difference.

So, if someone bought the nil-paid rights at 19.5c, including the 50c to be paid to exercise the rights, the total price is only 69.5c. Why should he pay 70.5c for the mother share?

Fundamentally, there is no compelling reason to sell below 70c as the yield is a handsome 9.14% at this price. However, if it does get sold down, I see immediate support at 69c which is where the rising 100dMA would be approximating soon. I might buy more then.

Related post:
First REIT: XR and fair value.

AIMS AMP Capital Industrial REIT, Cambridge Industrial Trust, Golden Agriculture, Healthway Medical and Sabana REIT.

I know of a few who are waiting to collect more units of AIMS AMP Capital Industrial REIT at 21.5c. With an estimated DPU of 2.08c in 2011, it would have a yield of 9.67% at 21.5c. Very attractive.

Technically, volume has been very thin and momentum has declined. The rising 100dMA is providing support at 21.5c and I doubt that this support would be compromised.  If it does break, the next support is at 21c which is where we find the rising 200dMA approximating in the next 2 or 3 weeks. An attractive passive income generator with limited downside for me, I hope to accumulate more at supports.

Cambridge Industrial Trust's charts look bad.  Since 22 October, volume has been higher on black candle days. In recent sessions, volume spiked as price broke the support provided by the 100dMA. The REIT is experiencing a rapid downtrend.

The 20dMA completed a dead cross with the 50dMA and is on course to form another dead cross with the 100dMA. The 50dMA is beginning to turn down. The MACD continues its decline below the signal line in negative territory. Momentum is clearly negative. The OBV shows heavy distribution going on.

The preferential offering last month to existing unit holders at 53.1c was unattractive and closing at 52c today, unit holders would have lost money on those units. The rising 200dEMA should provide immediate support at 50.5c in case of continuing selling pressure.

Golden Agriculture formed a wickless white candle, closing at 77c. Could it retest its high of 78.5c?  I will wait to see if the MACD and MFI are able to form higher highs. Unless volume expands significantly, the MFI is more likely to form a lower high.

I maintain that the negative divergence is a warning of a possible pull back and it could be a strong one. So, I will remain cautious.

Healthway Medical's positive divergence is still in play and the MFI has formed a higher low and seems on track to form a higher high. Immediate resistance at 15c. Overcoming this could see price test 16c, the resistance provided by the declining 50dMA.

Sabana REIT's volume expanded today as it formed a wickless black candle to close lower at 94c, indicating that further price weakness is expected. Judging by the bearish attitude Mr. Market has towards this counter, I have decided to put in my buy queue at 92.5c, support provided by the 150% Fibo line, 50% being one of the three golden ratios.

At 92.5c and an annualised DPU of 8.63c for 2011, yield would be about 9.33%. Not too bad.

Related posts:
AIMS AMP Capital Industrial REIT: 2Q FY2011.
Cambridge Industrial Trust: Equity fund raising again.
Genting SP: A rebound or a reversal?
Golden Agriculture: Levitation act.
Healthway Medical: Support at 15c broke.
Sabana REIT: Fundamental Analysis.