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First REIT: Simply amazing.

Wednesday, January 12, 2011

If it simply amazing how this REIT's price is pushing higher by the day. How much higher could it go? Why did it touch a high of 77c on 2 occasions and did not go higher?

Well, if we draw a set of Fibo lines, it becomes clear why 77c is resistance. It is where we find the 123.6% Fibo line. However, 23.6% is not a golden ratio and we could expect stronger resistance to be found at 78.5c which is where we would find the 138.2% Fibo line.


Of course, with both the RSI and MFI in overbought territories, we would not be wrong to question if the upward movement could continue. Although the OBV shows no sign of accumulation ending, we could see a pull back to correct the overbought condition. In such an instance, I expect 75c to be resistance turned immediate support.

I still have a fair value of 80c for this REIT based on FA.

Unaudited financial results of First REIT for the fourth quarter and full year ended 31 December 2010 will be announced on Friday, 21 January 2011.
Related post:
First REIT: Retesting high at 75c.

20 comments:

Isaac said...

Great counter. 9% div yield at my buy price plus 10% capital appreciation. :)

AK71 said...

Hi Isaac,

Congratulations! I share your sentiments and joy. This is a strong one, for sure. ;)

Happy Woof & JJ said...

Hi AK71,

Thanks for shariing on this counter. I read about on you blog and did my own research.

Good counter and great yield.
Bought into it in Dec 2010.

Thanks again

CJ

Anonymous said...

Hi AK,

Hock Lian Seng share price.. Shooting up today. Wonder if the recent extension of MRT line has something to do with it? :)

regards
Allan

AK71 said...

Hi CJ,

Hey, you are welcomed. I am happy that my blog has been helpful.

Please remember to visit my sponsors, especially the ads by Nuffnang. ;)

Thanks! :)

AK71 said...

Hi Allan,

I have a small long position in Hock Lian Seng and I noticed the rising share price last night but was too tired to do another TA. Will look at it tonight.

Congratulations! :)

Anonymous said...

Hi AK,

Multiple MA crossings.. :)
many people pounce on it at 0.330 this morning. I've 50 lots vested for so long I almost wanted to sell a few days ago. Lucky I held on :)

regards
Allan

AK71 said...

Hi Allan,

My investment is smaller than yours, if I remember correctly.

Patience is definitely a virtue. If we know that what we are vested in is fundamentally sound, holding on cannot go very wrong. Once again, congratulations! ;)

Singapore Man Of Leisure said...

Hello AK71,

Isn't it nice to come back from holiday and see your investment in First Reit grow?

I've benefitted from your blog. So rest assured I will click on your Nuffnang ads. It doesn't cost me a cent. Click click here I come. Must remember the source when I drink :)

AK71 said...

Hi SMOL,

Pardon me for shortening your name to 4 letters. It is more for economy and I do not mean any disrespect. :)

It is good to see most of my investments holding up well. Even Saizen REIT is showing some life.

Thanks for visiting my sponsors and I look forward to hearing from you again. :)

Anonymous said...

I am very pleased. For the first time in history, it is trading above its NAV. Hopefully Mr Market will re-rate this very stable and defensive Trust with a decent track record to be in line with its peers. 7.5% yield should be reasonable - we have to remember that it has a very concentrated counter-party so if Lippo goes so too will FR.

I expect more acquisitions this year.

Cheers,
Nick

(Vested)

AK71 said...

Hi Nick,

A 7.5% yield would mean a unit price of 86.5c with a DPU of 6.4c. You are even more bullish than OCBC Research. ;)

As for Lippo going under, I don't think it is likely. If Lippo went under, Indonesia would suffer big time. It is too big to fail. :)

Anonymous said...

AK,

since u were gone, i suffered from WITHDRAWAL SYMPTOM. so, WELCOME back ! hope u had a lovely surprise coz while u were gone, FR price kept climbing.

KM

AK71 said...

Hi KM,

I hope you are feeling better now. Hehehe... ;p

Yes, it is nice to see First REIT doing so well. I am still holding. 80c is just a matter of time. :)

Anonymous said...

Hi AK71,

Thanks for sharing on this counter=)

High volume has been changing hands at 0.765, could it a new support for this counter?

regards
abc178

AK71 said...

Hi abc178,

I still think of 75c as the most probable immediate support in case of a pull back, being a former high that was taken out recently. :)

Anonymous said...

Hi AK,

Recently I've bought into First Reit at 76c after reading your blog and did some research. I have noticed that you mention 80c to be it's NAV. If one intend to build up his portfolio via Reits counters, then should he be selling off the shares even when the counter reaches it's NAV?

LT

AK71 said...

Hi LT,

80c/unit is the fair value, not the NAV/unit. 80c/unit is somewhat higher than the NAV/unit. ;)

See the following blog post for the NAV/unit, XR:
First REIT: Rights issue.

When do you want to liquidate your position depends on your motivation for investing in a counter in the first instance.

With regards to First REIT, I might consider reducing my long position if the unit price is above the fair value of 80c/unit. Of course, what is fair value is pretty subjective and would most probably differ from one analysis to another.

Anonymous said...

There is no reason not to purchase REITs above its NAV if -

1) The dividend yield is still good. This either implies that the trust is highly geared or the asset NPI yield is above average (due to higher risk).

2) The REIT has posted reasonable growth in asset valuation over the past few years. If this is the case, it is only natural for the REIT to trade above its NAV in order to price in its growth.

3) The REIT unit price is highly liquid. Unlike properties, REIT units can be bought or sold with ease. Hence, it is not unreasonable for the market to demand a premium for this liquidity as compared to the price of its hard assets.

4) The Trust is lowly geared which leaves room for more acquisition and hence boosting its ROE and DPU further.

This applies to any business trust (port, shipping, funds etc) as well.

Personally, I don't pay much attention to the absolute NAV value. I am more interested in the TREND of the NAV value - is it increasing over the past 4 years or has it been fluctuating etc. A good REIT/Business Trust should exhibit growing NAV.

Cheers,
Nick

AK71 said...

Hi Nick,

Thanks for contributing your point of view, as always. :)

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