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AIMS AMP Capital Industrial Trust: Weekly chart.

Friday, February 18, 2011

I am going to plant some nightmarish thoughts in your head about AIMS AMP Capital Industrial Trust's unit price. Anyone who has been following my blog would know that I like this REIT for its high yield and how I think that risks are minimal what with the management refinancing at lower interest rates of 2.1+% and having no loans due until 2014. Even with the latest acquisition and share placement, the REIT's numbers remain healthy and I have estimated a mildly diluted DPU of 2c. At 21.5c, that is a distribution yield of 9.3%. Also, remember that this DPU is estimated based on managment distributing 97% of the REIT's distributable income against some other REITs which distribute 100% of their distributable income. OK, sounds good. Where is the nightmarish thought?

Look at the weekly chart. See the black candle formed this week and on much higher volume to boot? See how the MACD plunges towards zero and how the MFI is already in oversold territory? The OBV and RSI have similar bearish stories to tell.

On 15 Feb, I said that "I, however, am not entertaining any grand delusions that price might not weaken further once the counter goes XD. Using Fibo lines gives us a clue as to where the supports would be next. 20.5c is where we find 123.6% and 20c is where we find 138.2% as well as 150% (which is at 19.8c). As both 38.2% and 50% are golden ratios, I expect 20c to be a very strong support level if ever tested." Well, I am happy to report that the 21c has been holding up admirably and I still believe that my decision to buy in at 21c was right. The purchase would also be entitled to an advanced DPU of 0.285c.

So, would price weaken next week? I truly do not know but the possibility exists. The next distribution in June would probably see a DPU of 0.215c (0.5c - 0.285c) at the most although I suspect that it would be lesser as the income contribution from Northtech would take some time to kick in. So, with 11% more units in issue from the placement and if contribution from Northtech would not kick in till the next quarter, I expect the DPU in June could be 0.215/111 x100 = 0.1937c. Not very attractive? A reason for selling? Perhaps.

As I am investing in this REIT for income for the longer term, believing that its attractive yield is sustainable, I am not shaken by any short term fluctuations. If unit price were to test 20.5c or 20c, I am buying more.

Related post:
AIMS AMP Capital Industrial REIT: Oversold.


Anonymous said...

AK. You really have a way to shock me on a Sat morning. Nonetheless, better a bitter cup of truth then the heart attack when it is unveiled at the wrong time.

For me, I felt that if the fundamentals and FA (income + free cash flow vs payout etc) makes sense, and with regular and quarterly payouts, with this yield of over 8% (yeah, i know that yours is higher). I am very happy.

Wish list - a bit of cap appreciation via Mr. Market or shareholder-positive rights issue, will be very nice for us.

Have a good weekend...


AK71 said...

Hi SnOOpy168,

Well, it is the truth that price could decline but it is not a given. ;)

At the current moment, I don't see anything wrong with the REIT and would accumulate on any weakness. :)

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