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CapitaMalls Asia: Full year FY2010 results.

Thursday, February 17, 2011

A good set of numbers overall. Anything negative? Well, judging by the less than enthusiastic response from market participants, the proposed dividend of 2c per share probably failed to impress.

Although the share price of CapitaMalls Asia has been relatively resilient compared to other counters in the STI in the recent sell down, the outflow of funds from emerging markets is probably a dampener on its performance too. I received the following in my mailbox today:

For YTD 9-Feb-2011 there was a funds outflow of US$ 4.7 billion from Emerging Markets (China – US$ 2.19 bn; India – US$ 0.98 bn), with China and India accounting for 67% of the total funds outflow. The USA was the main beneficiary with net inflow of US$ 23.61 bn. [Source: EPFR Global, Data as at 9-Feb-2011].

The presentation slides are comprehensive and what I like about them the most is the candid manner in which the management shared the lessons learned from their 1st generation through 3rd generation malls in China. Although CapitaMalls Asia has malls in Singapore, Malaysia, India and Japan too, the largest market would still be in China eventually and they plan to have as many as 100 malls in China within the next 3 to 5 years.  Already 5 more malls would be completed in 2011. The management is now able to replicate their successful model in other parts of China quickly and reap returns at a faster pace.

See presentation slides here.

What about the technicals?  One look at the candlesticks and we would get the shivers. A bearish engulfing candle. Not good. However, notice the very long lower wick? This suggests some bullish buying which helped to push the counter to close at $1.92 which is where we find the 50dMA. It does not, however, change the fact that the bears have won the day.

I next look at the momentum oscillators.  The MACD's uptrend is still intact and it is still in positive territory although it does look like it could be making a bearish crossover with the signal line soon. The MFI and RSI have both turned down and are testing 50% as support. The mild upward bias of the MFI since the low of 31 Jan suggests that there is some demand and support for the counter.

What would I do? If price were to move higher, market participants who were waiting to sell at $2.00 like I was would sell into strength and, very likely, resistance such as $1.98 would become tougher to crack. Basically, a lowering of expectations would make lower resistance levels stronger. Of course, if these were to break, price could fly. I would set my sell orders at resistance. No surprises there.

What if the price moved lower which could very well happen? Taking a peek at the weekly chart, the MACD is still in negative territory but it is on the verge of forming a bullish crossover with the signal line. The MFI and RSI have both risen out of their oversold territories. Having said this, it is amply clear that the longer term downtrend is still intact. $1.83 could just be a floor.

There is one session left tomorrow before the weekly chart is complete but if price were to retest $1.83 successfully a second time round, I would expect strong buying interest from market participants.

Related post:
CapitaMalls Asia: Buy signal.


Ken Tan said...

nice post :)

AK71 said...

Hi Ken,

Thanks for the compliments. Do visit again soon. :)

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