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Cache Logistics Trust: A retest of 91.5c low?

Wednesday, March 2, 2011

This is one counter I have been patiently waiting for price to reach a level I consider relatively attractive. Technically, it is looking quite possible that my wish could come true.


Today's trading volume is the highest since 1 Nov 2010. A long black candle was formed. Coupled with increased volume, this is very bearish. We could see the recent low of 92.5c tested next. Could we even see the low of 26 May 2010 at 91.5c tested? There is a chance.


I have put in my buy queue at 91.5c. With an annualised DPU of 7.76c, it would mean a distribution yield of 8.48%. This is lower than AIMS AMP Capital Industrial REIT's 9.76% (with a DPU of 2c at the current price of 20.5c).

A lower distribution yield is acceptable to me due to the REIT's much lower gearing of 23.7% and much higher interest cover ratio of 9.3x. Cache Logistics Trust's numbers look stronger than AIMS AMP Capital Industrial REIT's (gearing of 33.6% and interest cover ratio of 5x). Buying at 91.5c is still a premium of 2.8% over its NAV/share of 89c but this is marginal and acceptable for a lower risk investment.

Related post:
Cache Logistics Trust: Weakness after XD.

4 comments:

Drizzt said...

there is no diff between 94 cents and 91 cents really

AK71 said...

Hi Drizzt,

Isn't there a 3c difference? ;p

Well, I guess how much we are willing to pay for something depends on how much we want it. I want some Cache Logistics Trust but I am not hungry for it. :)

WK said...

IPO at 88c... just wait there lo. if u r going for div income, does matter how much it u r goin in, as long the yield is appealing. anything above 8% is good lah...

AK71 said...

Hi WK,

Yes, the yield is important to me since I am investing for income and it is one reason why I have been waiting for the unit price to fall.

Actually, I found the IPO price somewhat pricey as well since, during that time, the forecast annualised DPU was lower.

Another thing that held me back then was how the unit price was at a premium to its NAV too.

How would we have known that this REIT would do so well since its IPO? Just one of those things. ;)

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