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Capitaland: Testing support at $3.36.

Tuesday, April 12, 2011

I initiated a long position in Capitaland today at $3.38 and $3.36. This was after what I said in the last blog post on this counter: "The Fibo Fan connects the low of 17 March and the high of today. Now, what I am interested in are the positions of the golden ratios in the next few sessions. 38.2% would be at $3.38 and 50% would be at $3.32 in the next session. Notice how the 20dMA seems to coincide with the 50% line? This is likely to be a strong support, if tested. In between these two golden ratios, we find the 50dMA, still declining but gently so, at $3.36. This could provide some support as well."

So, am I going to put in another buy queue for tomorrow at $3.32? Nope, looking at the charts at the end of every day is what I do and the 50% Fibo Fan line is at $3.33 tomorrow. Before that, however, we could see price supported as it closes the gap at $3.34 (1 April). So, buy queues for tomorrow would be at $3.34 and $3.33 for me.

If I were to choose between Capitaland and CapitaMalls Asia, it would seem that the latter has stronger technicals. However, it would be wise not to put all the eggs in one basket, I guess.

Coincidentally, OCBC Investment Research just did a piece on Capitaland and I would like to share what they said here. Remember to take everything with a pinch of salt:
Chinese worries overwrought - BUY. With the Chinese government’s plan to build 36m low-income homes by 2015 and its increasing determination to curb property prices, we recognize the down-side risks from Chinese property prices. However, given CAPL’s current share price, we believe Chinese residential worries on CAPL are likely overwrought due to two reasons. First, Chinese residential exposure only takes up around 12% of CAPL’s total book assets (FY10, ex. cash). In addition, we believe major projects, such as the Paragon, are well thought-out and likely resilient in a weak market. We update our assumptions and maintain a BUY rating with a revised fair value of $4.10 (at parity to RNAV) versus $4.05 previously. Read complete report here.


RL said...

Hi AK,

If I am not wrong, your strategy is to invest in high yield stocks to generate passive income.

However, it seems to me that CapitalMallAsia and CapitalLand are not giving as high div as others.

Any reasons why you are interested in these stocks?


AK71 said...

Hi RL,

One of my strategies is to invest for income. I also invest for capital gains.

When I started this blog in December 2009, I was at the tail end of a series of investments for capital gains which started months before. In early 2010, I divested big chunks of my investments in Healthway Medical and Golden Agriculture for capital gains.

Then, I concentrated on investing for income as I saw opportunities in undervalued REITs with high yields.

With the recent weakness in the share prices of certain developers, I am beginning to see value and, so, I invest accordingly. Wish me luck. :)

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