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Sabana REIT: Still waiting for a 10% yield?

Sunday, May 15, 2011

Sabana REIT has an annualised distribution yield of some 9.68% now, with DPU at 8.81c and unit price at 91c. In an earlier blog post, I mentioned that this is a better buy at the current price compared to AIMS AMP Capital Industrial REIT.

Sabana REIT has lower gearing, higher interest cover ratio and better quality assets overall; all these with a distribution yield that is comparable to AIMS AMP Capital Industrial REIT. Buying at 90.5c or 90c (if we were lucky enough in the last session) would close the difference in yield between the two REITs.

Now, many, including myself, would like to buy more of this REIT if it should give a 10% distribution yield which would imply a unit price of some 88c. Is this possible? An earlier blog post suggested that this would be a very strong support. Read it here.

88c a unit? A salivating proposition. Some would know that I bought more units in the last session at 90.5c. Why not wait for 88c? Well, TA shows where the possible supports and resistance would be, it does not say if they would be tested. I always hedge.


Continuing on TA, let us look at the daily chart for Sabana REIT. This chart has been adjusted to take into account the recent income distribution. It is interesting to note why 90c has proven to be a strong support in the last session. It approximates the low of 31 March 2011.

Next, look at the declining volume over the last two weeks as price declined from a high of 93.5c (pre-adjustment would be 95.5c). A low volume pull back. Are the bears losing steam? Indeed, in the last two sessions, we saw the formation of dragonfly dojis. These are bullish candlesticks but single stick patterns could be unreliable.

What about the MACD? It has completed a negative crossover in negative territory. A double negative! Do I see worry lines on your forehead? Well, I am inclined to believe that Sabana REIT has gone into a trading range. Its downtrend was broken earlier in April.

In sideways trading, I would look at the Stochastics. What do we see? It is in oversold territory. Could it get more oversold? It could, of course. However, TA is about probability and the probability of further downside is smaller now. That is for sure. For sure? Confirm? Double confirm. Yes, there are certain things we can still be sure about. Isn't that a relief? Hossan Leong would be happy.

90c would be a sweet price to get more units of Sabana REIT and I have put in my buy order for tomorrow. Good luck to fellow unitholders.

Related posts:
AIMS AMP Capital Industrial REIT and Sabana REIT.
Sabana REIT: Bought more at 91.5c.

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