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ARA: Initiated long position at $1.22.

Friday, September 23, 2011

I initiated a long position in ARA today at $1.22 a share. This decision is based on my TA last evening. Fundamentally, at $1.22, the estimated dividend yield is about 4% but investing in ARA is primarily for growth.

The counter's share price touched a low of $1.20 before closing at $1.205 on the back of very high volume. Such high volume sell down usually has some momentum to follow through. So, we could see ARA's share price head lower next week.

Based on the TA I did last evening, the next supports are at $1.17 and $1.08.  However, seeing how strong the selling was today, there is a good chance that $1.17 will fold if it should be tested.

I am not putting in any overnight buy order, prefering to wait and see how things will unfold next week, given the strength of the selling.

What about the potential positive divergence? It is looking extremely dicey as the MACD took a nosedive today.

Although a fundamentally sound company, its share price could weaken further from here. It might be a good idea to wait for the dust to settle before adding to my newly created long position.

Related post:
ARA: Breaking support. Going lower?


Anonymous said...

i am really wondering why this counter is taking such a beating. their income is fixed fee + performance bonuses from the reits ghey are managing. bao tarn kind of business which did a bonus/rights issue recently.

i certainly hoped for the 98c which i had loaded last year. but unfortunately my average cost is higher than the currentprices, due to some top ups this year. sianz...


AK71 said...

Hi SnOOpy168,

Since you are also a shareholder of ARA, I guess I am in good company. :)

Less and less, I wonder why share prices go up or down. More and more, I want to know what to do if they go up or down. ;p

Fundamentally, as you have rightly pointed out, ARA's business model is bullet proof. However, technically, expecting more weakness in price is not unreasonable.

I will keep an eye on this and hope to buy more at stronger supports.

Anonymous said...

yes AK. this would be one of those rare counters which i would consider for capital appreciation. jusy need to have some motivational directions, to move i and top up more.

look forward to your regular updates and insight.


AK71 said...

Hi SnOOpy168,

Sounds good. ;)

Ah John said...

Hi AK, I think you still hold on this counter. For last year, no much move in price. No much improvement in EPS but keep growing in NAV. I think it's still good and someday price will goes up due to lower PB. How about your view? Thanks!

AK71 said...

Hi Ah John,

I sold my investment in ARA already. ;)

With the proposed changes to REIT management in Singapore. ARA's income is likely to be negatively affected in future.

I think Mr. Market is going to wait and see what happens next. :)

AhJohn said...

ARA now price at 1.56, should be fair valued.
Thinking will it be another VICOM, as its business model.

AK71 said...

Hi Ah John,

With the proposed changes by the MAS on how REITs are to be run in future, ARA's revenue could be negatively affected.

Have you factored that into your valuation of ARA? If you have, could you share this? :)

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