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Banks are slashing jobs!

Thursday, July 28, 2011

Banks are retrenching. Should we be worried? Is a recession round the corner? Your guess is as good as mine. Best to have our emergency funds ready just in case. If we are thinking of buying shares on the cheap, make sure we have a war chest ready as well. Oh, make sure it is not empty. ;)

HSBC will slash more than 10,000 jobs as part of the global banking giant's recently announced cost-cutting drive, a report said.

Broadcaster Sky News said senior executives at the bank "are close to finalising costs cuts that will result in thousands of jobs being axed across the bank's sprawling global empire."

The report on Wednesday said London-headquartered HSBC may chop more than 10,000 positions across its operations, citing unnamed sources.

A bank spokeswoman in Hong Kong on Thursday declined comment on the report.

Read full report here.

Swiss banking giant Credit Suisse said on Thursday that its second quarter net profit plunged 52 percent, adding it would cut about four percent of its workforce worldwide.

Net profit for the three months ending June fell to 768 million Swiss francs (US$957 million, 667 million euros) from 1.6 billion francs a year ago, amid "disappointing performance" by its investment bank unit.

Concerns over the European debt crisis and weakening global economic indicators led to weak client demand and a poor trading environment, said the group.

Read full report here.

Good luck to us all.

Cache Logistics Trust: 2Q 2011.

The decision to use funds from the partial divestment of Saizen REIT to invest in Cache Logistics Trust at the right prices a few months ago continues to be rewarding.

The management has declared a DPU of 2.086c for 2Q 2011 which is much higher than the DPU of 1.71c the same quarter last year in 2010. At the high of 99c/unit hit this morning, the REIT had an annualised distribution yield of 8.43%. Income distribution will go XD on 2 August and is payable on 29 August.

Current gearing level is 29.1% and this will increase to 30.2% upon completion of acquisition of a warehouse facility in Loyang belonging to Air Market Express. This acquisition is expected to contribute 0.05c in DPU in time.

I also like how its cost of borrowing has come down with its all in interest cost now at 3.92% compared to 4.37% in the last quarter. This contributes to a higher level of distributable income.

Some other numbers:
NAV/unit: 88c.
Interest cover ratio: 9.2x

Interest cover ratio came down from 9.5x in the last quarter. This suggests that interest expense in dollar terms has gone up faster than net property income (NPI). However, at 9.2x, it is still much healthier compared to AIMS AMP Capital Industrial REIT, Cambridge Industrial Trust or even Sabana REIT. So, I am not unduly worried. Just have to keep an eye on things, as always.

See announcement here.
See presentation slides here.

Related post:
Cache Logistics Trust: 1Q 2011.

Sabana REIT: 2Q FY2011.

I have been accumulating units in Sabana REIT even after it went XD the first time round, convinced that it has many high quality assets and that the income distribution is sustainable for the foreseeable future.

Last night, it released results for 2Q FY2011 and results were largely in line. DPU of 2.18c was declared, slightly less than my expectation of 2.2c. At the current unit price of 94.5c, it means a distribution yield of 9.23%.

Some numbers:
NAV/unit: 98c.
Gearing: 25.1%
Interest Cover Ratio: 7.6x

Nothing exciting but I will be keeping an eye on gearing and interest cover ratio. Gearing increased by 0.2% while interest cover ratio went down from 7.9x to 7.6x. There was also a higher drawdown of rental support for 9 Tai Seng Drive. In the near future, these are perhaps not really big concerns but if they persist, they could be.

Better quality assets aside, if the management is not doing a good job, they could destroy a good thing. Well, we will have to wait and see. Meanwhile, enjoy the dividend.

See presentation slides here.

AIMS AMP Capital Industrial REIT: Higher DPU and 20 Gul Way.

Wednesday, July 27, 2011

AIMS AMP Capital Industrial REIT has once again delivered results which are above expectations. I was expecting a quarterly DPU of 0.5c but, instead, 0.53c has been declared. XD: 2 August. Payable on 14 September.

What's more? This is only 96.8% of total amount for distribution, not 100%. Annualised, it would be 2.12c which means a distribution yield 9.64% at the unit price of 22c/unit.

Gearing level has decreased to 30.4%.

Interest cover ratio has increased to 6.4x. It was 5.0x before.

NAV/unit is at 26.8c. So, the REIT is still trading at a significant discount to NAV.

It has been said before that many of the REIT's properties have great potential for redevelopment or Asset Enhancements as many of its properties have not maxed out their plot ratios. Unitholders have been waiting for this and today, the management announced that it will be redeveloping the property on 20 Gul Way.

20 Gul Way, currently with total gross floor area of 378,064 sq feet will become a five storey ramp up warehouse facility with total gross floor area of 1,159,536 sq feet! The total value of assets under management for the REIT will cross $1b upon completion of works in two phases!

Upon completion of both phases, everything else remaining equal, we are likely to see an increase in DPU per year by 0.293c if the redevelopment were to be funded 100% by debt. However, we must remember that it will take years to complete redevelopment work.

Phase 1 is estimated to take 15 months to complete while Phase 2 is estimated to take another 13 months to complete. The whole redevelopment is estimated to be completed in 2013 and is definitely a step in the right direction.

See 1Q FY2012 results here.
See announcement on 20 Gul Way here.

Noble Group: Another quick trade.

Tuesday, July 26, 2011

Technical analysis (TA) is dynamic. Day to day, charts have new information and TA will provide new insights. Not too long ago, I wondered if Noble Group's share price might hit $1.90. Read blog post here.

If you guess that I must have been waiting to sell at $1.90, you are right. However, doing a bit of charting last night revealed that we might not see $1.90 although there is still a chance we could. The declining 20dMA is now at $1.89 while trading volume has dwindled lately.

Today, it hit a high of $1.875 before closing at $1.865, forming a white spinning top (almost) in the process. There is obviously some struggle between bulls and bears at this level.

Half an hour before the market closed, seeing how $1.875 presented a respectable resistance and is only three bids from $1.89, I decided to divest at $1.87, selling straight instead of queueing at $1.875. That is 4 bids below $1.89 but it gives me a gross gain of 5% in less than a fortnight.

It seems that I have made another quick trade after the recent one with NOL. Conditions are not easy for long traders in recent months. Counter trend trading demands that I stay nimble footed and less greedy. A 5% gain here and there? Why not? I am still learning.

Golden Agriculture: 200wMA cleared.

Saturday, July 23, 2011

Golden Agriculture closed above the 200wMA in the last session. Cleared of this hurdle, we could see its share price going higher from here.

It is interesting to observe that the 50wMA has been crucial as support, seeing how share price bounced off the line each time it was tested in the past.

It would not be unrealistic to expect any retest of the 50wMA to see strong buying interest.

Related post:
Golden Agriculture: 68c support.

First REIT: 2Q 2011 results.

Friday, July 22, 2011

First REIT's results are more or less in line with forecast with a DPU of 1.58c for 2Q 2011. The REIT will go XD on 28 July and income distribution is payable to unitholders on 29 August.

The REIT's strong numbers have been mentioned before and here's the update:

NAV/unit: 78c
Interest cover ratio: 15x
Gearing: 13.8%

I am pleasantly surprised that its management is planning to have a special non-recurring dividend to be paid from its divestment gain resulting from the sale of its Adam Road property. This could translate into an additional one off DPU of more than 1c in future.

Low gearing, high interest cover ratio and a distribution yield of almost 8% with a special dividend to boot. This REIT is rock solid and remains one of my best investments in years.

One of my best investments it might be but it would not pay to fall in love with it. Even great investments would not see share prices go up in a straight line. They climb a wall of worries. However, today's white candle was formed on the back of very high volume and we could see price pushing even higher in the next session. 85c next? Possibly.



With price pushing beyond the upper Bollinger band, a pull back to supports would be a natural course. When? I would suspect it could happen when the counter goes XD. Immediate support at 80c? Or perhaps 79c? That's where the Fibo lines are on the daily chart.

Good luck to fellow unitholders.

See announcement here.
See presentation slides here.

Related post:
First REIT: Yield accretive purchase in South Korea.

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