CapitaMalls Asia: At resistance.

While chatting in LP's infamous cbox today, a cboxer, OT, said that he is queueing to sell some shares of CapitaMalls Asia at $1.395 because I said that is where gap filling could happen. That was based on TA which I did more than a week ago.

TA is dynamic. What is valid now might not be valid a week later. So, is this case any different?

Share price touched a high of $1.36 which is where we find resistance provided by a flat 50dMA. It closed at $1.345 which is where we find the declining trendline resistance.

The MACD is rising nicely but it is still in negative territory. Volume although slightly higher is not impressive. This rebound could sputter and fail quite easily.

If both the 50dMA and the trendline resistance could be taken out in the next session, we could indeed see the gap filled at $1.395. If the share price could close above the 50dMA in the next session, we could even see $1.44 tested next. Will it happen?

TA simply hints of what could happen and we must have plans for all possible eventualities.

Related post:
CapitaMalls Asia: Rebounding.

AIMS AMP Capital Industrial REIT: Consolidation and corporate rating.

Some readers left comments here in my blog while others wrote me emails asking me about the proposal by AIMS AMP Capital Industrial REIT to consolidate 5 units into 1.

Personally, I am not really concerned with this exercise. Why? 

The fundamentals will not change with this exercise. It is still the same REIT with the same fundamentals. As for whether the REIT's unit price will do better or worse after consolidation, if only I knew.

Am I not doing anything with regards to this exercise? I will continue to monitor the REIT's unit price. If its valuation becomes very compelling, I will buy more at supports. If the unit price were to retest resistance, I could divest.

A more important and positive development is the upgrading of the REIT's corporate rating by Moody's. The new rating is Ba1 with a stable outlook. A stronger rating improves investors' confidence and could make borrowings cheaper and more accessible for the REIT.

The improvement in rating is even more significant when we take into consideration the redevelopment of 20 Gul Way.

In an earlier blog post, I said that the redevelopment is a step in the right direction as the REIT moves to maximise the use of its plot ratio of 1.4x from the current 0.46x.

However, there will be short term pain manifested in various forms during the redevelopment period. The most immediately apparent would be the loss of rental income from 20 Gul Way during the redevelopment period.

I estimate a reduction of about 9% in distribution income which means that the DPU per year once the proposed redevelopment is underway could be lowered to 1.99c, assuming that the REIT pays out 100% of its distributable income.

At a unit price of 20c, therefore, the REIT still offers an attractive proforma distribution yield of almost 10%. If the REIT were to reduce payouts to 90% in view of the said redevelopment, we are still looking at a proforma distribution yield of almost 9%.

AIMS AMP Capital Industrial REIT and Sabana REIT have almost equal weightage in my portfolio and, together, form about 50% of my total investment in the stock market. They are likely to remain significant passive income generators for me.

Read full report from Moody's here.

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

Tharman Shanmugaratnam has spoken.

I think Tharman Shanmugaratnam is a really brainy guy. He also did our country proud when he was selected as the Chairman of the International Monetary and Financial Committee.

When Tony Tan talks about the economy, I listen. When Tharman S. talks about the economy, I listen too and he has spoken.

"Tharman Shanmugaratnam told a conference that the world has now “entered a phase where there is a self reinforcing cycle” of a loss of consumer confidence, which is leading companies to hold back on investing.

“Asia will not be immune to a global slowdown,” Tharman said. The Singapore economy is highly reliant on international trade."


Related posts:
Wage slaves should be fearful.

Singapore says global recession more likely than not
Tuesday, 06 September 2011

© 2011 - The Edge Singapore

Courage Marine: Added at 10.5c a share.

It has been some time since I wrote about Courage Marine. With the BDI in a downtrend, there was no reason to go long on this counter. The last time I did something pertaining to this counter was a divestment when news of a dual listing in Hong Kong was made known.

However, as I like the company, I have been tracking its performance which is of course closely tied to the BDI as most of its revenue is derived from spot rates.

The BDI was consolidating for many months. Since hitting a low in early 2011, 1,250 has been established as a support, four times tested no less. 1,500 was breached recently and retested successfully as support. The BDI has broken out of its consolidation phase and we could be seeing a trend reversal starting in earnest.

Courage Marine's share price went lower than its low of end 2008 recently. This means that the market expects the company to do worse than it did in the last recession but with the BDI breaking out of its consolidation phase to the upside, the fundamentals seem to suggest something else.

So, I have tip-toed back into Courage Marine, re-initiating a long position in the company. Technically, I am wary of initiating too big a long position because the declining 20dMA could push price lower again. If price were to overcome the 20dMA convincingly, we could see 12.5c and 13.5c tested next.

Related posts:
Courage Marine: Profit warning.

Bullish on Noble, IndoAgri, Genting and DBS?

I was reading The Straits Times online edition. Yup! AK71 is catching up with the Times! I love this pun!

There is an interesting article by Andy Mukherjee titled "Don't get seduced by analysts' darlings" and he selected four stocks as examples.

Andy is of the opinion that "analysts are overly bullish. They are beginning to turn nervous, but are far from throwing in the towel."

He also said that "for choppy markets to get better, sentiment must first hit rock bottom. Like it did in the first quarter of 2009."

Stock #1: Noble Group

"Analysts are still wildly bullish about Noble... (with) consensus estimate for the stock (suggesting) a 35 per cent upside.

"Noble shares fell more than 80 per cent between June and October 2008."

Stock #2: Indofood Agri Resources

"With the hiving off of Salim Ivomas Pratama, .. the company is sitting S$860 million in cash, with little clarity from management on future expansion. Meanwhile, the profit accruing to Indofood shareholders grew less than expected in the June quarter... The consensus estimate for the stock's target price is about 33 per cent higher than the current price."

Stock #3: Genting Singapore

"Chip volumes declined 13 per cent from the previous three months... Overall, though, the analyst community is still gung-ho on Genting... (and) the consensus target price is still 28 per cent higher than the market price."

Stock # 4: DBS

".. local currency interbank rates in Singapore... have collapsed. One key rate - the swap offer rate - has even turned negative.... The consensus in the analyst community, however, is that DBS Group's fair value is 28 per cent higher than what the stock currently sells for.

"If the Singapore economy slips into a technical recession this quarter and loan growth slows markedly, then the lingering optimism on DBS could dissipate. That could be risky for investors.

"For now, the cash in your mattress is quite safe where it is. If you really want to do something with your money, consider stocks with high dividend yields."

I do not think staying in cash 100% is a good idea since Mr. Market has a way of surprising us sometimes. Will we have a recession for sure? What if markets simply continue to trade sideways while inflation rages on?

Even famed New York University economist Nouriel Roubini, a perpetual bear, puts the risk of a double dip recession at 60 per cent probability and not anything closer to 100 per cent certainty.

The more we expect something to happen, the more it might not happen. So, without perfect knowledge, the best strategy, in my opinion, is to have a warchest ready even as we stay invested.

Oh, I am not vested in any of the above stocks.

Related posts:
1. Should we be staying invested or in cash?
2. Sleep well at night with a plan.
3. Stock market analysts.
4. A capital question: How much to have or how much to use?
5. Investing in REITs: A flawed strategy?
6. Dr Marc Faber: How not to lose money?

Wage slaves should be fearful.

I had a conversation with someone who said he is living hand to mouth and that he is somewhat worried with how things are developing in the world now.

Although Asia is where we find economic growth these days and it explains why people are flocking here as they look for better opportunities, if a global recession should transpire, Singapore is unlikely to be spared. 

In fact, we are likely to suffer more than others due to our very open economy which is highly dependent on external demand. Many are likely to lose their jobs in such a situation.






So, my friend is right to be fearful if he was indeed living hand to mouth. If he should become unemployed, he would be in deep trouble. For people like him, we cannot even start talking about investing in the stock market.

Using some common sense, what would I do if I were him? He must first get his finances in order:

1.  Look at his expenses. See what are necessities and what are not. Remove the latter, mercilessly.

For example, I know someone who sold his 5 year old car recently because the very bouyant COE prices now means that he could sell his car at a higher price than two years ago, minimising losses, losing $6K instead of >$10K. He now saves $800 a month in monthly repayment and is taking public transport for now. The car was not a necessity.

2.  Save money! Make sure he saves enough money to cover at least a year's worth of expenses. This will be his emergency funds. In case he should be retrenched in the next recession, he would have ample time to look for a job.

Some financial advisors say putting aside 6 months salary is the rule of thumb. For me, I would say measuring how much we should put aside in terms of expenses is more meaningful. If we should have enough money put aside to cover expenses for 10 years, not considering inflationary pressures, are we recession proof?






3.  Any money in excess of the emergency funds, he should put to work, investing for greater returns. Having excessive savings is silly given the paltry interest payment on savings.

Having said this, with the stock market weakening continually now, we should be prudent and not throw everything including the kitchen sink into stocks.

4.  I would also suggest that he looks into ways of increasing his income in his current job or a new job. He might also want to look for supplementary income. Be more productive.

No one owes us a living. Unless we can show that we can make valuable contributions, no one will think we are valuable enough to pay us!

Living hand to mouth is being a wage slave. Wage slaves are pitiful but someone who is living like a wage slave when he does not have to is NOT pitiful.

Note:
Wage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. (Source: Wikipedia.)

Related posts:
1. Needs and wants.
2. Do you want to be richer?

Tea with AK71: Durians tidak boleh?

This photo was taken at a MRT station on the Circle Line. See why people say Singapore is a "fine" country?

No durians but no fine if we were caught har?

Are the authorities partial to durians?

Does anyone know the reason why there is no fine for being caught with durians on MRT trains?

Could it be that the powers that be have not decided on how much the fine should be? If so, I have a suggestion!

To be fair, they should have a weighing scale at every station and the quantum of each fine should be determined by the weight of the offending fruit which was brought onboard!

Bring more, fine more. Bring less, fine less.

If the reason for banning durians on MRT trains is because of its endearing fragrance, what about durian mooncakes, durian puffs, durian puddings and other such yummy delights?

Heavens forfend! ;)