They chose financial independence over home ownership.

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership.  They are in their 30s and,...

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Cache Logistics Trust: 4Q and FY2011 results.

Thursday, January 19, 2012

Cache Logistics Trust announced a good set of results.

Its recent acquisitions pushed distributable income upwards by some 9.2% while DPU increased to 2.1c. Annualised, distribution yield is 8.48% with unit price at 99c.

Net gearing: 29.6%.
NAV per unit: 91c.
Interest cover ratio: 8.0x

The CEO, Daniel Cerf, said that although new supply in warehouse space could come on board in late 2012 and 2014, existing demand should take up the new supply as good quality warehouse space is still in short supply in Singapore. (Source: The Straits Times, 19 January 2012).

Last month, I accumulated units of Cache Logistics Trust on weakness at 95c a unit. Those units were divested today at 99c when my overnight sell order was filled. The reason for selling? Technically, I see resistance at 99.5c and, for more than a week, unit price has plateaued at 99c.

In a rangebound situation, I look to the Stochastics for clues and it has been overbought for many sessions. Together with the formation of a doji today on the back of very much higher volume, the risk of a downward movement in price is, therefore, higher. When would a decline happen? When the counter goes XD? Perhaps.

If price should break resistance and move higher, I would still benefit with my remaining investment in the Trust. Otherwise, it would just continue to generate passive income in my portfolio. I think this is a good position to be in.

See presentation slides: here.

Related post:
Cache Logistics Trust: 3Q 2011.


INVS 2.0 said...

Hi Ak71,

Next turn will be AIMS and Sabana tmr. :)

AK71 said...

Hi INVS 2.0,

Yup. Exciting! :)

lokster said...

hey! do you think CACHE @ $1.00 now is a good time to enter? it has gone XD a few days ago!

AK71 said...

Hi lokster,

At $1 a unit, the expected distribution yield is 8.4% per annum. Once you are satisfied with its other numbers, if you feel that 8.4% yield is good enough for you, why not?

Technically, however, I see possible further weakness with stronger supports at 98.5c and 97c. You decide. ;)

Ah John said...

I just read a article that low interest rate is good for REIT, it's reasonable. AK, any comment about interest rate impact to dividend?

AK71 said...

Hi Ah John,

It is no secret that a low interest rate environment is good for businesses. REITs being leveraged entities are logical beneficiaries.

Low interest rates would reduce their cost of debt and this would logically mean more distributable income, everything else remaining equal. :)

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