Sabana REIT: 4Q 2011 results.

A DPU of 2.17c has been announced. This is a little lesser than my estimate of 2.2c. This is probably due to the fact that no rentals were collected for the property of 1 Tuas Avenue 4 in the months of November and December 2011. The manager is in advanced stage of negotiation with a party to rent the said property for a 10 year period. This, when completed, together with recent acquisitions should boost income and result in a higher DPU.

1, Tuas Avenue 4.

NAV per unit: $1.05.
Gearing: 34.1%.
Interest cover ratio: 7.4x
Average land lease expiry: 40.2 years.
(10.4% of the REIT's land leases will expire between 2032 and 2036 while 7.3% will expire between 2037 and 2041.)

Sabana REIT managed to secure lower cost of funding for its newer loans at between 3.4% to 3.9% compared to 4.8% previously. The savings will result in higher distributable income, everything else remaining equal.

The REIT will go XD on 30 Jan and income distribution is payable on 29 Feb.

Technically, I see resistance at 91c. We could see gap filling at 91.5c if resistance should be taken out. Stochastics has risen into overbought territory once more which simply suggests to me that there could be a better time to add to long positions. For anyone looking to reduce exposure to the REIT for any reason, this could be a good opportunity.

See presentation slides: here.

AIMS AMP Capital Industrial REIT: 3Q FY2012.

AIMS AMP Capital Industrial REIT delivered a solid set of results with DPU at 2.6c. This is a 4% increase over the previous quarter.

As I was expecting a DPU of 2.5c with a possibility of a small reduction, this is good news indeed. It will go XD on 3 Feb and is payable on 20 Mar.

Upon completion of sale of 31 Admiralty Road for $16.438m, the REIT's gearing would drop to 29.4%. The REIT had purchased this building for $13.4m. So, the REIT will recognise a gain and have gearing comfortably under 30% at the same time.

NAV per unit: $1.367
Interest cover ratio: 5.6x
Occupancy: 98.9%
Average land lease expiry: 41.9 years
(Only 10.9% of nett lettable area will see land lease expiry within the next 21 to 30 years).

The REIT has no debt due until October 2013.

Expectations for very slow growth in 2012 is unlikely to be too challenging as REITs are generally able to weather zero growth environments. The REIT also collects an average of 8.4 months in security deposits per property.

At the recent high of $1.00 per unit, its annualised distribution yield is 10.4%. This could increase in 2013, everything remaining equal.

I am confident of the REIT as a strong passive income generator and it remains a core component of my portfolio.

See presentation slides: here.

Related post:
AIMS AMP Capital Industrial REIT: Partial divestment.

FSL Trust: Reduced DPU to US0.10c.

Mr. Market is showing displeasure with FSL Trust's decision to reduce quarterly DPU from 0.95c to 0.1c. Its price has plunged more than 20% from the closing of 30c yesterday to 23c when I last looked.

Assuming an exchange rate of US$1 to S$1.30, the annualised distribution yield is about 2.2% per annum based on a unit price of 23c. Better than fixed deposit rates but as an investment, it is not very attractive.

However, I believe that this development together with the Trust's recent successful refinancing with a 6 year amortising loan are steps in the right direction. If the Trust survives the difficult times ahead, it could emerge stronger and ready to ride the next upswing in the cycle.

Read press release: here.

Cache Logistics Trust: 4Q and FY2011 results.

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.

Capitaland: Partial divestment at $2.48.

Just two days ago, on 17 January, I said that I see resistance at $2.48. I got this from the weekly chart as that was resistance provided by the declining 20wMA and the 138.2% Fibo line.

So, I put in an overnight sell order at $2.48 and it was filled later in the session today.

In very bullish circumstances, we could see $2.50 and $2.53 taken out with ease. With the formation of a long white candle on the back of very high volume, this could indeed be the case. The MACD has just crossed into positive territory and this signals the return of positive buying momentum.

In such an instance, we could see $2.65 or even $2.75 tested. It would be a sight to behold. Remember, however, that TA is about probability. Nothing is for certain.

Relates post:
Capitaland: Resistance at $2.48.

AIMS AMP Capital Industrial REIT: Partial divestment.

Tomorrow will see the release of quarterly results for AIMS AMP Capital Industrial REIT. As if in anticipation of a good set of numbers, its unit price pushed higher today on higher volume, closing at $1.00.

Last month, I accumulated units of the REIT at 93.5c, 94c and 95c. Why did I buy? At those prices, the REIT was very undervalued. Indeed, I was waiting to accumulate at 92c too but the lowest it went to was 92.5c. I blogged about it: here.

Today, my overnight sell order at 99c was filled, locking in some gains. I believe the REIT is still undervalued and I sold not because of valuation concerns. Then, why did I sell?

I sold because I want to rebalance my portfolio. With the acquisitions I made last month, the REIT's weight in my portfolio has tipped somewhat. Also, technically, $1.00 seems to be the upper end of a trading range. So, divesting partially, closer to resistance, makes sense.

Notice how the Stochastics has stayed in overbought territory for quite a long time now. In a range bound situation, the risk of a downward movement in price is, therefore, higher. However, in very bullish circumstances, momentum oscillators could stay overbought for a long time. In case resistance at $1.00 is taken out, I expect resistance provided by the 200dMA at $1.02 to come into play.

My remaining investment in the REIT is still a substantial part of my core investment for passive income. This is unlikely to change.

Tea with AK71: Another loaf of bread.

I blogged about how a loaf of bread could last me for days before. I like raisin bread the most and would usually buy when there is a special deal. Gardenia's raisin bread had a special deal going for a while but ended a couple of weeks ago.

On Sunday, I bought a loaf of softmeal bread from Sunshine. Usual price: $2.30. Special offer: $1.95.

Today, I finished the last few slices and had the two bread ends for lunch with a generous spread of margarine. Had to be more generous with the margarine or they would be too dry and difficult to swallow.

An inexpensive and healthy lunch.

Related post:
Tea with AK71: A loaf of bread.

ARA: Divestment at $1.30 and $1.32.

I have been entering overnight sell orders for ARA at $1.30 since early this month. $1.30 was the price I last sold some ARA at. As I noticed some strength in the upward movement in price, I also put in a sell order at $1.32 last night. Both sell orders at $1.30 and $1.32 were filled today.

Price touched a high of $1.33 today before closing at $1.315. Volume was relatively low compared to 3 sessions ago when price action formed a similar white candle. I wonder if it would have enough fuel to push it past the next resistance at $1.335.

Immediate support is at $1.29 but I expect a stronger support to be at $1.25 in case of a retracement. $1.25 is also where a golden cross is likely to be formed with the 20dMA rising to cross the gradually declining 100dMA. A golden cross was earlier formed between the 20d and 50d MAs.

CapitaMalls Asia: Overcame resistance.

CapitaMalls Asia is rising and stronger than Capitaland too.

Its share price overcame resistance provided by the 20wMA.

Resistance provided by the 138.2% Fibo line at $1.32 is the one to watch now. Could we see a retest of $1.40, the high touched in early November 2011?

The 20wMA could be resistance turned support in the event of a weakening in price. This is at approximately $1.26.

Related post:
CapitaMalls Asia: 20wMA, the resistance to watch.

Capitaland: Resistance at $2.48.

Capitaland is on the rise.

I see resistance at $2.48. This is provided by the moderately declining 20wMA as well as the 138.2% Fibo line.

Beyond $2.48, resistance is provided by the 150% and 161.8% Fibo lines at $2.50 and $2.53 respectively.

In case of a retracement, we could see a test of the 50% Fibo line at $2.30 or the 38.2% Fibo line at $2.27.

Related post:
Capitaland: 20wMA, the resistance to watch.

Hyflux: Divestment as gap closed at $1.365.

My sell order at $1.365 was filled today. This is the gap filling I talked about before. 

Could price move higher in the next session? It could, of course.

However, the upper wick in today's white candle as price touched a high of $1.37 before closing at $1.35 suggests that selling pressure is very much present. 

Moving higher on lower volume compared to two sessions ago is also a sign of caution.

The declining 100dMA is likely to exert downward pressure on price action. 

So, further upside could be capped at $1.385 or so. In a retracement, expect some support at $1.21.

Related post:
Hyflux: Retest of recent high.

Courage Marine: BDI plunging.

Yesterday's Business Times reported that the Baltic Dry Index (BDI) fell to an 11 month low. Today, it fell another 3.799% to 1,013.

The decline is attributed to a worsening glut of ships. Rates are now below operating costs in the Pacific Ocean.

Capesizes, the largest dry bulk carriers cost US$7,437 a day to operate (excluding fuel). However, rates on round trip voyages in the Pacific fell to US$6,471 a day, down 80% from a month ago.

Seasonal decline in demand to ship commodities to China, port disruptions in Australia after a recent cyclone and a larger number of ships will continue to exert downward pressure on rates in the short run.

My investment in Courage Marine late last year at 10c a share is now underwater. What do I plan to do? Nothing. Why?

Courage Marine is a company with a strong balance sheet and I doubt it is going to sink. It might not do well but it will most probably survive the bad times.

For those who are thinking of possibly investing in Courage Marine, there could be a better time to do so. For those who are already vested, we have to ask if we run the risk of selling at the bottom if we exit now.

With my investment in the company accounting for only some 1.5% of my total portfolio value, I will simply hold on.

Investing in financially sound companies, I am able to stomach paper losses which are likely to be temporary in nature.

Related post:
Courage Marine: Bought more at 10c a share.

Courage Marine unit disposes MV Raffles for $4m
Wednesday, 18 January 2012

© 2012 - The Edge Singapore

Tea with AK71: A lunch of barley and winter melon.

I have blogged about how I would boil barley water and later eat the barley for a meal as well. Today, I brought to work a container of barley and winter melon strips drenched in soya bean milk.

My sister boiled barley water over the weekend and she was going to throw away the barley and winter melon strips. I asked her to keep them for me in a container so that I could bring to work for lunch. She kindly obliged.

This morning, I poured soya bean milk into the container and, voila, that's my lunch for the day!

Barley has been described as a nutritional powerhouse that has a low glycemic index (GI). It is high in fiber, naturally low in fat and cholesterol free. It contains vitamin Bs, antioxidants, selenium, iron, magnesium, zinc, phosphorus, potassium and copper.

A healthy meal and it costs next to nothing!

Related post:
Tea with AK71: A simple meal.

Mr. Lee Kuan Yew on the eurozone crisis.

I just received the latest copy of Alumnus in the mail and on page 4 is a one page write up on what Mr. Lee Kuan Yew said during LKY School of Public Policy's 7th Anniversary. He said something about the eurozone which got me interested enough to search for more details online.

The one liner that got me interested was: "Mr. Lee thinks European leaders will try very hard to prevent the collapse of their currency union but he does not believe they will be able to keep it going." So, does he think that the eurozone will ultimately dissolve?

Searching the internet, I found a website with the details:

... European leaders will try to save the euro zone from collapse, because a collapse of the currency union would be “an admission that their aspiration for one Europe is not achievable”.

.......

“A fundamental problem of the euro is that everybody, every European country, march to the same drummer whereas each country has its own tempo and you cannot expect the Greeks to march like the Germans, so the problem will not go away”.

Therefore, he added, “a two-tier Europe or even a three-tier Europe is possible but a one-tier Europe with different spending habits, thrift habits and discipline is too difficult to achieve”.

The euro came into existence in 1999 with the aim of increasing economic cooperation and growth in Europe, and upping Europe’s presence on the world stage.

With the recent debt crises, the currency union forces other European countries to bail out troubled  members and policymakers are denied the flexibility of monetary policy as a tool to fight recession.


Read articles: here and here.

So, will the eurozone go the way of the Dodo? If it will, when will it happen? 

Your guess is as good as mine. 

One thing is for sure, Mr. Lee Kuan Yew has spoken and I will take note.

------------------------------

Seven eurozone countries had their ratings confirmed while nine were downgraded by S&P on 13 Jan (Friday). It downgraded France's top AAA rating by one notch to AA+, with a negative outlook while  Italy went down by two notches to BBB+, negative outlook, and Spain was also down two notches to A, negative outlook.

Read article: here.


BREXIT!

Updated on 25 June 2016: Prime Minister David Cameron is to step down by October after the UK voted to leave the European Union. Speaking outside 10 Downing Street, he said "fresh leadership" was needed. The PM had urged the country to vote Remain but was defeated by 52% to 48% despite London, Scotland and Northern Ireland backing staying in. (Source: BBC)

The UK is likely to lose its AAA credit rating after it voted to Leave the EU. Moritz Kramer, chief ratings officer for S&P, said on Friday morning that the UK's AAA rating was “untenable under the circumstances”. German daily newspaper Bild quoted Kramer as saying: “If Great Britain decides for a Brexit in the EU referendum on Thursday, then the AAA credit rating would come due and would be downgraded within a short period of time.” (Source: Independent)

Related post:
Stakeholders should worry as credit is tightening.

Sabana REIT and AIMS AMP Capital Industrial REIT: Releasing quarterly results on 20 January 2012.

Both Sabana REIT and AIMS AMP Capital Industrial REIT will be releasing quarterly financial results on 20 January 2012.

Sabana REIT: see announcement here.

AIMS AMP Capital Industrial REIT: see announcement here.

Sabana REIT has completed a few acquisitions in the last quarter. However, I think their contributions to distributable income will be more substantial in the current quarter. This is because the acquisitions where completed in November and December and not at the beginning of the last quarter.

On 22 November, acquisitions of the following were completed:

1. 3A Joo Koon Circle
2. 2 Toh Tuck Link
3. 21 Joo Koon Crescent

See announcement here.

On 7 December, the acquisition of 39 Ubi Road 1 was completed. Read announcement here.

On 15 December, the acquisition of 6 Woodlands Loop was completed. Read announcement here.

All acquisitions were funded by debt and would contribute to a higher DPU. Conservatively, I am expecting a DPU of 2.2c or a bit more to be announced on 20 Jan.

We could see a higher DPU in the next quarter when full quarter contributions from the aforesaid completed acquisitions weigh in.

As for AIMS AMP Capital Industrial REIT, redevelopment of 20 Gul Way is ongoing and seems to be progressing nicely. Higher income due to this redevelopment will materialise only in 1Q 2013. I blogged about it before. See it here and how I bought more units at 93.5c.

It would be nice to have a repeat of 2.5c DPU when results are released on 20 Jan although I would not be surprised if DPU dips a bit due to possible loss of rental income from the redevelopment of 20 Gul Way. I mentioned it last year in a blog post as well: here.

Unit prices of both Sabana REIT and AIMS AMP Capital Industrial REIT have been creeping up. Their unit prices closed at 90c and 97.5c respectively in the last session. With the estimates I have made, this would mean annualised distribution yields of roughly 9.78% and 10.26% respectively.

Good luck to all unit holders.