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Croesus Retail Trust: What is my plan?

Saturday, February 1, 2014

When I revealed that I had a BUY order queued at 85.5c, a reader was concerned. He said that he bought some units in Croesus Retail Trust at 87c because he read my blogs and how I first initiated a long position at 87c too.

From Winston Koh's FB wall.

Do I think that the unit price will fall a bit more?

Well, I don't know. My bowling ball has been rather quiet lately. Not talking to me. Maybe, I should give it a good rub later but that sounds like work and I am such a lazy guy. Bad AK! Bad AK!

What I do know is that selling pressure seems to have eased, looking at the higher lows in the CMF and the MFI.

Click to enlarge.

The moving averages are all bunching up which implies a very low level of volatility and this congestion in the moving averages will serve to be an important support or resistance in future. In future?

Yes, with the Bollinger Bands having narrowed, I would not be surprised if this period of low volatility should be followed by a big move in unit price in the near future.

Big move? Up or down? Well, if I should hazard a guess, with the CMF and MFI the way they are, I would say "up". However, if these should be negated and if unit price were to move down instead, using Fibo retracement lines, the 138.2% golden ratio is at 85.5c.

So, this solves the mystery of why AK71 has put in a BUY order at 85.5c. For those who say they feel safer if they buy at a lower price than me, well, 85c is a possibility too since that is where we find the 161.8% golden ratio.

At 85c or 85.5c, we are looking at a prospective 9.62 to 9.68% in distribution yield, according to guidance provided by the management. It would also mean getting in with a bigger discount to the Trust's NAV.

There is no way I can predict the price movement. However, I do know what I would do in each scenario.

Asking what would we do is more useful than asking what would the price do. 

After all, we have control of our faculties (I hope) but we do not have any control over Mr. Market's actions.

Some numbers (pre-MTN):

From: Presentation to investors (7 & 8 Jan 2014).

Related posts:
1. Croesus Retail Trust: Overnight BUY order filled. (I looked at how the S$100 million MTN could affect the Trust here.)
2. Why some were burnt badly.


Unknown said...

Dont worry abt short term la. Just buy at a comfortable price and close eyes and enjoy the dividends la.

AK71 said...

Hi StoneCold,

Always happy to have a guest blogger sharing words of wisdom.

Thank you and Gong Xi Fa Cai! :)

yeh said...

Hi I have just bought ocbc and suffering huge losses...

I also no eyes see. Think will still drop somemore. Wonder shd I average?

AK71 said...

Hi yeh,

Mr. Market isn't feeling good about OCBC and I told a couple of friends that it could be a good idea to avoid until the dust has settled. OCBC is going to have to raise plenty of funds to acquire that bank in H.K.

As for Wilmar, I have a long position too and it is in the red. However, I am not too concerned because buying into Wilmar is buying into a belief that food prices will rise a lot more in future.

Wilmar is a market leader and has a network that is not easy to replicate. It is a matter of time that it shows in the numbers. Anyone with a 5 years horizon should not have to worry about Wilmar, barring unforeseen circumstances.

If the $3 support (150% Fibo line) for Wilmar should break. We could see $2.95 tested next. Could be a buying opportunity. Short term, I see weakness but, long term, there should be support.

Wow! My bowling ball is talking again! ;p

Solace said...

Agreed that it is pointless to guess how low a stock will go. As long the purchase price is below your intrinsic value and offers certain level of safety margins, it is good enough.

Given enough time, mr market should reward the stock with its fair value if one has done the analysis correctly.

AK71 said...

Hi Solace,

Now, I feel pressure... -.-"

Done the analysis correctly... =.="


yeh said...

Hi ak.
I will still buy into ocbc and wilmar.
I see ocbc has its value...

But I have no much money now...maybe when everything stablised, I will buy somemore to keep for long term.

happy chinese new year to you!,

AK71 said...

Hi yeh,

Sounds like you have a plan. That is good. Gong Xi Fa Cai! :D

Howard said...

AK, people seems to be just relying on you instead of doing their homework and find their own comfort zone. Bad behavior i must say. These people will blame you if they lost money because "AK said so". So just stop entertaining them?

Solace said...

Haha Ak,

Actually i did tell some of my friends that Croesus Retail Trust is one of the stock that can be considered at recent times.

Hopefully i will be right about it also. Recently it seems that Hwang Investment Management Berhad disposed 299,000 units of the Croesus retail trust on the open market on 23 Jan.

Big boys doesn't seems to have the patient to wait, hopefully investors patient in this one will be rewarded.

On a separate note, PCRT will be releasing their results on 7 February 2014, i am eager to pay attention if they have make any improvements in beefing up the occupancy rates.

AK71 said...

Hi Howard,

Definitely, it is not a good idea to follow anyone blindly, guru or not. I will say the same to anyone and I have said the same to this reader. ;)

All of us will take time to mature as investors. Just got to keep trying. :)

AK71 said...

Hi Solace,

I am lucky that I am not a big fund that has to balance portfolio regularly and show profit to stake holders. ;p

As for PCRT, they must move faster. I am rather concerned that the earned out deeds will be depleted by end of this year.

Perennial China Retail Trust: Progress in Q3.

K-Enterprises said...

Hi AK!

Happy new year to you and your family. Firstly I'm appalled that a reader would say that as your sharing is of your own views and opinions and u didn't for any readers to follow your call. They should have done their due diligence before investing. Looks like that reader wouldnt be able to stomach a 2 cts drop in croesus and is anxious ;). Maybe u should put up the old blogpost on investing for a steady flow of income for that reader.

AK71 said...

Hi K,

Gong Xi Fa Cai! :D

I went through that stage too as a newbie investor. So, I can understand the feelings. Well, I am glad the reader gave me a chance to explain. No harm done. :)

I am trying to recall which blog post you are referring to. I have more than 2000 blog posts by now and I cannot remember. -.-"

Internet Marketer said...

Hi AK,

I've recently found this stock Frasers Centerpoint Trust to be undervalued, and rising DPU year after year. However, you've not mention anything about it. What do you think of the prospect moving forward?

Is it a good price to go in? It's at 52 weeks low of $1.70 now.


AK71 said...

Hi Internet Marketer,

Well, why do you think it is undervalued? What are the criteria? Would you like to elaborate?

When you ask if the price is good now to buy some, the impression given is that you are not sure of the REIT's valuation. I could be mistaken, of course. :)

Unknown said...

FCT is currently trading below its NAV with a 6.5% dividend.

AK71 said...

Hi 玉龍,

If I am not mistaken, FCT declared a DPU of 2.5c in the last quarter. Annualising this gives 10c a year. At today's close of $1.66 a unit, it gives us a distribution yield of 6%. Not bad.

However, FCT's DPU usually increases in the following quarters. So, an eventual distribution yield of 6.5% is realistic.

NAV per unit at $1.77.

Gearing ratio at under 30%.

Interest cover ratio at 6.0x

The next thing I would do is to look at the charts for clues as to where the supports might be. As it turns out, $1.66 is an important support based on Fibo retracement lines. The next supports are at $1.60 and $1.55.

Unknown said...

opps, my bad I got the data from reitdata.

AK71 said...

Many years ago when I first started investing in REITs, I used the information they collected too. :)

The problem really is that we are depending on someone else's work and what if there was a mistake.

It is definitely better to check published financial statements. :) said...

FCT distributed 10.93c in 2013. At the price of 1.66, will be getting DY of 6.5% :)

Well, I do hope FCT continue to do well and distribute sustainable higher DPU :D

AK71 said...

Hi boonchin,

Crossing fingers. I hope FCT continues to do well too. :)

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