S-REIT sector not attractive?

I read that JPMorgan says "valuations are no longer compelling as S-REITs are trading at a forward dividend yield of 6.0%, P/B of 1.1X and 7.5% premium to house NPV estimates."


JPMorgan singled out 2 REITs for comment:

Cuts CapitaCommercial Trust to Underweight vs Neutral on lack of growth, deteriorating portfolio quality and rich valuation. 
 

Cuts CapitaMall Trust to Neutral vs Overweight "as we believe that constant cash calls from the sector would put pressure on the stock."

I am vested in neither one. As with stocks, there will be better counters to be vested in and the ones to avoid. Broader strategy towards S-REITs stays the same for me. Stay vested in S-REITs with higher yields, trading at a discount to NAV and with relatively low gearing.

S-REIT valuations no longer compelling - JPMorgan
Wednesday, 12 January 2011

© 2011 - The Edge Singapore

Hock Lian Seng: Running out of gas?

This counter had been sleeping for some time. Yesterday, it stirred, forming a wickless white candle on the back of higher volume. The bullish candlestick followed through today as price touched a high of 33.5c before closing at 32c, forming a very long upper wick in the process. 32c, thus, remains a formidable resistance with some history backing it.

Although the OBV shows sharp accumulation, both MFI and RSI are in their overbought regions. Price could have moved up too much and too quickly. In case of a pullback, I expect strong support to be found at 30c. Any attempt by the counter to move higher in price could see selling pressure once again as people who bought at 33c might try to break even and get out of what might have been a hasty buy decision.

"If price tests 29c, I would buy more. 29c is also where we find the 138.2% Fibo line. This should lend support in case of retracement." Buying more at 29c almost three months ago has proven to be a good decision.

Related post:
Hock Lian Seng: Buying more?

First REIT: Simply amazing.

If it simply amazing how this REIT's price is pushing higher by the day. How much higher could it go? Why did it touch a high of 77c on 2 occasions and did not go higher?

Well, if we draw a set of Fibo lines, it becomes clear why 77c is resistance. It is where we find the 123.6% Fibo line. However, 23.6% is not a golden ratio and we could expect stronger resistance to be found at 78.5c which is where we would find the 138.2% Fibo line.

Of course, with both the RSI and MFI in overbought territories, we would not be wrong to question if the upward movement could continue. Although the OBV shows no sign of accumulation ending, we could see a pull back to correct the overbought condition. In such an instance, I expect 75c to be resistance turned immediate support.

I still have a fair value of 80c for this REIT based on FA.

Unaudited financial results of First REIT for the fourth quarter and full year ended 31 December 2010 will be announced on Friday, 21 January 2011.
Related post:
First REIT: Retesting high at 75c.