CapitaMalls Asia: Doji at $1.91.

CapitaMalls Asia broke the trendline support today with price reaching $1.89 at one point before pushing back up above the trendline at $1.91 where it closed. For those who have been following my analyses so far, the question is how are things looking now?

Well, the weakness in price today brought out the bargain hunters as they pushed price back up to $1.91 and volume expanded modestly in the process. This suggests to me that at lower prices, buyers are waiting. However, it is quite obvious that the descending 50dMA is a strong resistance and people are probably just waiting to see if it could be overcome convincingly in future sessions. Breakout traders are waiting, I am sure. The 50dMA is currently at $1.94. Expect a wave of buying if resistance is taken out.

Volume has remained thin as trendline support is tested. Although I remain optimistic that price could move higher in the near future, that's just me. We really have to wait and see. I am no longer accumulating at the current support as I already have a sizeable position. We could very well see the counter trading sideways too.

Related post:
CapitaMalls Asia: Closed at $1.90 support.

Suntec REIT: Broke resistance.

I was just having a chat with Nick in LP's cbox not so long ago regarding REITs and their fair values. Nick mentioned that REITs with high gearing have little growth prospects and therefore will not see their unit price go up (i.e. yield will not compress). I think he mentioned that the stock market is rather efficient when it comes to REITs.

In theory, I agree with Nick. However, I mentioned that it is hard to be sure since how much a REIT should trade at is very often a matter of sentiments, this is the same with stocks. Certain REITs are small and are not covered by analysts. They could also be too small to interest institutional investors. Their unit prices could continue to languish even if they provide decent yields with relatively safe gearing. Certain REITs are obviously overvalued and give very low yields with relatively high gearing but they continue to enjoy much attention. For example, I would not bother buying into CMT. The yield is so unattractive.

Nick used Suntec REIT as an example of a REIT with high gearing and therefore it did not see its yield compress much. However, the last session saw Suntec REIT's unit price close at a high of $1.61, forming a wickless white candle, on the back of heavy volume. Yield is compressing and quite significantly too. The last time this REIT was at $1.61 was in Jun 2008!

Could we see this REIT's unit price move higher? A wickless white candle coupled with heavy volume is bullish. So, expectation is for price to move higher. However, the MFI is nearing overbought territory. In case of a pull back, it would be interesting to see if $1.58 could be resistance turned support.

Mr. Market is always right and he enjoys his hat tricks.

AIMS AMP Capital Industrial REIT: 3QFY2011.

My first night on a working trip in Hong Kong and I am having trouble sleeping although I was feeling quite tired earlier. So, I went to the reception and purchased a card which allows me to have internet access for 3 hours for a fee of HK$40. Quite reasonable, I think.

First thing I did online was to check on results announced by AIMS AMP Capital Industrial REIT. Its unit price touched 21c with 8 lots changing hands at that price in 4 transactions. Almost all of last session's trades were at 21.5c.

The recent weakness in this REIT's unit price could be attributed to some heavily vested investors anticipating a lower than expected DPU which came in at 0.51c, payable on 15 March 2011. The guidance was for 0.52c in a circular dated 22 Sep 2010. I am not at all surprised since I had expected a lower DPU of 0.5c myself when I revised the DPU and fair value of this REIT on 11 Dec 2010. Read my blog post here.

So, a DPU of 0.51c is rather pleasant for me. This could be due to the fact that "I did not take into consideration the other positive developments in the Market Update which is the 100% occupancy achieved for 15 Tai Seng Drive (85.7% as of 31 March 2010) and 23 Tai Seng Drive (84% as of 31 March 2010).  Conservatively, this should add about $400,000 to the REIT's annual rental income."

In its report, the management also said that the newly acquired property of 27 Penjuru Lane only contributed 78 days of rental income, being only acquired on 15 October 2010. So, could we expect next quarter's DPU to be marginally higher when the property contributes three month's worth of rental income to the REIT? Perhaps.

This REIT is still a strong proposition for anyone looking for a reliable stream of passive income. I have put in a BUY order at 21c in case the selling continues in the next session although I do not think anyone in his right mind would want to sell at that price.

Annualised DPU: 2.04c
Gearing: 32.7%
NAV/unit: 27c

See presentation slides here.