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Thanks to accumulation at much lower prices, my long position in CapitaMalls Asia is firmly in the black. The question I am faced with now is whether to sell.
Breaking out of a double bottom formation almost one year ago, the share price of CapitaMalls Asia has been climbing a wall of worries. On the weekly chart, the uptrend is clear to see. Could this continue? It could, of course.
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| Weekly chart. |
However, with the MACD histograms not forming higher highs, we could see a pulling back in share price. When? That is harder to say.
This possibly impending weakness is, however, likely to be short lived as the CMF shows smart money pouring back into the stock. Hence, a pull back to support is likely to see strong buying interest.
Drawing a trendline to connect various lows, it is easy to see that the 20w MA is the support to watch. Using Fibo lines, we get a rough idea of where is the support in dollar terms in case a retracement should take place. In this case? $1.93 seems likely.
Remember, as always, that TA is about probability and could help to optimise returns but there is no certainty.
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6 comments:
AK
CMA had run away. this counter has the front seat at the rise in consumption in China. doubt it will succumb to the "slump" in Sg property counter.
at $1.93, i will buy some too. my target price is $2.03, the last breakout resistance.
Hi seefei,
My long position here is quite significant and I am hoping to add on pull backs. Too early to say if it would or would not happen.
Anyway, might sell some as a hedge. :)
Thanks for commenting on the technicals of this one! As mentioned before, CMA is my cornerstone growth investment as I continue to like the long-term play on Chinese and SG consumption and real estate. The recent restructuring of CapLand I also see as positive, as it focuses CMA's parent company on fewer regions (for me, real estate is a very local business with limited regional synergies).
But the run over the last 12 months was fast.. good for us, but I agree it's time to take some money off the table. Have been thinking since it went over 1.80. I have a stop loss at 2.00 right now, that I hope to increase a bit before it gets triggered.
As for re-entry, my gut feel was around 1.80, but thanks to your chart comments here I might place a first batch at 1.90-1.95, once the time is right..
Hi Jay,
Share prices climb a wall of worries and I would be worried if they don't.
For sure, there is nothing wrong with taking some gains off the table especially after a long winning streak. I have done just that as share price tested what seems to be a strong resistance band between $2.18 and $2.20.
Will buy again if share price were to retrace to test supports. ;)
OCBC also raised its target price for CapitaMalls Asia to $2.55 from $2.16 and kept its ‘buy’ rating.
“We continue to favor CapitaMalls for executing sharply on a well thought-out strategy: active capital deployment into its growth market China through deepening its operational presence in key cities, such as Shanghai, Beijing, Chengdu and Wuhan,” OCBC said.
CMA announced it had been awarded a shopping mall site in Wuhan. It secured the 70,400sm site with potential for 240,000sm of GFA (excl. car park) for RMB660m (RMB2,700psm GFA). The site is strategically located at the junction of Jiefang Ave and Gutian Second Rd in Hanyang, about 8km from the city centre, and has a direct connection to the Gutian 2nd Rd metro station on Line 1. There is an estimated 80k population catchment within 1km of the site and 0.5m within a 5km radius, with potential reach 3m population
when the 6th Jianghan Bridge is completed by 2015.
The development will comprise a
mix of retail (c.70%) and office space. In the preliminary plans, the office space to be housed in two separate blocks can be built for enbloc sale and based on demand, which will improve the returns of the project in the longer run.
Using a total development cost of RMB2.8b (RMB12kpsm GFA) and stable rents of RMB150-200psm/mth, the
development is expected to give an initial net yield of 4-5% when completed in 2015, and rise to 8-9% when stable. This is in line with returns for newer malls in its portfolio. Furthermore, building a critical mass of malls in this area
would enable the group to leverage on its existing network and experience in Central China. After this acquisition, balance sheet remains healthy, with see-through gearing expected to remain at about 40%, including the current
land purchase and expected drawdown for construction over the next year.
With yield compressed for its listed REITs, which have rendered them more effective currency
platforms, the group will have even greater flexibility in its capital management exercises going forward.
Maintain BUY. We raised RNAV and TP by 1ct to S$2.70 and S$2.30 after adjusting for the latest transaction. We believe targeting the mass and mid-market consumers amid rising urbanisation in Tier 2 cities should yield positive
returns in the medium term. We continue to like CMA for its lead in the Asian retail real estate sector. Earnings and NAV growth should be sustainable with the gradual ramp up if its ongoing operations.
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