Cache Logistics Trust: Weekly chart.

For quite a while now, I have been investing for income. However, friends and readers of my blogs in the early days would know that I am not averse to investing for capital gains as well. Logically, who would be averse to investing for capital gains?

For a longer term picture, I like to look at weekly charts. Looking at the weekly chart of Cache Logistics Trust, it is obvious that it has been in a downtrend for months, well, since mid September 2010. I feel that a rebound is probably on the cards, if not a reversal. Why? The MACD has formed a double bottom and the distance with the declining signal line has narrowed. We could see a bullish crossover in time although it would almost certainly happen in negative territory.

Next, look at the OBV. Since forming a low in the week of 21 February, it has not formed a lower low and this is although price went on to touch new lows. This suggests that smart money is accumulating units in this REIT as price weakened in the longer term.

In terms of candlesticks, a white hammer was formed last week. This is following the preceding week's big black candle. This is a bullish signal which, of course, needs confirmation. If confirmed, immediate resistance are at 95.5c (20wMA) and 96.5c (50wMA). Overcoming these resistance levels would give a target of 98.5c which is resistance currently provided by the trendline resistance which approximates the upper Bollinger band.

With the next income distribution due to be announced on 26 April, chances of an upward movement in unit price is rather good. I have been accumulating and wish fellow unitholders the best of luck.

Related post:
Cache Logistics Trust: Testing supports.

Cache Logistics Trust: Testing supports.

In my last blog post on this Trust, I said that we should watch for a retest of supports at 93c and 92.5c. Today, those prices were tested as price touched a low of 92.5c before closing at 93c. Although volume was much higher relative to the preceding sessions, it is lower compared to 23 Feb, 15 and 24 Mar when the same prices were tested and even breached in the case of 15 Mar. This is an important development as it suggests that selling pressure has seemingly reduced.

As the ADX still suggests a lack of trend, look to the Stochastics for guidance. It suggests that the counter is now oversold. The potential for a reverse head and shoulders pattern remains just a potential for now. Although I think that there is a nice chance it could come to fruition, Mr. Market could have other plans. I would hedge and I have put in my buy queue at 92.5c. If the support should hold, I would then buy more.

Related post:
Cache Logistics Trust: Accumulate on weakness.

Industrial rent forecasts strongest for Singapore.

This research paper on Asia Pacific real estate by DTZ Research was published on 23 February 2011. DTZ Research rates properties as HOT, WARM or COLD.  HOT refers to properties severely undervalued. WARM refers to properties somewhat undervalued to somewhat overvalued. COLD refers to properties which are very much overvalued.

It is very interesting to see that Singapore properties are rated as HOT for all three markets researched, namely, office market (-12%), industrial market (-14%) and retail market (-8%).  In more detail, HOT refers to an investment where investors can expect to make returns higher than the risk adjusted rate of return. Markets estimated to be more than 5% under-valued are classified as HOT. To put things in perspective, the office and industrial markets in Hong Kong are rated COLD. Taipei's industrial market is also rated COLD.

As I am heavily invested in industrial properties S-REITs, notably in AIMS AMP Capital Industrial REIT and more recently, in Cambridge Industrial Trust, Cache Logistics Trust and Sabana REIT, I am pleased to have affirmation from DTZ Research when I read this:  "Singapore, a traditional powerhouse in trade and logistics, is expected to be the best industrial performer over the forecast period in terms of rental growth, forecast at 3.6% pa." Refer to page 8 of the research paper. See it here.

Related post:
Higher rents to benefit industrial properties S-REITs.

Cache Logistics Trust: Accumulate on weakness.

We could be seeing the final move in the formation of a reverse head and shoulders pattern. Volume has been reducing as price weakened from a high of 96c on 4 April. The counter closed at 93.5c today.

What do I like?

1. Low volume pull back.

2. ADX suggests a lack of trend. Looking at the Stochatics, it has entered oversold territory.

3. Potential reverse head and shoulders pattern. Watch out for price possibly testing 93c or even 92.5c for support.

4. Results and income distribution will be announced on 26 April. Expecting that to be a catalyst to send price higher.

So, if the pattern is valid, how high could the price go? Well, the low of the pattern was seen on 15 March and that's at 91c. The neckline of the pattern is at 96c. Projecting this difference forward would give us a target of $1.01. Not too bad, if I do say so myself. I am accumulating on weakness.

Higher rents to benefit industrial properties S-REITs.

In the last one month, I bought more units in industrial properties S-REITs.

1. I became an investor in Cambridge Industrial Trust again. Read blog post here.

2. I bought more units of AIMS AMP Capital Industrial REIT. See latest blog post here.

3. I became an investor in Cache Logistics Trust. Read blog post here.

4. I became an investor in Sabana REIT too. Read blog post here.

I believe that all these REITs are fundamentally strong and if we are investing for income, these could be very rewarding in the next two years. Distribution yields range from 8.15% for Cache Logistics Trust to 9.76% for AIMS AMP Capital Industrial REIT at current prices. Attractive? Quite.

DTZ Research said that rents for industrial space in Singapore are rising. Although average rent grew 3% quarter on quarter, current average rent is still 17.1% below the peak of 2008.


"DTZ added that industrial rents are anticipated to continue to increase. That is because the annual average potential supply of 7.5 million square feet between 2011 and 2013 is significantly lower than the historical 10-year average demand of 9.3 million square feet." CNA, 07 April 2011.


If we are trying to beat inflation and protect our wealth from shrinking, industrial properties S-REITs are definitely worth considering. I have felt this way for more than a year and I continue to believe in their fundamentals.

Cache Logistics Trust: When would I buy more?

Cache Logistics Trust went as high as 96c/unit today before closing at 95c/unit, forming a gravestone doji in the process. Buying more at current levels means a smaller margin of safety, for sure. Volume was also lower as price tried to move higher. A picture of negative divergence is forming: rising price and falling volume.

Connecting the lows of 15 March and 24 March gives us a trendline support. Waiting for price to pull back to this support level before loading more would be sensible. This is currently at 94c which is also where we find the flattening 20dMA. In rather bearish circumstances, we could even see price breaking support, be it a whipsaw or not, to touch 93c. I could buy more then.

Having said all this, if a person is worried about missing the boat and would really like to initiate a long position, 95c could be a hedge. Why? Well, the momentum oscillators are all rising nicely: the MACD lookings like it could be crossing into positive territory soon. Using a Fibo fan, we also see that  95c is exactly where we find the golden ratio 61.8% and if this were to be established as a support, unit price could touch 97c in the near future.

Cache Logistics Trust has strong fundamentals and its technicals have strengthened. However, I am not one to chase after rising prices. If the opportunity presents itself, I would buy on weakness.

Related posts:
Cache Logistics Trust: Initiated long position at 91.5c.
Cache Logistics Trust: Positive divergences.

Cache Logistics Trust: Downtrend intact.

After a brief two sessions of trading above the downtrend which started on 28 Jan, its unit price is once again within the downtrend. Fundamentally strong, this REIT's technicals are somewhat weak. The OBV suggests that distribution is ongoing.  

Could the divestment on 21 March by substantial shareholder, Morgan Stanley, have spooked investors? Morgan Stanley's stake in the REIT reduced from 7.1860 % to 6.9790 %.

With the chart spotting positive divergences and with the MFI suggesting some underlying demand, I expect the supports to hold up if retested. Unless distribution activities cease, it would be hard for price to move higher, however. So? This REIT could be bottoming too and, based on its strong fundamentals, I would accumulate on weakness, if any.


Related post:
Cache Logistics Trust: Mixed signals.

Cache Logistics Trust: Mixed signals.

Cache Logistics Trust's price action formed a hangman today, not a bullish signal, surely. However, closing at 94c is bullish since it is beyond the trend resistance. So, is the downtrend broken? It would seem so.

The momentum oscillators are encouraging and are still trending upwards with higher lows. A continuation of the upward movement would see immediate resistance at 96c which would be a good price to divest perhaps partially for a quick trade. Price could even touch 97c if sentiments are very bullish.

Related post:
Cache Logistics Trust and CapitaMalls Asia.

Cache Logistics Trust and CapitaMalls Asia.

Cache Logistics Trust: On a day with lower volume, price could not break out of the downtrend. Instead, a doji, suggesting indecision, was formed.

Could we see price overcoming resistance and test the merged 50d and 100d MAs at 96c? Although the positive divergences are plain to see, we need volume to expand on any move upwards in order to overcome the trend resistance. Immediate support is at 92.5c in case of a pull back.

JP Morgan reduced its holdings on 15 March from 6.97 % To 5.83 % (44,210,000 units to 37,032,000 units).  That's a reduction of 7,178 lots. That was the day the trust touched 91c.

CapitaMalls Asia: No breakout today which obviously means that the downtrend is intact. Immediate support is at $1.66. If that were to break, keep an eye on $1.57. If it were to be retested intact on lower volume, it would be bullish.

A breakout would see immediate resistance at $1.75, $1.78 and, ultimately, $1.83.

Related posts:
Cache Logistics Trust: Positive divergences.
CapitaMalls Asia: At resistance.

Cache Logistics Trust: Positive divergences.

I initiated a long position recently in this Trust on 15 March at 91.5c. That decision was made mostly on fundamentals. The technical consideration was that 91.5c was the lowest it ever hit since its IPO but it went on to touch 91c on the same day. I was even musing as to whether it would hit 88c next which, incidentally, is its NAV/unit.

Today, I decided to rely on the many positive divergences in the daily chart of CLT and I added to my long position with additional purchases at 92.5c. The counter closed at 94c today, forming a long wickless white candle in the process. Volume was higher than the session before too.

However, closing at 94c means that the downtrend is still intact. If there should be a follow through next week, we would see the downtrend broken and price could rise to test resistance at 96c as provided by the merged 100d and 50d MAs or even 97c which is where we find the 200dMA.

Related post:
Cache Logistics Trust: Initiated long position at 91.5c

Cache Logistics Trust: Initiated long position at 91.5c.

"I said in an earlier blog post that I am willing to pay a small premium above NAV which is acceptable for a lower risk investment. So, if a retest of the low of May 2010 at 91.5c were to happen, I could buy some units." This was what I said in my blog on 8 March, a few days before the terrible disaster hit Japan. Today, I bought some units of CLT at 91.5c.

With the acquisitions the manager announced yesterday, this REIT is looking more attractive as its gearing level remains under 30% while its DPU could bump up by a few percentage points. Could its unit price weaken further? It could as its downtrend is technically very much intact.

Well, 91.5c/unit was my target entry price and, I dare say, is a fairly good one with a smallish 3.98% premium to NAV/unit which is at 88c. I have gotten my foot in the door, so to speak.

I have a few more blog posts which I would like to put up this evening but it really depends on my condition later on. My second hot yoga session is in less than an hour!

Related post:
Cache Logistics Trust: Why not buy at 94.5c?
Cache Logistics Trust: Acquisitions.

Cache Logistics Trust rated 'buy' by OCBC. Initiate buy on CLT with a fair value of $1.03 largely on valuation grounds.
Tuesday, 15 March 2011

© 2011 - The Edge Singapore

Cache Logistics Trust: Acquisitions.

Cache Logistics Trust is making its maiden acquisitions.

"The two unrelated transactions were signed with APC Distributors Pte Ltd (“APC”) for the acquisition of 6 Changi North Way for a purchase price of S$30.9 million and with Kim Heng Tubulars Pte Ltd (“Kim Heng”) for the acquisition of 4 Penjuru Lane for S$8.9 million."


Some important numbers:

1. Both acquisitions are expected to be accretive to Cache’s distribution per unit. The combined NPI yield is expected to be 8.0% which compares favourably to the NPI yield of 7.7% for the existing portfolio of Cache as at 31 December 2010.

2. Both acquisitions will be fully-funded by debt. The aggregate leverage of Cache will increase from 23.7% (as at 31 December 2010) to 27.6% as a result of the acquisitions.

Read press release here.

I remain interested in initiating a long position in this trust.

Cache Logistics Trust: Why not buy at 94.5c?

More than one person asked why not I buy units in Cache Logistics Trust at 94.5c since I like its fundamentals. Well, it is just like asking why not I buy an Audi A3 at the current price since I like it. It is not really a question of affordability. As usual, it is a question of value for money.

At 94.5c, I would be buying at 5.5c above NAV. That is a 6.18% premium. Regular readers would know that I loathe to pay above NAV for a REIT. It is just like many loathe to pay COV for HDB flats but in those instances, sometimes, they do not have a choice or they really like a particular flat. After all, it could be one of a kind thing. (Ask LP at Bully the Bear. He would tell you his experience.) With a REIT, however, I am willing to wait for the right price.

So, what is the right price for this REIT for me? Well, I said in an earlier blog post that I am willing to pay a small premium above NAV which is acceptable for a lower risk investment. So, if a retest of the low of May 2010 at 91.5c were to happen, I could buy some units. Didn't I say 92.5c could see me buying some too? Yes, even at  92.5c.

What are the chances of its price going lower? Well, looking at the weekly chart, I would say there is a fair chance of it happening, given more time. In fact, we could be seeing the formation of a down trending channel.

A look at the MACD and we see a lower high. The previous low has already been surpassed and a lower low is a given. Look at the OBV and we see obvious signs of distribution over the longer term. However, the higher lows on the MFI and RSI show that some support is forming as price declined. So, downside could be limited.

Accumulating on weakness should be a fairly safe thing to do but for anyone who is willing to stomach the possibility of a 2c to 3c paper loss and would like to buy in at 94.5c, it's your call. Don't let my ideas affect you.

Related post:
Cache Logistics Trust: A retest of 91.5c low?

High Yield Portfolio - Update.

Sometimes, we just stumble upon a good thing. One of my inaugural blog posts when I started ASSI on Christmas Eve 2009 remains the most popular blog post today. I am talking about "High Yield Portfolio".

In October last year, a reader asked if I would do an update on the portfolio and I did. However, it was a "Reply from AK71" kind of thing and were mostly one-liners. See it here.

Have I deviated much from the first time I introduced this portfolio for investors who are more interested in investing for income? Not much. I am still invested in all six counters although the weight of each counter in the portfolio could have changed somewhat.

My largest investment is based on rather contrarian ideas and has attracted some skepticism, putting it mildly. I started investing in Saizen REIT at 13c a unit and I kept loading up.  Even at 16.5c a unit, I bought some. For sure, this is an under-performer in terms of capital appreciation. However, I invested in this with a view that it is grossly undervalued and that things could not get any worse. So, if we take care of the downside, the upside should take care of itself. The annualised DPU of about 1c is much lower than my estimates from a year ago and, at first glance, seems unattractive. I did not take into account the amortising nature of its new loans then. However, when we realise that the DPU could actually be 50% higher if not for the amortising nature of its loans (unlike all the CMBS before), it is immediately apparent how strong this REIT's cashflow from operations actually is. See: 2Q FY2011 results.

My second largest investment is also rather controversial: AIMS AMP Capital Industrial REIT. Reading some other blogs as well as comments left in my blog, I realise how there is still deep seated mistrust of its management. This is despite the fact that it is quite a different animal from its MI-REIT days. It is financially stronger and it has two strong sponsors. It has all its financial requirements well looked after and even managed to refinance its loans at a lower interest rate. Some people say that they were the early investors in the REIT during its MI-REIT days and that they would never recover their money. It might surprise them to know that I was also an early investor but when the REIT was recapitalised, I looked at the numbers and decided that at 20.5c, it was a safe investment promising an almost 10% distribution yield. I increased my investment in the company by some 5x right away and I have recovered all my losses and more since, especially with the rights purchased at 15.5c/unit in September last year. See: Rights issue. Would I buy more now? At 20.5c and with an estimated DPU of 2c for a distribution yield of 9.76%, why not? See: Acquisition of Northtech.

My third largest investment is now in First REIT after its recent rights issue. A blog post of mine says that this one is for keeps and I still believe it is so. See: This one is for keeps. Actually, it is more so now after the rights issue and acquisitions. An expected DPU of 6.4c and the current price of 74c, it will deliver a distribution yield of 8.65%. With gearing low at 15% or so, it has more headroom to gear up for future acquisitions which could bump up DPU. See: FY2010 results.

My fourth largest investment is in LMIR. The investment was premised on a robust Indonesian economy with 60% of its GDP from domestic consumption. However, I do not like the idea of the management losing lots of money in foreign exchange forward contracts. See: Foreign exchange forward contracts. I do, however, recognise that this is a stable passive income generator and exchange rates (Rupiah/S$) should be quite stable from here. DPU for FY2010: 4.44c and at a unit price of 54c, that's a distribution yield of 8.22%.

My fifth largest investment is in SPH. No need to say much here. SPH is one of the highest yielding blue chips I know of. Although it is synonymous with The Straits Times and other publications, it is really its exposure to real estate that I really like. I especially like the fact that it owns and manages The Paragon on Orchard Road. I also like that fact that it is a co-owner of the soon to be completed Clementi Mall. Would I buy more now? The yield is still about 6.5% even at recently traded prices. I might buy more if price were to weaken further. See: Final dividend.

My smallest investment in this High Yield Portfolio is in Suntec REIT. This REIT was something I went in big at about $1.00/unit, give or take few cents, with a view that it would be a beneficiary of the expected improvement in tourist arrival numbers and improving office rentals. Technically, it was also looking good then. I think it is quite boring now with price at $1.50/unit or so. I have divested most of my investment in this REIT and still retain a small investment. Expected DPU for 2011: 9.7c. See: Buy calls.

Do I have any counters I would consider adding to this High Yield Portfolio? Yes, there is one: Cache Logistics Trust. I have blogged about it regularly and did so recently again. Read it here. I could replace Suntec REIT with Cache Logistics Trust if the conditions were right.

Cache Logistics Trust: A retest of 91.5c low?

This is one counter I have been patiently waiting for price to reach a level I consider relatively attractive. Technically, it is looking quite possible that my wish could come true.

Today's trading volume is the highest since 1 Nov 2010. A long black candle was formed. Coupled with increased volume, this is very bearish. We could see the recent low of 92.5c tested next. Could we even see the low of 26 May 2010 at 91.5c tested? There is a chance.

I have put in my buy queue at 91.5c. With an annualised DPU of 7.76c, it would mean a distribution yield of 8.48%. This is lower than AIMS AMP Capital Industrial REIT's 9.76% (with a DPU of 2c at the current price of 20.5c).

A lower distribution yield is acceptable to me due to the REIT's much lower gearing of 23.7% and much higher interest cover ratio of 9.3x. Cache Logistics Trust's numbers look stronger than AIMS AMP Capital Industrial REIT's (gearing of 33.6% and interest cover ratio of 5x). Buying at 91.5c is still a premium of 2.8% over its NAV/share of 89c but this is marginal and acceptable for a lower risk investment.

Related post:
Cache Logistics Trust: Weakness after XD.

STI up 1.8%: Out of the woods?

The STI closed 1.8% higher and recaptured the 3,000 points support. Whether 3,000 points is now support once more, actually, needs confirmation. It is too early to say that we are out of the woods.

As most of my investments in the stock market are not index linked counters, I am not too bothered by the STI apart from the possible spillover effects it could create.

1. AIMS AMP Capital Industrial Trust: My buy queue at 20c was not filled. I am continuing the buy queue at 20c for next Monday. Although price closed at 20c today, most of the 8,840 lots transacted today were Buy Ups at 20.5c, 6,913 lots to be exact. 20c is a very strong support both technically and fundamentally.

2. Cache Logistics Trust: I am still waiting to buy this at 92.5c. It did touch 92.5c recently but my Buy order was not filled. So, am I going to buy at a higher price? Nope. I will continue to wait at 92.5c since technical weakness is still apparent.

3. CapitaMalls Asia: Closed 1c higher. Technically very weak. See if it captures support at $1.83. The counter closed at $1.77.

4. First REIT: For anyone who is seeking exposure or increasing the weight of his long exposure to this REIT, 72c support has held up and could be a fairly safe entry. However, if 72c breaks, the next support is at 69c. If a possible 3c paper loss is acceptable, why not?

5. Genting SP: Similar to CapitaMalls Asia, this counter must capture its previous support in order to set investors' minds at ease. That would be at $2.00. The counter closed at $1.95.


6. Golden Agriculture: Regained support at 63.5c. This needs confirmation in the next session but it is a shot in the arm for investors. Closing below support recently could just be a whipsaw.

7. Healthway Medical: Closed at 14c which was support. This could now be resistance. Technically and fundamentally weak, I would only go long on this counter for quick trades for now which is what I have done before.



8. Saizen REIT: Buy ups at 16c happening. 15.5c remains a very strong support, technically, and is a fairly safe entry price for any interested investor.

9. ASTI: I increased my long position and I shared this on Twitter yesterday. EPS: 2.6c. NAV: 18c/share. Dividend: 0.7c/share. I bought more at 10c/share. It was my only "update" yesterday in my blog. If you are not following me on Twitter yet, you might want to do so for my short "blogs".

OK, hungry for dinner now after an afternoon nap, recovering from hours on the beach. Have a wonderful weekend! :)

STI climbs 1.8% to 3,025.16 at closing
Friday, 25 February 2011

© 2011 - The Edge Singapore

STI soaked in red and AK71's thoughts.

I slept a full 8 hours last night! I also took a 2 hours nap in the afternoon today! Now, I am feeling drowsy from a very good dinner, a good facial treatment and a good massage. Yawn...

OK, a quick one:

1. CapitaMalls Asia: $1.83 support is gone. I remember saying that if this support goes, the next major support is probably at $1.70. $1.83 could be support turned resistance. Would I sell my loss making investment in the company? Nope. Why? Because I think the selling could be overdone. Look at the weekly chart and you would see a positive divergence between price and the MFI and RSI.

2. AIMS AMP Capital Industrial REIT: My buy order at 20.5c was filled this morning. I am now in the queue at 20c to buy more if the weakness continues. At 20c, the yield would be 10% per annum.

3. Cache Logistics Trust: Putting in a buy order at 92.5c. Nice chance of getting it filled. This is the lowest geared industrial property trust in Singapore right now, if I remember correctly.

4. First REIT: In an earlier blog post, I said there is probably a better time to increase exposure to this REIT and that price could retreat to 72c. It has done just that today. I am tempted to add to my long position at this price for a 9% yield per annum. However, I would not throw in the kitchen sink. Watch 72c which is supported by the 100dMA. If it goes, the 200dMA is at 69c and that is some way to fall.

5. Saizen REIT: 15.5c is where we find the rising 100wMA.  This is a very long term MA and likely to be a very strong support. For anyone waiting to enter or increase exposure to this REIT, this would be a fairly safe entry price.

6. Golden Agriculture: Breaking support provided by the 200dMA at 63.5c is very bearish. It needs confirmation to see if the 200dMA is now support turned resistance. The momentum oscillators are negative and we could see the 100wMA tested as support if this keeps up. Currently, it is at 54c.

I am having a hard time keeping my eyes from closing. So, that's all for tonight. Good night and good luck. :)

AK71 is on vacation!

In my last blog post, I mentioned that I had to catch a very early flight this morning and had to sleep early. Well, sleeping early is something very difficult for me and I didn't sleep very well last night.  If you are wondering what am I doing catching an early flight today, I am on vacation! Yes, finally!

I just woke up from a short nap and got connected to the internet a while ago. I have checked the stock market and saw, wow, a sea of red! It seems that the unrest in the Middle East and North Africa is shaking the global stock markets. I see prices of gold and silver climbing higher even as equities retreated.

This could be one of those opportunities to load up on counters with sound fundamentals. It could be a chance to make some value buys. This is the investor in me talking. However, the trader in me says that things could go lower and that we should wait to see supports holding up before increasing our long exposure. This is only sensible, is it not?

Which are the counters I am eyeing? Quite a few and here are three I am thinking of loading:

1. CapitaMalls Asia: Reversal signal failed to be confirmed, similar to most other counters' reversal signals. Keep an eye on the $1.83 support. See my earlier blog posts for more information.

2. AIMS AMP Capital Industrial REIT: 20.5c is holding up nicely as of now. I would probably put in a buy order tomorrow at 20.5c. Would definitely buy more at 20c, if ever tested. See my earlier blog posts for more information.

3. Cache Logistics Trust: I have been waiting for another chance to start a long position in this REIT. Touching 93.5c today, I might just be given a chance to buy a bid or two lower. See my earlier blog posts for more information.

Although I have internet connection in the hotel, I just realised that they use a different type of electrical plug from Singapore. I will have to see if I can get an adapter from a hardware store or supermarket. If I cannot find an adapter, you might not see me blogging for a while as my notebook's battery is running low on power.

Also, as I am on vacation, I might be somewhat lazy. It is only natural, isn't it? ;)

So, don't be surprised to see one liners or nothing at all. Hahaha... A vacation is a most uplifting must do for working adults. Despite a sea of red in the stock market, I am actually feeling quite happy. It could also be that most of my investment portfolio is for income. So, I am not so affected by the market weakness since capital appreciation is a secondary objective for me.

Till the next blog post, good luck to one and all. :)

Cache Logistics Trust: Weakness after XD.

Cache Logistics Trust went XD and the price gapped down, forming a big black candle, rebounding a tad as it hit support at 97c provided by 2 longer term MAs, the 100d and the 200d MAs. This is a familiar pattern. If we look at the candlestick of 3 Nov 10, it was the same story of weakness after XD. Could we see the unit price fall further? Quite likely. I have been waiting for a nice entry price for some time now. When to buy?

On 23 October 10, I said, "On 29 July, CLT was trading at $1.01 per share. This would give a yield of 6.77% based on an annualised DPU of 6.84c. Its unit price is now 98.5c, not much lower. That's unattractive for me although I recognise that it is a relatively safe investment." Read blog post here.

On 16 December 10, I went on to say, "With an annualised DPU of 7.76c, at today's closing price of 94c, the distribution yield would be 8.26%. Still not attractive enough for me but I recognise its strong numbers which would convince me to start a small long position if price would decline to test its historical low of 91.5c for a yield of 8.48%." Read blog post here.

Technically and on hindsight, 94c would have been a great entry price as price touched a low of 93.5c on 16 Dec and went on to touch a high of S$1 on 28 Jan. Fundamentally, I notice the annualised DPU increased from 6.84c to 7.76c. This is a strong passive income generator and the numbers show it. More than ever, I want a slice of the pie.

Now, 94c would stay in the heads of market participants. People like myself who were waiting for a retest of 91.5c would now wait for a retest of 94c instead before entering. Judging from past data, price could continue to weaken for the next 4 to 6 weeks. I am going to watch this as I definitely like this REIT for its strong numbers which justify the lower distribution yield.

The MACD in the last session completed a bearish crossover with the signal line while the RSI broke its trendline support as it falls further from the overbought territory. OBV is rather flat but definitely lower than  2H2010. Signs suggest that people currently vested in this Trust are strong holders investing for income. However, momentum is suffering as some are selling after the counter went XD. I shall wait and see.

Gearing: 23.7%
NAV/unit: 89c
Annualised DPU: 7.76c
Interest cover ratio: 9.3x

It is important to note that Cache Logistics Trust is currently paying out 100% of its income and this would come to an end in December 2011. From 2012, it would pay out at least 90% of its income. As an aside, AIMS AMP Capital Industrial REIT is paying out 97.1% of its income on 15 March (3Q FY2011).

See 4Q2010 presentation slides here.

Cache Logistics Trust: Still on my watchlist.

I hardly talk about Cache Logistics Trust but regular readers would know that this is on my watchlist. With an annualised DPU of 7.76c, at today's closing price of 94c, the distribution yield would be 8.26%. Still not attractive enough for me but I recognise its strong numbers which would convince me to start a small long position if price would decline to test its historical low of 91.5c for a yield of 8.48%.

Here are the numbers as at 30 Sep 10:
Gearing: 23.4%.
NAV/unit: 88c.
Interest cover: 9.2x.
Portfolio 100% leased.
WALE: 5.8 years.

Substantial institutional shareholders:
JPMorgan Chase   9%
Morgan Stanley     7%
The Capital Group 6%
Amundi                 7%

How likely is it for the Trust to retest 91.5c? Since 22 Sep, the OBV has been in decline, though bumpy. This suggests that there is gradual distribution going on. The MACD has also been on a decline. Volume is, however, very thin. Price could be quite volatile.

Anyway, if I get some units here, it is a move to diversify my portfolio but it is not absolutely necessary. If the price does not decline to the level I feel comfortable with, I would give it a miss.

See 3Q 2010 slides here.

Related post:
Cache Logistics Trust: Low gearing.