Charts in brief: 5 Jul 10.

NOL: MFI did not manage to recapture 50% as support and its continuing decline suggests a lack of demand.  RSI similarly did not manage to recapture 50% as support and this suggests the speed of decline in price is relentless. Downtrend in price is intact. Since forming an inverted hammer on 21 Jun, volume has increased as price declined.  In the last two sessions, trading volume has fallen somewhat. This might or might not be a temporary respite.  I see support at the flat 200dMA, $1.83, and resistance at a confluence of MAs, $1.98.

SPH: Price touched a high of $3.88 again. MFI is rising sharply.  Demand is strong.  OBV is rising.  Accumulation is ongoing. Volume is, however, a tad lower today.  Breaking $3.88 could possibly see a target at $4.08 reached. Resistance at $3.95, the lower high formed on 10 May, would have to be taken out first, in such a case.

Metro: This counter has been in a downtrend since it peaked on 7 Jan, touching a high of 90.5c. Since May, indicators are showing some strength returning.  MFI has been climbing since late May.  OBV has been rising since late May.  RSI has been rising since early May.  The peak in distribution happened on 25 May as an ugly black candle was accompanied by a huge spike in trading volume.  A low of 73.5c was touched in two separate sessions on 21 May and 7 Jun.  That likely is the immediate support for now.  With momentum oscillators bouyant, it is unlikely that 73.5c would be taken out anytime soon.  In fact, the 20dMA has been rising gently since middle of June. The trend is still down but the worst might just be over, for now.

Related posts:
NOL: Downtrend.
Charts in brief: 2 Jul 10.

K-Green Trust: A stable source of passive income.

I spent some time recently looking into the latest trust to list in the stock market here: K-Green Trust (KGT). This is an infrastructure business trust listed by Keppel Corporation recently. Initially, it only has three assets:

1. Senoko Waste-to-Energy Plant

(Concession period: 15 years from 1 Sep 09)

2. Keppel Seghers Tuas Waste-to-Energy Plant

(Concession period: 25 years from 30 Oct 09)

3. Keppel Seghers Ulu Pandan NEWater Plant

(Concession period: 20 years from 28 March 07)

The Waste-to-Energy plants treat close to half of Singapore's incinerable waste while the NEWater plant is one of Singapore's largest.

The main attraction of this trust is the stability of its non-cyclical cash flows and a lack of counter-party risks as its customers are NEA and PUB.

Using the usual metrics for analysing trusts, we find that KGT has zero gearing, has an estimated dpu of 7.82c (which translates into a yield of 7.38% based on the last traded price of $1.06) and is currently trading at a 5.5% discount to its NAV of $1.12. Although the small discount to NAV is unattractive, the zero gearing is.  There is room for KGT to gear up to, say, 40% and improve its dpu in time.

Stable cash flow, low risk and room to grow.  This sounds like a good addition to my passive income portfolio. It diversifies my income stream and injects a higher level of stability at the same time. The lower yield is acceptable because of its debt free balance sheet.  When a balance sheet is heavy in debt, the risk is higher and, consequently, I would demand a higher yield.

I would like to buy some units of KGT but how much would I pay? On its first day of trading, KGT started off at $1.17 and hit a high of $1.33 and closed at $1.11. Usually, I would depend on TA here but being so new in its listing, four days old, to be exact, TA is impossible. However, we can see that it reached a low of $1.00 on 1 Jul and formed a white candle with a long upper wick on 2 Jul as it closed at $1.06.  This suggests some selling pressure.

Why the selling pressure? If we remember that KGT units were actually given to existing shareholders of Keppel Corporation as a special dividend, the reason becomes apparent. Some shareholders are monetising their "dividends".  If this continues to play out and if the buying interest does not strengthen to counter balance the selling pressure, KGT unit price could go lower.

I would be quite happy to collect some units at $1.00 which would give a yield of 7.82% to begin with.

K-Green Trust rated hold
Monday, 28 June 2010

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