China Hongxing: Target hit.

On 24 June, I wrote "With momentum oscillators turning up strongly, we could possibly see 16c tested." Today, China Hongxing hit the breakout target of 16c.  What next?

The OBV shows a sharp increase in accumulation.  No distribution is taking place yet, it seems.  However, MFI and RSI have both pushed into overbought territories. Also, notice the negative divergence between price and volume. A pull back in the near future is not unrealistic. Immediate support is at 14.5c followed by a stronger support at 13.5c. Remember, it's all about probabilities.

What would I do? I would lock in some gains. If I were to stay vested, it would be with a smaller position at this point in time. Congratulations to anyone who made money from this and if you see fit to contribute to my pocket money fund, thank you too. ;)

Related post:
China Hongxing: Breakout.

Mapletree Log: Acquires properties in Japan.

Mapletree Logistics Trust (a Temasek linked REIT), has shown its confidence in the Japanese economy by acquiring three distribution centres in Japan for a total of JPY13b or S$200m.

"MapletreeLog says it has sufficient financial flexibility and capacity to fund the Acquisition which is expected to be completed by end 3Q 2010. The purchase price and other acquisition costs of the properties will be fully funded by debt, which will bring MapletreeLog’s gearing level to 43.6%, after taking into account all acquisitions announced to date." (The Edge, 28 July 10, 13.23)

Its presentation slides show these acquisitions to be yield accretive. The investment would generate a return of 7.3% per annum.  At the last traded price of 88c, the yield is currently about 6.8%. These Japanese properties are likely to bump up DPU by 5.6% per annum. The properties are also freehold in nature.  No "depreciation". See presentation slides here.

Having said this, with these latest acquisitions, gearing level would be pushed up to 43.6%.  One wonders if Mapletree Log would go to unitholders with hat in hand in the near future or, perhaps, do a share placement.

MapletreeLog acquires 3 properties in Japan for $200m
Wednesday, 28 July 2010

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