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.

Healthway Medical: 4Q 2010 results.

Not expecting any spectacular improvement in numbers from Healthway Medical. Let's take a look:

1.  Revenue declined 23.8% in Q4 compared to the same period last year.  For the full year, revenue declined 12.2% compared to the previous year.

2. Staff cost increased 11% in Q4 compared to the same period last year.

3. Profit before income tax decreased 68.2% to $1.133m in Q4 compared to the same period last year.

4. Cash flow from operations is positive for the quarter at $6,289m. This may seem like a good thing but scrutinise the numbers and we realise that most of this is because of trade and other receivables which came up to $6,927m. If we take these away, cash flow from operations would be negative.

 

5. EPS for the quarter is 0.04c which is an improvement over the 0.01c in Q3 but down from 0.23c in the same quarter last year. Full year EPS 0.14c.

See results here.


Although the numbers are still bad, generally, the numbers are getting less bad. The increase in staff cost seems to be slowing down while the reduction in profit is not as severe as before. Even the negative cash flow from operation situation is less serious now as compared to negative $2.3m in Q2 and negative $1.278m in Q3.

With an EPS of 0.14c, Healthway Medical is trading at a PE of 100x. No investor worth his salt would touch this. However, there could be opportunities to trade this counter and I would view any rebound as a chance for stale bulls to reduce exposure.

Immediate support is at 13.5c but if this were to break, we could see 12.5c next. Strong support is to be found at 11c. Technically, the only encouraging sign is the MFI which shows some underlying support with higher lows.

So, if we do not see a sell down tomorrow, it would suggest that only stoic long holders are left. In fact, from the peak achieved on 16 June 2010, volume has been declining as share price retreated. No matter how dismal the fundamentals are, if all the sellers have sold, share price could begin to bottom in earnest. Wait and see.

Related post:
Healthway Medical: 3Q 2010 results.