Golden Agriculture: 3 signs of possible weakness.

I am waiting to add to my long position here. There are signs that price could see some weakness in time to come.

1. Formation of a gravestone doji today on much higher volume. This suggests that buyers were unable to beat sellers as market participants mostly chose to lock in gains.

2. Declining volume as price rose. Volume is the fuel that drives rallies. Without volume, rallies would fizzle out.

3. A lower high on the MACD even as price formed a higher high. A negative divergence. Buying momentum is in decline.

Immediate support is at 72c. If this should fail to hold, I expect the 200d MA, a long term MA to be tested. This is currently at 67.5c.

Saizen REIT: Acquisitions and long term loans.

Although I divested a large part of my investment in Saizen REIT, I still like the idea of owning freehold residential real estate in Japan where two thirds of its population rent the homes they stay in.

The Japanese Yen has strengthened against the S$ quite a bit and this could translate to higher income distribution in 2012 for unitholders. Add YK Shintoku's contribution to income distribution and the recent acquisitions which were funded by debt, we could see DPU a bit higher than my last estimate of 1c. Whether the difference is going to meaningful would also depend on how many remaining warrants would be exercised before the next distribution.

I have said that I like the amortising feature of the loans taken by the REIT before. What I also like are the relatively long terms of the loans taken by the REIT. This logically lowers refinancing risks.

The REIT recently took on a loan of JPY500m which partially funded the acquisition of a property in Kumamoto. This is an amortising loan with a 20 years tenure. The interest rate is 3.35% per annum.

For any investor who bought at 13.8c/unit today, if I were to stick to an estimated DPU of 1c per annum, we are looking at a distribution yield of about 7.25%. Of course, I am hoping for a higher DPU.