Saizen REIT: Properties in Sendai and YK Shintoku.

The quake that rocked Japan affected the city of Sendai the most. Saizen REIT has 22 properties in that city and we are still awaiting news on the extent of the damage. Here are photos of some of the properties in Sendai taken from Saizen REIT's website :

In a reply to a reader, I mentioned that of the 28 properties possibly affected (3 more each in Koriyama and Morioka), 13 properties are in the portfolio of YK Shintoku. I wonder how this would play out since YK Shintoku is still in default of its CMBS and not contributing to income distributions to unitholders.

If the 13 properties in question were totally destroyed, YK Shintoku's portfolio NAV would lower significantly. In such an instance, perhaps, it would not make much sense to continue trying to pay off the CMBS which is in default. It would make more sense to let YK Shintoku go into foreclosure. After all, Saizen REIT's other investments are ring fenced from YK Shintoku and are doing quite well without any contribution from YK Shintoku.

Of course, I am just raising a hypothetical scenario assuming that all 13 properties concerned were destroyed. A portfolio with a NAV higher than its outstanding loan is worth rescuing but a portfolio with a NAV lower than its outstanding loan should be considered for foreclosure. It is just good business sense, I believe.

Golden Agriculture: Testing the 200dMA.

Crude palm oil (CPO) price was down 2.75%, "touching their lowest level in four months as key crop data pointed to a surprise increase in stock levels." Source: Dow Jones Newswires.

Doing a one day contra on my most recent foray into Golden Agriculture was an example of how a little less greed could be a good thing. The counter's share price sank to retest support provided by the 200dMA at 64.5c in the last session on the back of higher volume. Could price go lower to test the lower Bollinger band at 62c? It could. If that were to happen, could it be time to buy? It is too early to say but it could be.

Pay attention to the MACD and see if it forms a higher low if price were to retreat further. A positive divergence would be a good signal that we could go in for another trade.

Related post:
Golden Agriculture: A one day gain of 7 to 9.4%.
Golden Agriculture: To sell or to hold?

Baby in pram by the beach.

On my recent vacation, while spending time by the beach in Phuket, I witnessed a somewhat interesting event.

A mother pushed her baby in a pram to the beach and stood there for quite a while before deciding to take a swim, leaving the pram on the beach as the tide was coming in.

If you take a close look at the three photos in sequence, you would notice that the pram's wheels were deeper in the sand in the second and third photos. An eye opener for me. 

Would you leave your baby all alone in a pram by the beach and go swimming in the sea for even a few minutes?

Actually, I was not sure that there was a baby in the pram until the lady came back from her swim and squatted next to it. 

A baby's arm came out to touch her and confirmed my suspicion!

CapitaMalls Asia: Closing at $1.70 support.

In the massive selling down, CapitaMalls Asia touched a new low of $1.68 before closing at $1.70, which remains an important support. Would the price continue to decline next week? Your guess is as good as mine.

However, what is clear is that the downtrend is still intact. If we draw a trendline resistance connecting the highs of 9 Feb and 17 Feb, we would see that it approximates the position of the 20dMA. This means that the 20dMA is providing immediate resistance. A retest of the high of 3 March at $1.78 could happen and it should be a strong resistance. Wait a minute? Did I just say could happen? Yes, I did.

If we look at the MFI, which takes into consideration volume and price, it has formed a higher low. There is some positive momentum in demand as price weakened. Now, if we look at the volume, on 28 Feb when a black hammer was formed, volume was very high. Look at the last session which also saw the formation of a black hammer and we would see that the volume is much lower. Sellers are less enthusiastic now.

The 20dMA would provide immediate resistance on the upside while immediate support is at $1.70 with a possibility of a retest of $1.68.

Related post:
CapitaMalls Asia: A basket case?