Sabana REIT: Still waiting for a 10% yield?

Sabana REIT has an annualised distribution yield of some 9.68% now, with DPU at 8.81c and unit price at 91c. In an earlier blog post, I mentioned that this is a better buy at the current price compared to AIMS AMP Capital Industrial REIT.

Sabana REIT has lower gearing, higher interest cover ratio and better quality assets overall; all these with a distribution yield that is comparable to AIMS AMP Capital Industrial REIT. Buying at 90.5c or 90c (if we were lucky enough in the last session) would close the difference in yield between the two REITs.

Now, many, including myself, would like to buy more of this REIT if it should give a 10% distribution yield which would imply a unit price of some 88c. Is this possible? An earlier blog post suggested that this would be a very strong support. Read it here.

88c a unit? A salivating proposition. Some would know that I bought more units in the last session at 90.5c. Why not wait for 88c? Well, TA shows where the possible supports and resistance would be, it does not say if they would be tested. I always hedge.

Continuing on TA, let us look at the daily chart for Sabana REIT. This chart has been adjusted to take into account the recent income distribution. It is interesting to note why 90c has proven to be a strong support in the last session. It approximates the low of 31 March 2011.

Next, look at the declining volume over the last two weeks as price declined from a high of 93.5c (pre-adjustment would be 95.5c). A low volume pull back. Are the bears losing steam? Indeed, in the last two sessions, we saw the formation of dragonfly dojis. These are bullish candlesticks but single stick patterns could be unreliable.

What about the MACD? It has completed a negative crossover in negative territory. A double negative! Do I see worry lines on your forehead? Well, I am inclined to believe that Sabana REIT has gone into a trading range. Its downtrend was broken earlier in April.

In sideways trading, I would look at the Stochastics. What do we see? It is in oversold territory. Could it get more oversold? It could, of course. However, TA is about probability and the probability of further downside is smaller now. That is for sure. For sure? Confirm? Double confirm. Yes, there are certain things we can still be sure about. Isn't that a relief? Hossan Leong would be happy.

90c would be a sweet price to get more units of Sabana REIT and I have put in my buy order for tomorrow. Good luck to fellow unitholders.

Related posts:
AIMS AMP Capital Industrial REIT and Sabana REIT.
Sabana REIT: Bought more at 91.5c.

NOL: Reporting a loss.

NOL reported that it has made a loss due to increasing fuel prices and too much new capacity entering the market. Marine bunker fuel averaged US$600.02 per metric ton in the first quarter in Singapore trading compared with US$469.19 a year earlier, according to data compiled by Bloomberg.

Will things improve for NOL?

“Too much new capacity has entered the market this year,” said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. “It should get better as we go into the peak season in the third quarter and fewer new ships enter service.” Source: The Edge.

Oil prices have come off their highs and are now under US$100 a barrel. Supply worries have eased. The spike in oil prices was probably due to speculative activities rather than a real increase in demand. As circumstances surrounding the supply of crude oil turn benign once more, it would benefit NOL and other transport companies, everything else remaining equal.

Technically, NOL's chart is spotting a positive divergence. There is a higher low on the MACD as price spotted a lower low. Volume has also reduced significantly over the last five sessions as price hugged the 20dMA for support.

I believe that there could be a knee jerk reaction to the news and we could see price decline to cover the gap at $1.86. Any further decline in price and we want to see support at $1.80 holding up.  If it does hold up, it might be a good opportunity to buy some.

Now, we know that Mr. Market has a perverse streak. Could not the price move up instead? Yes, why not? And the reason would be that things are not as bad as analysts had feared. I'm just guessing, of course. Then, expect immediate resistance in a band between $1.92 and $1.93, after which, there is the declining 50dMA at $1.95.

NOL reports first loss in year on fuel, cargo rates. Average revenue per box rose 3% in the period, trailing a 28% jump in fuel prices, as the introduction of more ships on Asia-Europe routes sapped rates.
Friday, 13 May 2011

© 2011 - The Edge Singapore

Golden Agriculture: Excellent results.

Golden Agriculture reported a sterling set of results as expected. My faith in the company was not misplaced and my expectations were met. Year on year, revenue increased 134% while net profit increased 161%. Quarter on quarter, net profit increased 47%.

I have mentioned before that I like how the company is expanding its downstream operations to be closer to consumers. I also like how it is expanding its business in China to diversify its customer base away from Indonesia. Its Chinese operations saw a year on year increase in net profit of 220% while its Indonesian operations saw a year on year increase in net profit of 159%.

However, it is clear that its Indonesian business is still the more profitable one as it has a gross profit margin of 43%, up from 33% a year ago, while its Chinese business has a gross profit margin of only 7%, up from 6% a year ago. Could gross profit margin of its business in China be improved further? I am hopeful that it would.

Golden Agriculture's share price formed a white spinning top in the last session on the back of increased volume. This could be in response to the company's excellent results which were announced mid-day. It is easy to see that immediate although weak resistance is at 67.5c. Stronger resistance is at 68.5c and if this were taken out, we could see 70.5c tested next. 70.5c is also where we find the declining 100dMA and the upper Bollinger band. So, I expect this to be a strong resistance.

We want to see 70.5c taken out convincingly and we want to see the price form a higher high. The last high was at 73.5c. If a lower high should be formed, we could see a head and shoulders pattern. That could be ominous.

See presentation slides here.

Golden Agri profit doubles to record on surge in palm oil. Net income rose to US$230.7 billion ($287 billion) for the quarter ended March 31 from US$88.5 million a year earlier.
Friday, 13 May 2011

© 2011 - The Edge Singapore

Capitaland: More downside?

A low volume pullback would suggest that weak holders were selling. A high volume sell down is something else and investors should turn cautious. The volume which accompanied the formation of a long black candle today is the highest since 11 Feb 2011. The bearish tide is very strong.

My purchases made on 12 April at the prices of $3.38 and $3.36, above the 50dMA, are now in the red.  Will I buy more to average down my price? Capitaland's NAV/share is about $3.30. At today's closing price of $3.17, it is trading at a discount to NAV. Fundamentally, Capitaland is a strong company. However, it does not mean that its share price cannot go lower from here.

I have said this before and I will say it again as a reminder to myself: FA is about value and TA is about price.

The reverse head and shoulders did not give rise to a powerful upward surge in share price. The rising price was stopped by the declining 100dMA, trapped for many sessions before finally breaking the support provided by the 50dMA. Any trader worth his salt would have cut loss then. However, I am a bad trader and held on. As price declined, volume seemed to reduce which was heartening. Of course, today's explosive volume as price plunged destroyed that illusion.

All the MAs are declining and the 20dMA seems ready to form a dead cross with the 50dMA. -DI has been rising and, with it, the ADX. The downward movement in price seems to be gathering momentum. Further downside cannot be discounted and if price were to decline further, supports are at $3.11 and $3.08. I will wait for the dust to settle before deciding on my next move.

CapitaLand down on policy tightening worries
Wednesday, 11 May 2011

© 2011 - The Edge Singapore