Saizen REIT: Better than expected DPU.

Saizen REIT reported full year results this morning and declared a DPU of 0.26c, payable on 29 September 2010.  This is better than expected as the REIT did not have a full quarter to accumulate cash for distribution.  They also refinanced GK Choan and had to pay some fees as well as amortise that loan.  Read about it here. 

So, I was expecting a smallish cash distribution of about 0.1c in September.  Instead, a DPU of 0.26c in September, given the difficult conditions, bodes well for the next DPU in December which would have a whole quarter to accumulate cash for distribution to unit holders.  I estimate the DPU in December to be between 0.4 to 0.5c.  Assuming it is 0.4c, that would give an annualised DPU of 1.6c and an annualised yield of 10% at the current unit price of 16c.

Some key numbers from the reports:

1.  Annual valuation of properties (161 Freehold buildings in Japan) declined 4% from a year ago from JPY42,051.1m to JPY40,381.7m.  The rate of decline has slowed and this is in line with the general view that real estate prices in Japan are bottoming.  Read valuation report here.

2.  NAV is still at 40c per unit given the strong JPY.  The JPY is likely to stay strong, given the concerns of weak recoveries in heavily indebted western economies.

3.  NPI yield at 6.7%.  This is above the average of 5% that is required by most pension funds.

4  Gearing level at 36.9%.  This is quite comfortable.

5. Occupancy rate at 91.3%.  This is Saizen REIT's strength as it was able to maintain an occupancy rate of above 90% even through the recession.

Read full report here.

The one last thorn in the sides of Saizen REIT is the CMBS for YK Shintoku.  A punitive interest rate of 7.07% is still being paid to the bondholders.  Successfully refinancing this CMBS with a conventional bank loan at a more reasonable interest rate of about 4% would bring about substantial cost savings and could bump up DPU significantly.  This would be a major positive catalyst for Saizen REIT's unit price to be revalued upwards when it happens.

Discussions with a financial institution on the terms and timing of a loan, which will potentially enable the loan of YK Shintoku to be refinanced, have commenced. Currently, the main impact of the maturity default is the increase in interest rate on the outstanding loan amount from 3.07% per annum to a default interest rate of 7.07% per annum.

I am happy with Saizen REIT's results and look forward to a higher DPU in December.

Saizen REIT's slides presentation here.

Related posts:
Saizen REIT: 3Q FY2010 results.

Improve your trading skills: Learn technical analysis from the experts.

Macquarie is inviting avid investors and traders to a FREE SEMINAR where Mr. Keane Lee, the founder of the T3B trading system, will be sharing his trading techniques. These include trend spotting and opportunities, how to set stop losses and using gearing to increase returns.

The session will also include a short presentation on warrants and how they can be used to increase exposure while limiting total capital at risk.

About Mr. Keane Lee:
Mr. Lee obtained his DR License and was a Dealer Representative proficient in various trading systems, strategies and indicators. This was in the 1990s. He is highly proficient in intraday and short term swing trading in stocks, CFDs, futures, options and warrants. He formulated his first trading system in 1996. This was vigorously back-tested, forward-tested, evaluated and refined. He became a multi-millionaire using this system before he was 30.

Improve your trading skills: Learn technical analysis from the experts.

Dates: 30 August 2010 & 31 August 2010

Time: 6.30 pm to 8.30 pm

Venue: DBS Auditorium, 6 Shenton Way, DBS Building Tower 1, Level 3

Admission is FREE and light refreshments will be provided after each session.

Register at: http://www.warrants.com.sg/en/seminar/seminar_e.cgi

ADVERTORIAL

AIMS AMP Capital Industrial REIT: Rights issue.

Unlike the share placement proposed by Cambridge Industrial Trust, a rights issue allows all unit holders to participate in an enlarged capital base and to reap the rewards, if any.  So, is this rights issue beneficial to unit holders?  Let us examine the proposal.

I won't go into the full details since anyone interested enough could find all the details in the announcement at SGX.  Read it here. For anyone who is more visually inclined, presentation slides could be viewed here.

Basically, the proposal is to acquire 27 Penjuru Lane (a 30 years leasehold property starting October 2004) for S$161.0 million.  This price is about 2% below the latest valuations.  This acquisition will be funded by debt and equity.

Debt is in the form of two term loans (a 3 year term loan of S$100m and a 5 year term loan of S$100m) and a revolving credit facility of S$80m for a period of 3 years. The manager will use S$97 million to part finance the cost of the acquisition and S$175 million to refinance an existing S$175 million facility maturing in December 2012, allaying refinancing fears.  The 7 for 20 rights issue at a price of 15.5c per unit would raise a net amount of $74.8m, of which S$64.5 million will be used to part finance the acquisition.

The acquisition will contribute to a higher NPI yield.  The current portfolio has a NPI yield of 7.4% while the property to be acquired has a NPI yield of 7.7%.  Post acquisition, the NPI yield for the REIT becomes 7.5%.  Due to the rights issue, however, the NTA per unit would decline from 31c to 26c.  However, what is of more interest to unit holders is probably the DPU and how it would be impacted.

Acquiring the property in question would bump up the total cash distribution to unit holders.  However, due to the rights issue, actual DPU would decline from 0.54c per quarter to 0.52c per quarter. So, existing unit holders will see a reduction of 3.7% in yield for their current investment in the REIT.

Having said this, unlike a share placement as proposed by CIT which dilutes the shares of existing unit holders without any benefits, the rights here are offered to unit holders at only 15.5c.  On an annualised basis, these rights shares are therefore going to enjoy a yield of 13.42%. We lose some and we win some. I support this rights issue and will apply for excess rights as well.

K-Green Trust: Possibly stabilised.

On 15 Aug, I did a TA for KGT and suggested that its chart showed some weakness. At that time, it hit a low of $1.11.  In the next two sessions, it went to a low of $1.10 as its price hugged the lower Bollinger. It has since shown a detachment from the lower Bollinger as price moved sideways. Volume has been declining in recent sessions with this sideway movement in price. This suggests that much of the selling is done. This is possibly confirmed by the OBV which has gone flat which suggests a stalemate between accumulation and distribution.

 

The RSI's lower highs indicate recent selling pressure and the index is now in oversold territory.  The MFI has similarly entered the oversold territory with falling demand. However, both indices are turning up slightly. Is a reversal on hand? It is too early to tell. However, there is a picture of growing stability as price has moved sideways for more than a week.

I decided to look at the Stochastics since it is most useful in a rangebound situation.  It has been trending up in the oversold region since 5 Aug. This looks promising. It means that the daily closing price has been relatively stronger in recent sessions compared to its price range.

On 3 July, I blogged that KGT has "Stable cash flow, low risk and room to grow.  This sounds like a good addition to my passive income portfolio. It diversifies my income stream and injects a higher level of stability at the same time. The lower yield is acceptable because of its debt free balance sheet.  When a balance sheet is heavy in debt, the risk is higher and, consequently, I would demand a higher yield."

I have been waiting for a possibly better entry price but it was impossible to use TA at that time as KGT was newly listed then. This situation is being corrected.

I believe the catalyst for an upward movement in price for KGT would be the announcement of a cash distribution and a near term support seems to have formed at $1.10 in anticipation of this. Therefore, I would buy some at the current price of $1.11 instead of waiting as per my original plan.

With an estimated yearly DPU of 7.82c, buying at $1.11 would give a yield of 7.05%.  It would also be buying at almost the NAV of $1.12. I believe that KGT would be a valuable part of my passive income portfolio.

Related post:
Charts in brief: 13 Aug 10 (Part 3).

Today's millionaires.

Do you know that millionaires' effective income tax rate might actually be lower? This is true in the USA and it is also true in Singapore.

Remember how much income tax I had to pay? See: Double your income but not your tax.



85% of America's rich are self made. (18 March 2014.)

I enjoyed reading this article and would like to share it:

7 Millionaire Myths
by Claire Bradley, 15 Aug, 2010


1. Millionaires Don't Pay Their Taxes 
2. Millionaires Just Inherited Their Money
3. Millionaires Feel Rich 
4. Millionaires Have High-Paying Jobs
5. Millionaires All Drive Fancy Cars 
6. Millionaires Hang Around the Golf Course All Day
7. Millionaires Are Elitists


Today's millionaires are people who live within their means, budget and spend wisely, and focus on financial independence first. 

These are habits that take discipline, but ones we can all adopt to begin growing wealth. If these facts prove anything, it's that every one of us can strive to become a millionaire.

Read article here.

You might also like this post:
Grow your wealth and beat inflation.

Golden Agriculture: Inverted black hammer.

On 16 Aug, I mentioned: "Any further weakness should see strong support at 55.5c as provided by the 100dMA." Price closed at 55.5c in the last session. This is also where we find the rising 50dMA which seems set to form a golden cross with the 100dMA soon. The volume, although rising, is relatively low.

The declining MACD does suggest some price weakness and the 20dMA has completed its turn downwards.  The MFI, although showing longer term strength, might continue to decline in the near term if price weakens to test the 200dMA as support and if volume increases on such a move. This next support is at 54c. 

Despite the recent weakness in price, OBV does not show a major downswing, suggesting that distribution is weak. Thus, I would continue to accumulate on weakness.

Related post:
Golden Agriculture: Chinese demand on the rise.

Marc Faber: S&P will not fall below 1,010.

 "If you are very bearish about the world long term, you would probably be better off in equities than in bonds." Marc Faber, 3 August 2010.

Genting SP: Weakness to continue?

On 17 August, I asked "Has Genting SP's sky rocketing price run out of fuel at last?" Price has shown some weakness as it retreated to the short term support of $1.50.  This support was compromised in the last session.  A sell signal on the MACD histogram appeared two sessions ago.  The silver lining is the low volume observed as price weakened.

Lower price and lower trading volume. What does this mean? The momentum oscillator to look at is the MFI. The picture of higher lows on the MFI is still intact. Demand has not crashed. There is no big downswing on the OBV either which suggests a lack of any meaningful distribution.

So, it seems that Genting, thus far, is experiencing a low volume pull back. Time to buy? On 17 August, I suggested $1.30 as a stronger support because it is "a candlestick resistance level which took many sessions to be overcome".  Has the picture changed?

The 20dMA has moved higher up and would provide immediate support in case of a sustained pullback.  It is currently at $1.35 which happens to be the low of 13 Aug.  Traders would remember this day as the day the counter gapped up on high volume. Expecting some support at $1.35, therefore.

In the news:
Who’s the businessman who lost S$26m in three days at RWS?

Genting SP: Black candle.

Has Genting SP's sky rocketing price run out of fuel at last? The price action is still above the upper Bollinger band and there is much room to fall in case of a pull back to the 20dMA, currently at $1.30. This is also a candlestick resistance level which took many sessions to be overcome.  This price is therefore psychologically stronger in the minds of market participants and should be a strong support.

Overall, momentum is still positive.  The higher low on the MFI suggests that demand is still intact.  This is despite some distribution taking place as suggested by the OBV turning down.

However, the price has moved up too quickly as suggested by the RSI which is in the overbought territory and this is being corrected.  All signs currently suggest that Genting SP's share price might just be taking a breather.

Healthway Medical: 17c support.

Some large transactions sold down shares of Healthway Medical at 17c today.  Volume, although higher, is not very much so.  Would the selling pressure continue? Where is the next support?

The MACD is plunging into negative territory, widening its distance from the signal line as it does so.  The momentum has clearly turned negative. With the lower highs we see in the MFI, it is obvious that demand is weakening.  OBV which has been sloping downwards gently took a bigger dip today, suggesting consistent distribution which accelerated today.

For sure, there is a chance price could decline further.  If it happens, the next support is at 16c, a many times tested support level in April. Given Healthway Medical's fundamentals, I feel that it is expensive even at 16c but we might see momentum oscillators entering oversold territories by then and that could bring about a brief rebound. I would pay attention to the volume as price declines.

Related post:
Healthway Medical: Second quarter results.

Saizen REIT: Sold down.

A few big transactions today, selling down Saizen REIT units.  One single transaction sold down 2m units at 15.5c.  This caused the OBV to plunge today and the MFI to sink deeper into negative territory. Distribution coupled by a reduced demand.  Not a pretty picture.

However, checking for announcements by Saizen REIT did not show any sale by insiders or substantial shareholders.  I suspect some retail investors are losing patience again.  Momentum is clearly negative as the MACD continues to decline beneath the signal line in negative territory.

At this rate, we could possibly see 15c tested as the next support. If that happens, I would buy more.

Mapletree Investments, a real-estate firm wholly owned by Singapore state investor Temasek Holdings, plans to launch a Japan property fund of around 80 billion yen (1.3 billion) this year in a bid to expand in the country’s property sector ahead of its rivals....

....Japan’s property market, the world’s second-largest and heavily leveraged, was hit hard by the onset of the global financial crisis and has yet to see a major investment since then.

But some Asian investors including wealthy Chinese individuals have begun showing an appetite for assets in Japan, whose property market is considered relatively transparent and yields stable returns.

Mapletree plans $1.3b Japan property fund
Monday, 16 August 2010

© 2010 - The Edge Singapore

Golden Agriculture: Chinese demand on the rise.

Price closed 1c lower at 57.5c today. The weakness is accompanied by a much reduced volume.  So, I am not too worried. Looking at the other indicators, we see the MFI forming a higher low, suggesting improving demand.  OBV is likewise rising, suggesting more robust accumulation activities.  The RSI has bounced off 50% which acted as support, suggesting a return of buying momentum. Any further weakness should see strong support at 55.5c as provided by the 100dMA.

The fundamentals are strong and the momentum oscillators are promising.  I would accumulate on weakness.

China's vegetable oil demand is entering a seasonal high, buoying edible oil and feedmeal prices, as the Mid-Autumn Festival and National Day holidays approach. 

"There is a supply reduction in oilseeds and this is leading to greater dependency on palm oil as supply growth is lagging behind demand," a senior trading executive at Malaysia-based major plantation company said. 

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

Healthway Medical: Second quarter results.

Healthway Medical announced that it has entered into agreements with twelve (12) medical and dental centres in Shanghai and Hangzhou.  To operate and manage these facilities, an investment of RMB38m (or S$7.6m) is required over a period of three months. They hope to increase the number of facilities under management to more than twenty by end of this year.

At the same time, Healthway Medical also released their second quarter results and the numbers look bad.

1. Revenue compared to the same period last year has tumbled 12.3% from S$24.45m to S$21.44m.  This is worse than the first quarter when the revenue declined 6.3% compared to the same period a year ago.

2. Staff cost increased 22.9% which suggests that Healthway Medical is paying a lot more now to retain or to recruit staff.  In terms of absolute dollars, the increase from S$10.75m to S$13.2m is no small change.

3. Profit before income tax is an insignificant S$165k compared to S$5.23m in the same period last year.  This is much worse than the first quarter profit of S$1.4m.

4. Cash flow from operations is a negative S$2.3m compared to a positive S$4.05m in the same period last year.  However, it is an improvement over a negative S$4.94m in the last quarter.

5. Cash flow from financing activities is still a positive S$18.79m and the company has S$32.6m in bank deposits.

6. EPS for the quarter is 0.01c, down from 0.32c in the same quarter last year and down from 0.09c in the last quarter.

Fundamentally, Healthway Medical's numbers in the first quarter were relatively bad but they are now worse.  See second quarter statements here.

On 16 May, I blogged about Healthway Medical's first quarter results.  I said: "As an investor, to be prudent, I would continue to wait for greater clarity on whether higher earnings would follow, maintaining that the share price at current level does not offer good value."  This opinion has not changed.

Although Healthway Medical has taken another important step in its expansion plans in China, risks still exist and it remains to be seen if the management is able to execute its plans successfully and deliver value to shareholders.  With weakening revenue and rising costs at home and possible teething problems in China, investing in Healthway Medical at the current price is not for the faint hearted.

On 11 Aug, I blogged about how Healthway Medical's support at 18.5c has been compromised and that price could go lower. It is likely that 17c could be tested as a support sooner than later.

Related post:
Healthway Medical: A weak first quarter.
Healthway Medical: Support compromised.

Charts in brief: 13 Aug 10 (Part 3).

Noble: Looking at Noble's chart, the double top formation is quite obvious. If this is a valid formation, we could possibly see price declining to hit $1.20.  Top at $2.20, neckline at $1.70, target at $1.20.  A scary possibility? Price closed at $1.54, the low formed on 20 May.  Could this hold?  Well, the MFI just dipped into oversold territory.  RSI continues to sink in oversold territory.  OBV shows continuing distribution.  Price could enjoy a brief rebound and should meet with resistance at $1.64 in such an instance.

Noble cut to Hold by DBS Vickers with $1.62 target. DBS Vickers says 2Q10 results dismal, with earnings down 65% on year at US$86.6 million ($118 million).
Friday, 13 August 2010

© 2010 - The Edge Singapore

KGT: I am still interested in collecting some units of KGT.  However, the price refuses to fall below $1.10.  When I first blogged about KGT, it was at $1.06 and I said I would wait for $1.00.  Doesn't seem very probable now. However, I decided to sneak a peek at the charts. 

Well, not much to work on but notice that price has been trading below the 20dMA in recent sessions with a falling MACD. MFI has formed lower highs which suggests a falling demand. The RSI has likewise been falling suggesting increasing selling pressure over time. We could see KGT at under $1.10 again if this keeps up.  Good things come to those who wait?  Of course, if the counter goes CD soon, it could change everything.

Related post:
K-Green Trust: A stable source of passive income.

Cambridge Industrial Trust: Acquisitions and private placement.

CIT is acquiring new industrial properties in Singapore. The new purchases are to be at market valuations.

As CIT is already highly geared, to do this, it will have a private placement which will raise approximately S$37.6m, after deducting fees and expenses.  This will increase the number of units by 83,683,000. It has also secured new loan facilities, a S$50m term loan and a S$20m revolving credit from National Australia Bank Ltd.
 
By acquiring new assets valued at S$37.2m and going ahead with the private placement, CIT bumps up the value its total assets.  This is the reason why the total gearing level will reduce from 42.3% to 41.5%.

Of greater interest to existing unitholders is the effect of the acquisitions and private placement on their investment in CIT.  Will existing unitholders see greater income flow from their current investment in CIT?

Due to the acquisitions, total distributable income is expected to increase 5.7%.  However, in order to fund the acquisitions, the private placement would lead to an increase of 10.15% of units in issue.  This effectively dilutes the DPU of CIT, post acquisition. DPU is estimated to fall from 5.36c to 5.14c.  NAV per unit will also fall from 60c to 58c.

I continue to believe that AIMS AMP Capital Industrial REIT is a better investment than CIT in the world of industrial S-REITs.  The former has a stronger balance sheet and a bigger discount to NAV.  Although its yield is lower at 9.55% based on a unit price of 22.5c, it has greater room to gear up to make yield accretive acquisitions. Chances of a dilutive exercise like this one by CIT are therefore lower.

Read announcement here.

Related post:
AIMS AMP Capital Industrial REIT: Steady performance.

Charts in brief: 13 Aug 10 (Part 2).

Golden Agriculture: CPO price rose again and Golden Agriculture's share price broke resistance provided by the 20dMA at 58c. MFI registered another higher low.  OBV shows a pick up in accumulation.  RSI bounced off 50% as support.  All signs point towards optimism of market participants. Price could possibly retest 60c resistance in the next session.

Wilmar:  The market does not like the news. Wilmar's downtrend which started on 12 Jan 10 is intact.  However, connecting the lows of 21 May and 29 Jun gives us an uptrend support which approximates the rising 50dMA. So, time to buy Wilmar? The MFI has formed a lower high and the uptrend support has been broken.  Demand has clearly plunged. $6.05 is the immediate support to watch. For any brave soul who is thinking of a punt, buying close to $6.05 if the support holds is probably the strategy to adopt.

Wilmar unit to pay $80.36m for 20% stake in Kencana Agri
Friday, 13 August 2010

© 2010 - The Edge Singapore

Charts in brief: 13 Aug 10 (Part 1).

Genting SP: Broke resistance, gapped up and formed a wickless white candle on extremely high volume.  Closing at $1.46, could it go higher next week?  With such strong momentum and a flurry of BUY calls from all the research houses, we could see price going higher.  To any investor who ignored the constant SELL calls from these houses earlier, congratulations!

Citigroup upgrades Genting Singapore (G13.SG) to Buy from Sell, lifts target price to $1.55 from $0.99 after increasing FY10-FY12 earnings estimates by 20%-80% to factor in robust 2Q10 results.
Friday, 13 August 2010

© 2010 - The Edge Singapore

China Hongxing: MFI has been declining gently, no longer in overbought territory.  OBV rose today, sign of a return of accumulation activity. Volume expanded significantly as price rose today.  This is promising. Closing at 15.5c shows that the declining 200dMA is still acting as resistance. Could the rising 20dMA push the price beyond the 200dMA? Immediate support at 14.5c and immediate resistance at 16c.

Hock Lian Seng: OBV shows a trend of consistent accumulation since 21 July.  This company has strong fundamentals and, technically, the immediate support is at 28.5c, provided by the 100dMA. The rising 20dMA is on track to form a golden cross with the 100dMA soon.  This would probably strengthen the support at 28.5c. Price seems to be forming steps upwards and this reminds me of HWT's chart once upon a time.  The recent uptrend is defined by the rising 20dMA.  Could the 20dMA push price higher? Possibly. Bugbear is the falling volume.

Hock Lian Seng Holdings, the civil engineer and a building materials supplier, says it posted a 61.9% y-o-y increase in net profit attributable to shareholders to $15.2 million in 1H2010 from $9.4 million in 1H2009.
Friday, 13 August 2010

© 2010 - The Edge Singapore

Golden Agriculture: Eyeing immediate support.

Anyone who has been following my blog would know that I have a preference for Golden Agriculture over Indofood Agri.  The former is more of a pure CPO play and I have said that demand for oil will improve over time even in a weak economic recovery.  Therefore, CPO is a natural beneficiary.  As Golden Agriculture is the most levered to the price of CPO amongst all the CPO companies listed on the Singapore Exchange, fundamentally, it would outperform if CPO price stays high. In terms of valuation, Golden Agriculture remains the least expensive CPO play as well.

Today, its price closed at 57.5c which is where we find the rising 20dMA. Although the MACD is declining and has completed a bearish crossover with the signal line, it is interesting to note that OBV has formed a higher lower.  It seems that distribution is weakening.  Of course, the higher high on the MFI is still valid.

Drawing an uptrend line from the low of 7 Jun, it is easy to see that a support that approximates the rising 50dMA. This should be a very strong support.  However, it might not be tested if the 100dMA holds up as immediate support at 55.5c.

Indofood Agri target lowered to $2.31 by Daiwa. Daiwa notes management’s warning of weaker margin for cooking oil in 3Q10 due to 5% price cut at end June. Keeps Hold call: “While we are bullish about the palm-oil sector, our main concern is IFAR’s relative valuation compared with those of its peers.”


Thursday, 12 August 2010

© 2010 - The Edge Singapore

By OCBC Investment Research, 12 Aug 10:
Golden Agriculture: Company Update.

Related post:
Why Golden Agriculture?

Genting SP: Uptrend intact.

Genting SP's uptrend is clearly intact.  The 20dMA is still rising. Could it push price higher?

The MFI is declining towards 50%.  Could 50% provide support? OBV shows a lack of distribution activity. So, despite a weakening demand, there is no serious selling down.

Immediate support is at $1.25 and immediate resistance is at $1.30.

Genting Singapore reports 2Q net profit of $396.5m
Thursday, 12 August 2010

© 2010 - The Edge Singapore

SPH: Black spinning top.

SPH has gapped down for two consecutive sessions.  Very bearish.  Today, it formed a black spinning top, closing at $3.97, just two bids above a natural support at $3.95.  Could $3.95 hold up as the immediate support or would it shatter?

The MACD crossed the signal line a few sessions ago and is fast declining towards zero.  The MFI formed a lower high which suggests weakening demand.  It is currently flatlining just above 50%.  Could 50% act as support? OBV shows some distribution taking place. Weakness is obvious.

TA is about probabilities and helps by letting us plan ahead.  What would we do if price goes up?  What would we do if price declines?

In this case, if price should rebound to test support turned resistance provided by the 20dMA, it might be a good idea to do a partial divestment.  This is currently at $4.06.  Price would probably encounter gap resistance at $4.04 in case of a rebound.  So, not to be greedy, this might be a better price to divest.  Just don't bang our heads against the wall if price does touch $4.06.  If price crashes through $3.95, I would wait to see if it would descend to the long term 200dMA before picking up more.  The 200dMA is now at $3.80.  Good luck to fellow shareholders.

Healthway Medical: Support compromised.

18.5c support which has stayed strong since early July was compromised today as price touched a low of 18c before closing at 18.5c.

The MACD continues to decline towards zero.  MFI's lower high shows a sustained reduction in demand. OBV shows some distribution activity.  Nothing too alarming.  However, without any high volume buy ups, price could drift lower.  Price is now below the 20d and 50d MAs. Next level of support is at 17c.

A quick check of the weekly chart shows that the 20wMA approximates 17c, lending strength to the idea that this could be a strong support. However, it is also obvious from the chart that price bounced off the 50wMA before heading higher in recent past.  With the MACD about to do a bearish crossover with the signal line, the possibility of price going lower cannot be discounted.

Golden Agriculture: 20% rise in net earnings.

Price broke the 58c support to touch a low of 56.5c before closing at 57c.  Volume is higher than yesterday's but not significantly so. The selling down, although formed a big black candle, lacks conviction.

In my analysis yesterday, I mentioned that the MFI could test 50% as support.  Today, it is at 66%.  Still declining, it suggests a weakening in near term demand.  However, the recent higher high gives me reason to be optimistic.

Continuing weakness could see a stronger support provided by the flattish 100dMA at 55.5c tested.  I would increase my exposure to the stock if price should test this support level.  Higher CPO price is good news for Golden Agriculture and would strengthen its fundamentals.

Golden Agri off 3.3%; Cost pressure may persist. On brighter note, any concerns over Greenpeace’s recent allegations of company engaging in environmentally harmful planting practices should ease with Golden Agri releasing findings of independent study clearing it of any wrongdoing.
Wednesday, 11 August 2010

© 2010 - The Edge Singapore

Golden Agri-Resources posts 20% rise in 2Q net profit to $89.4m. As at end of June 2010, GAR’s financial position remained healthy with conservative gearing and sufficient cash balance.
Wednesday, 11 August 2010

© 2010 - The Edge Singapore

Golden Agriculture: CPO broke double top.

Crude palm oil (CPO) formed a 15 months high yesterday (RM2,730), breaking the double top formation (RM2,710) mentioned before. Fundamentally, this is very good news for Golden Agriculture.

Golden Agriculture started at 61c today before closing at 60c after touching a low of 59c.  Volume was quite low. The sell down lacks conviction and this is good news for the bulls. The MFI has formed a higher high but it might decline to retest 50% which is also where we find a longer term uptrend support. 

In case of a pull back, expect immediate support at 58c, this is also where the rising 20dMA would be in the next few sessions.  58c could be a good entry price, especially if we notice the uptrend starting 30 June approximates the 20dMA. 

Fundamentally, strong CPO prices would underpin performance of Golden Agriculture.  Technically, the uptrend is obvious and it should be safer to buy at supports in an uptrend.

Retirement planning (How much do we need or what do we need?).

Recently, I was asked a question on how much do we need for retirement?

It is one of those questions which seem easy to answer but, if we spend more time thinking about it, we realise it is actually not that easy.





I talked about needs and wants in another post earlier.  

What are needs and what are wants? 

See:
Money management: Needs and wants.

There are certain basic needs in life but there are many wants which have become needs in modern society. 

Therefore, how much do we need for retirement could depend on how many wants we have in life, wants which have been internalised as needs over the years.

An important question to ask is, then, what do we need for retirement? 

This is a qualitative question and needs to be answered.  Otherwise, we cannot start estimating how much do we need for retirement.  

So, the person who put the question to me was left scratching his head as I gave him not an answer but another question.






Very often, people wonder how much they need for retirement, wonder if a million dollars is enough or maybe two million dollars.  

They should think about what they really need in life and what would they be contented with.  

Perhaps, they should not keep chasing after that first million.  

Perhaps, they should not keep thinking about how much do they need.  

Perhaps, they should think of what they really need instead.

Planning for retirement? 
You might want to read these:
1. Inflation adjusted retirement plan.
2. POSB ManuRegular Payout better?
3. Selecting a good financial adviser.
4. OCBC BCIP.
5. POSB INVEST SAVER.
6. A cornerstone in retirement funding.
7. Wealthy nation cannot afford to retire?

Courage Marine: Range bound.

Price seems range bound between 19.5c and 18.5c. The BDI has been rather anemic of late and that could perhaps partly account for the lethargy in Courage Marine's share price.

The MFI, OBV and RSI have all recently flatlined.  Nothing seems to be happening. In a range bound situation, look at the Stochastics and we see it high in the overbought region.  This suggests that price, which happens to be at the upper end of the range identified, could find it hard to move higher for now.

The good news is that MACD has been rising slowly in positive territory above the signal line.  The return of positive momentum provides some cheer although we should remember that it is a lagging indicator.

FSL Trust: Where to from here?

I have blogged about how a past decision to invest in FSL Trust was a mistake. Over time, I have discovered more reasons why FSL Trust is a high risk investment and how, in the long run, it is doomed to fail as it is operating based on a flawed business model.

An article, Shipping Trusts: A closer look, 13 July 2010, in Next Insight says it well:

"... problem arises when the trust managers market the trust as a going concern, but then pay out cash as if the trust were self liquidating ... This misleads investors who think that the high payouts are sustainable and do not realise that part of the cash received is a return of capital...

"Until recently, FSLT paid out 100% if cash generated and did not pay down its debt. This essentially made the trust behave like a self-liquidating vehicle, regardless of any management claims to the contrary."

I know of at least two blog masters who have liquidated their investments in FSL Trust recently at a loss: Mike Dirnt and Musicwhiz, admitting that their investments were mistakes.  JW of Wealthbuch almost put some money in FSL Trust just before the recent crash from 60+ cents based on the posts by Grandmaster89 in an investment forum. Grandmaster89 has become more grounded in his views since. More recently, Alvis of A Investor bought some units at a price close to the bottom at 30+ cents based on TA.

I still have units in FSL Trust bought at $1 in the early days, probably at about the same time Musicwhiz bought his units.  I have been thinking of divesting these units but was not as deft as Mike Dirnt to divest at >60c at the recent high; nor did I divest last week like Musicwhiz at a rather much lower price.

I also have some units which I bought in the recent crash. Why? I explained that the purchases were made based on TA and are for a trade. Looking at the charts, FSL Trust's price has not just found a floor, it has most probably bottomed.  So, would I sell at the bottom?  No. 

In fact, the low formed on 11 Jun at 36c would be a strong support if price does decline to that level again.  Market participants would remember that price as the low and they could have made some money if they had bought more then.  More likely, however, the recent many times tested support at 37.5c would act as an effective breakwater in case of a decline. What about the upside? For now, it seems that the price could remain trapped in between the 20d and 50d MAs for a while. These assumptions are valid as long as everything else in FSL Trust's business remains constant.

From a FA perspective, it is true that FSL Trust has very high risks and its propects seem bleak in the longer term but would it go belly up in the next few months? Rather unlikely as the world economy is still on the mend and the fortunes of the shipping industry are looking up.

Related post:
High yields: Successes, failures and the in betweens.
Charts in brief: 26 Jul 10.

High yielding REITs.

I came across an article which reported Morningstar analyst John Coumarianos saying "I guess people are so exasperated with earning nothing on money market [funds], so they're opting for the 2 to 3 percent [yield] that they're getting on a REIT fund".

This is a reference to the situation in the USA.  2 to 3 percent yield? That's peanuts compared to what we are getting from REITs in Singapore!  I mentioned before that a 5 to 6 percent yield in a REIT is not enough to attract me because I can get an almost 10 percent yield in some REITs here. I think investors in REITs here are spoilt!

After the subprime mortgage crisis, all types of real estate investments were punished. Many experts thought that commercial real estate would be the next big bust. "The headlines were all so bad with the housing market," Sorensen says. "REITs don't have a ton to do with the housing market, and expectations there were so depressed. The reality has been better than expected."

Read the article here.
Will the REITs Rally Continue?

Ben Baden, On Thursday August 5, 2010, 11:43 am EDT

Related post:
Create more passive income with limited capital. 

Property prices in Japan.

Property prices in Japan may be near the bottom because transactions are picking up as loan default rates begin to decline....

.... Investors including Chuo Mitsui Trust & Banking Company and CLSA Capital Partners have said they will invest in real estate in Japan this year after the nation’s commercial land prices fell to the lowest in at least 36 years....

.... ‘The best time to invest is before things hit bottom, because if everyone were to agree we are right at bottom, they would all come rushing back in. If you have a longer term outlook, now is a very interesting time to be looking,’ said Buddy Ferrie, a general manager of the investment division at property consulting firm Colliers Halifax in Tokyo....

Read complete article here.
Analysts indicate property prices in Japan may be near bottom, Property Wire, Friday, 04 June 2010 .

I first put up this video on 13 March but I think it is worth watching again.  A video interview with Marc Faber (Posted Mar 12, 2010 07:30am EST by Peter Gorenstein):



"If you are going to put money to work in stocks both market watchers think Japan is the place to be. After a 20 year bear market and despite high-debt-to-GDP levels, the pair think the market has become too cheap to ignore. Always a contrarian, Faber believes the lack of interest in Japanese stocks makes it one of the most compelling buys in the world. "

Related post:
Buy Japanese real estate.

Golden Agriculture: Uptrend.

58.5c is a natural resistance turned support if we look at the candlesticks formed in the last three weeks.

The current uptrend support approximates the rising 20dMA and would be somewhere around 57.5c in the next session. Price could decline, break support at 58.5c and hit 57.5c in a whipsaw before rebounding.

Since the price hit a low of 48c in May, the MFI, OBV and RSI have been rising together with the rising price. So? Growing demand, continual accumulation and bouyant price movement. All good news for bulls.  If this continues, price could push upwards to retest 62.5c.  Could it overcome this resistance level?

Crude Palm Oil (CPO) has recovered strongly in a steep line upwards and is now at RM 2,661.  This is not far from the double top which saw CPO at around RM 2,710.  Golden Agriculture would benefit from higher CPO prices and the market knows this.  If CPO price breaks RM 2,710, we could see Golden Agriculture's share price rally to a new high.

Tea with AK71: Philips Blu Ray.

On Sunday, I bought a Philips Blu Ray player for a good friend as a housewarming gift.  I got it from Courts near HDB Hub in Toa Payoh.  I bought it because it was such a good deal.  Listen to this: usually $299, it was going for $239!  Also, they threw in a free HDMI cable and 2 free Blu Ray titles! 

I got my Sony Blu Ray player just weeks ago at Best Denki in Vivo City for $299 and I had to pay $99 for a HDMI cable!  I also had to spend more money buying a few Blu Ray titles at MJ Multimedia to start me off.  Fortunately, MJ was having a GSS offer at $70 for two titles but it would still come to a total of $299 + $99 + $70 = S$ 468 to get the same deal as offered by Philips in Courts!  It's a $229 savings!

Now, here is the issue: the free Blu Ray titles must be collected from Philips HQ in Toa Payoh Lorong 1.  They were not available in Courts.  The posters in Courts showed Wolverine, UP and a couple of other titles.  The salespeople told me that my friend has to bring along the receipt and his IC to choose the titles of his choice.  I dutifully conveyed the message when I gave the player to my friend.  This was on Sunday.

This evening, my friend went to Philips HQ and they told him that only Night at the Museum 2 and UP are available. Initially, I thought that the other titles were fully redeemed.  My friend told me he was informed that only these two titles are available all along!!! This is a clear case of misrepresentation!!!  I am so upset but my friend took it quite well and told me not to be angry.  Grrr!!!

If anyone from Philips HQ in Singapore is reading this, you guys are lucky I was not with my friend when he went to collect the discs.  I would have given you guys a piece of my mind!!!

Saizen REIT: Oversold.

Saizen REIT has been stuck at 16c for weeks. Nothing is happening and it is just a waiting game now.  However, it appears that most of the weaker holders have sold.

The Bollinger bands have narrowed and the MAs are all flattening with the exception of the long term 200dMA which is still rising.  In fact, the 20d and 50d MAs have merged and flatlined at 16c. 16c could either become a very strong support or resistance in future.  Looking at the MFI and the Stochastics, we see that this counter is very oversold. The OBV shows a stalemate between accumulation and distribution.

Taking a look at the weekly chart reveals that the longer term demand has been trending up.  The MFI confirms this. Price has also overcome the descending 100wMA which was a strong resistance.  At 16c, the unit price is sandwiched between the flat 20w and 50w MAs.  Although Mr. Market does not care for what I think, it seems to me that the unit price of Saizen REIT could only go up from here.  Let's wait for the results.

AIMS AMP Capital Industrial REIT: Dragoning.

The latest substantial shareholder of this REIT, Dragon Pacific Assets Limited, has increased its stake in the REIT again today. Its stake increased from 7.21 % To 11.39 % and it now owns 167,010,000 units.

I have not been able to find any information on Dragon Pacific Assets Limited and I am very curious as to its background.  I am also very curious regarding the identities of the sellers. The same reason has been given for the buy up as before: Acquisition for investment purposes.

The REIT closed at 23c, the upper end of its range and with it going XD tomorrow, I would be very surprised if this long term resistance could be overcome. Then again, never say never.

Noble: Downtrend.

Noble has been in a downtrend since the middle of March. This downtrend is intact.  With MFI forming lower highs, which suggests a lowering demand, and OBV dipping gradually, suggesting consistent distribution, the technical picture is rather negative.  The MACD is in negative territory and has just completed a bearish crossover with the signal line. Momentum is negative and it is not improving.

The counter is nowhere near oversold and price could sink lower if there is no catalyst strong enough to turn market sentiments positive. Price is currently resting on immediate support at  $1.66.  Immediate resistance is at $1.70 as provided by the 20dMA and candlestick resistance. 

Noble to sell coal mine stake to Gloucester, Australian says, for as much as A$300 million ($370 million).
Wednesday, 04 August 2010

© 2010 - The Edge Singapore

CapitaMalls Asia: Low volume sell down.

Price reached a low of $2.09 before closing at $2.11 which is the top of a mini double bottom formation. If $2.11 breaks, we could see a retest of the base of the double bottom at $2.02.  How likely is this?

Although price has moved down, volume has likewise reduced.  A low volume pull back. Good news. Second opinion? The OBV has turned down but it did not plunge which means no massive distributrion. Again, good news.

However, chart watchers would see the sell signal on the MACD histogram.  If this is confirmed in the next session, price is more likely than not going to move lower.

CapitaMalls Asia off 1.9%; 2Q fails to inspire. Earnings down 23.7% on year at $113.1 million as lower property valuation gains offset 31.9% rise in revenue.
Wednesday, 04 August 2010

© 2010 - The Edge Singapore

Blackstone is buying real estate in Japan.

I came across an article published by Bloomberg on 22 July, 2010, that Blackstone may buy Morgan Stanley's real estate assets in Japan.  Here are some salient points:

Prices for Tokyo office buildings have fallen as much as 50 percent from their 2007 peak, according to an estimate by CB Richard Ellis Group Inc.’s Japan subsidiary. Blackstone’s first purchase in the country, after opening a Tokyo operation three years ago, may suggest prices are set to climb, said Takashi Ishizawa, a real estate analyst at Mizuho Securities Co.

“The news confirms my view that property prices in Japan have reached bottom,” Ishizawa said in a telephone interview in Tokyo. “Now is the time to invest.”

Japan’s nationwide average land prices dropped 8 percent in 2009 from a year ago, the second straight annual decline, the National Tax Agency said in a report earlier this month.

The drop has attracted other buyers. Acquisitions by the country’s 38 publicly traded real estate investment trusts more than doubled in the first quarter to 229 billion yen from the same period last year, according to IB Research and Consulting Inc., a Tokyo-based research firm.

Japan’s listed real estate investment trusts have raised 195.5 billion yen in the first six months of this year, the highest since 2008, as they look to expand their portfolios, according to Mizuho Securities Co.

Read full article here.

Related post:

Buy Japanese real estate.

Starhub: Testing support.

Technically, this counter looks a bit weak. $2.38 has been established as a strong resistance while $2.30 is a many times tested support. Volume was rather high today as price started at $2.38 and travelled all the way down to test the support at $2.30 before closing just 1c higher at $2.31.  Could the rising 50d and 100d MAs lend support to $2.30 or would the support break?

The declining MFI suggests that demand has weakened while the declining MACD suggests that the shorter term MA is losing altitude.  All in, a rather ominous picture for the bulls. Support at $2.30 is critical. If this support level holds as momentum oscillators decline, that is a sign of strength. If it were to break, $2.22 would be the immediate downside target.

STI drops 0.3% to 3,014.77 at closing.

Hyflux (HYF SP), Singapore’s biggest water treatment services provider, increased 1.6% to $3.28. The company said it and Mitsui & Co. will start a venture to buy stakes in four water treatment plants in China and offer to take Hyflux Water Trust (HYFT SP) private. The trust surged 11% to 76 cents. The venture will offer to buy 205.5 million shares in Hyflux Water at 78 cents each.

Tuesday, 03 August 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: New SS.

There is a new substantial shareholder for this REIT: Dragon Pacific Assets Limited.

No. of Shares held before the change: 38,985,000

No. of Shares which are subject of this notice: 66,693,000

No. of Shares held after the change: 105,678,000
As a percentage of issued share capital: 7.21%

Reason given:  Acquisition for investment purposes.

Many are probably wondering who are the sellers as this is probably a married deal. The volume is really very high.  Fundamentally, more substantial shareholders with a longer term investment horizon is good for the REIT. They would give a stronger floor to the unit price and, therefore, a firmer platform for possible future price appreciation.

Technically, the big sell down today at 22.5c sent the MFI crashing into the oversold region. The MFI has also formed a lower high.  What we see now is a negative divergence with price which has moved up to test the long term resistance of 23c in recent sessions.  23c remains a formidable resistance.

OBV dropped a notch and the MACD seems ready to form a bearish crossover with the signal line.  With XD date approaching in another 3 days, a pull back in the unit price of this REIT is probable.  In such an instance, expect initial support at 22c and a stronger support at 21.5c, the midpoint of the trading range (20c to 23c).  Good luck to fellow unitholders.

CapitaMalls Asia: Sell on news?

The market seems unimpressed with CapitaMalls Asia's results.  Price tried moving higher, touched a high of $2.18 before declining to close unchanged at $2.16. The MACD is back in positive territory which suggests that we are once again seeing positive momentum in price movement.

Although the rising MFI suggests a strong demand, the OBV has turned flat in the last two sessions which suggests that neither accumulators nor distributors have the upper hand. Therefore, the lower volumes in the last two sessions as the price tried to move higher should be taken as a strong cautionary note.

Having said all these, it is worthwhile noting that price has closed above the 100dMA again even though it's a black candle day.  If the 100dMA is confirmed as the new support, price could move higher.

CapitaMalls Asia achieves 1H 2010 net profit of $209.8m
Tuesday, 03 August 2010

© 2010 - The Edge Singapore