CapitaMalls Asia: Bought at $1.37.

Similar to Capitaland, I am still waiting for a technical rebound in the share price of CapitaMalls Asia before reducing exposure. The counter is dreadfully oversold and a technical rebound is probably overdue. However, in extremely bearish circumstances, a counter could stay oversold for a very long time. As always, a huge dose of luck is required.

Today, I bought more shares of CapitaMalls Asia at $1.37 per share. Why? Is there a positive divergence? Nope. So, why am I buying when there is no reversal signal? The same reason why I bought more shares in Capitaland and if you remember, price went lower the next day. So, will price move lower tomorrow for CapitaMalls Asia? Your guess is as good as mine.

From the ADX, it is obvious that CapitaMalls Asia is in a downtrend and the trend is strengthening too. If we look at the MACD, it is set to form a lower low. However, if we connect the two earlier lows, the MACD could have hit support. As if to support this thesis, price action almost formed a white hammer today. On the back of high volume, price formed a doji as it closed at the day's opening price of $1.40 after hitting a low of $1.36.

After such a rapid and steep decline in price, the rebound could be equally forceful. We could perhaps see gap cover at $1.55 in such an instance. This would also approximate the position of the declining 20dMA. Wish me luck.


Daryl Guppy: A different reality in China. Despite the much-anticipated hard landing, bubble bursting and general collapse in China, the reality is a little different. The China market fills the growth gaps left by the US market for those companies smart enough to work in the Chinese environment, and meet the growing demands of Chinese consumers. This demand is fuelled by mandated wage increases and the structural shift towards a domestic consumer economy.
The EDGE, 20 June 2011.




Related post:
CapitaMalls Asia: Daily versus Weekly.

Golden Agriculture: A steeper trendline resistance.

Has Golden Agriculture's share price turned bearish? I would not say bearish exactly since the uptrend that started on 23 Feb 2011 is still intact. However, the inability to form a higher high is worrisome. Having said this, price could go as low as 66c in the next couple of sessions and the uptrend would still be intact.

Looking at the chart, the trendline resistance that started on 30 May 2011 has immediacy compared to the one which started on 11 Apr 2011. It is currently at 68c. There is more downward pressure in the current timeframe.

Is there no chance of a rebound? Well, although the Stochastics has just risen out of the oversold territory, we could be walking on thin ice here. If we believe in chart patterns, it seems that a symmetrical triangle is forming. If this triangle is valid, we should see a sharp movement in price in either direction two thirds of the distance to the apex. It could happen soon.

If price could find strong support at 66c and in the process forming a white candle which ultimately breaks resistance, there is a chance of further upside in price. If price should break support at 66c on the back of higher volume, we will probably see the start of a new downtrend.




Related post:
Golden Agriculture: Contra at 68.5c.

Staying positive on S-REITs.

In the recent weeks, shares of property developers, telecoms companies, commodities companies, shipping companies, gaming companies etc have mostly declined in price.

So, in a sea of red, is staying uninvested the way to go? Very probably, many are doing just that. Personally, I am staying invested and mostly in selected S-REITs. In an environment of greater volatility, S-REITs' unit prices have demonstrated resilience and my portfolio of S-REITs has remained relatively unscathed in the recent market weakness.

Some asked me if it is safe to invest in S-REITs now or add to their long positions. Truthfully, I cannot give any answer in the affirmative. I will ask you to instead consider the more discussed circumstances in which S-REITs could fail.

1. Interest rates suddenly shoot through the roof when the time comes for S-REITs to refinance.

2. Credit drying up, leading to S-REITs being unable to refinance at any price.

3. Tenants defaulting en-masse leading to S-REITs being unable to meet their financial obligations.

4. Value of properties declining to the point where gearing exceeds 40%.

Then, ask ourselves how likely are these events to take place in the next two years. I have given some thought to these points and I remain sanguine about the situation.

1. It is unlikely that interest rates would shoot through the roof overnight or over the next two years. We must see some pretty strong inflationary pressure before interest rates would go higher. U.S. interest rates being revised upwards by 0.25% every few months is hardly catastrophic. Unless funds are able to get higher returns with similar or lower risks elsewhere, I do not see S-REITs turning unattractive, all else remaining equal.

2. The Great Depression delivered a lesson which has not been forgotten if the actions by central banks around the world were anything to go by. Any businessman would know that credit is the lifeblood of the economy. Credit dries up, businesses come to a halt and great hardship would follow. Central banks will ensure that this never happens again. We came pretty close in the last great recession and already got a fleeting glimpse of what could happen if credit dried up completely.

3. The supply of industrial space is likely to remain tight in Singapore in the near future and I have blogged about this. If the economy takes a sudden turn for the worse, we could see some tenants defaulting but it is unlikely that tenants would default en-masse. Even in the last recession which was one of the worst I have seen, nothing that serious took place. With interest cover ratios of 5.7x or more, industrial S-REITs are not about to make me lose sleep at night.

4. Most S-REITs are conservatively geared. Even with a gearing level of 32%, we have to see property valuations dropping by some 20% before gearing would hit 40%. A 20% decline is pretty severe and I do not think it likely unless the current valuations are frothy. If we look at the current valuations of industrial properties S-REITs, they are still very much below the peak before the last recession.

Although I remain sanguine about the fundamentals of the S-REITs I am vested in, I do recognise that prices are driven by sentiments. If Mr. Market should go barking mad and is willing to sell to me at prices which would give me distribution yields in excess of 10% like it did in the last recession, I would gladly increase my long positions. Yes, that is my plan. Keep a warchest ready and seize the opportunity if it should present itself.

Related post:
Investing in REITs: A flawed strategy?

Capitaland: More downside?

My purchase of more shares in Capitaland yesterday at $2.81 per share, unfortunately, did not turn out well. Today, its share price closed at $2.75, the day's low. There are some very determined shortists. The bears have won for now. Well, this is the risk one has to accept if one were to go long in a downtrend when there are no clear reversal signals. Too bad for me.

I am going to employ Fibo lines which have worked so well for me on other occasions to help determine where would we find the next support. Taking the high of $4.23 as 0% and $3.08, a natural support as 100%, we see a clearer picture.

$2.81 is where we find the 123.6% Fibo line, not a golden ratio and, as it turned out, it was a weak support which held up for a while in the morning. The next support is at $2.64. This is provided by the 138.2% Fibo line, a golden ratio and likely to be stronger. In the absence of a rebound, I would keep an eye on this price if it should be tested.

Fundamentally, Capitaland is now trading at a 21.4% discount to its NAV of $3.50 per share. I still get a feeling that it is very oversold and that a technical rebound is overdue. Of course, Mr. Market does not care two hoots what I feel.

For investors still keen on property stocks, the key is to be extra selective. Daiwa Securities recommends CapitaLand, which it notes has underperformed the local market “significantly” over the last 12 months. “We believe the market has sold down CapitaLand shares to a level where nearly all of the future policy risk (in China and Singapore) has been priced in.”

Daiwa adds what while home prices in Singapore and China may stagnate or even decline, CapitaLand’s combined residential property exposure in the two countries accounts for less than 20% of its overall assets. Daiwa has an “outperform” rating and $3.50 price target on CapitaLand. The stock closed at $2.75 on June 17.
(Source: The EDGE Weekend Comment Jun 17)

Related post:
Capitaland: Average buy price of $2.81.

Golden Agriculture: Contra at 68.5c.

Golden Agriculture saw 90,289 lots changed hands today with 15,147 lots done at 68.5c after market closed.

In my last blog post on Golden Agriculture, I identified 68.5c as the immediate resistance as provided by a confluence of the 20d, 50d and 100d MAs. So, I put in a sell order last night for those units which I bought at 66c yesterday. My sell order was filled, locking in a gross gain of 2.5c or 3.78% in one day. In uncertain times, I suppose it makes sense to lock in gains quickly and not tempt Fate, especially over the weekend.

If 68.5c could be overcome convincingly next week, the next significant resistance is at 70c. I might sell more of my shares in Golden Agriculture then.

Related post:
Golden Agriculture: Bought at 66c.

Capitaland: Average buy price of $2.81.

Readers might remember that I said I was waiting for a chance to reduce exposure to this counter. It means waiting for a rebound to reduce at resistance. I do not like selling as prices are on their way down. Of course, as I have mentioned before, this is also a flaw in my methods. If there should be no rebound, then, it is more stocks for the freezer. However, if we believe that downtrends are rivers of hope, then, rebounds are just a matter of time.

With Capitaland, price has continued to drift lower for a month or so now. No rebound. Some traders have thrown in the towel and called it quits, selling away their shares. This, to me, shows fatigue amongst long holders and, perhaps, many, if not most, of the would be sellers have sold. The counter's share price would have a better chance of going higher then.

Today, there was a fierce tussle between bulls and bears. Very high volume was chalked up as price closed lower at $2.82, after touching a low of $2.79, forming a black hammer in the process. We might not have seen the bottom yet but we could be seeing the corner of a floor.

There are no signs of a reversal yet and buying into Capitaland at $2.81 is based on a believe that the counter is oversold and that a technical rebound is overdue. Target to the upside is $3.00. Wish me luck.

Related post:
Capitaland: Daily versus Weekly.

Golden Agriculture: Bought at 66c.

Been another long day and I just settled down at 11pm or so. Will be another couple of weeks before I settle into a new routine. Until then, I will be blogging sporadically.

Today, my buy order for some shares in Golden Agriculture at 66c was filled. I also have another buy order at 65.5c which was not filled.

65.5c is at support provided by the trendline which started on 23 Feb. So, buying some at 66c, 1 bid above support seems like a pretty safe move. This is seemingly the case when volume has been reducing as price drifted lower. A low volume pull back suggests a lack of conviction on the part of sellers.

Looking at the ADX, we see a lack of trend, strong or weak. Therefore, look to the Stochastics for clues. It has declined into oversold territory. A rebound is probable. Immediate target is at the confluence of the 20d, 50d and 100d MAs at 68.5c. Overcoming this would see a higher target of 70c.

If price were to break support at 65.5c and close lower in the next session, we could see a retest of the 61c low. Good luck to fellow shareholders.

Related post:
Golden Agriculture: Critical support at 67.5c.

Cheap shopping and makan in Johor Bahru?

I read the terrible experience of the two Singaporean ladies who suffered at the hands of the Malaysian Immigration and Customs with much feeling. 

I have stopped going to JB for shopping and makan (Malay for "eating") for years now. The numerous reports of robbery, murder, burglary, car thefts etc raised a red flag. How these criminals seem to target Singaporeans really did it for me. 



However, past reports of how Singaporeans suffered at the hands of the Malaysian Immigration and Polis (that's how it is spelt in Malaysia, if I remember correctly) really angered me. 

Is it not enough that we have to worry about criminals? Do we have to worry about the law enforcers as well? Ahem, in Malaysia, yes!

My family used to go to JB regularly many years ago for recreation. I remember once when we were about to leave that my mom discovered her passport was not stamped with an exit stamp the last time we visited. It created a bit of an inconvenience that time when we were leaving the country. 

However, since she had an entry stamp, she was not fined or jailed for illegal entry and she could not be charged for overstaying as well since she just received another entry stamp for our then current trip. I remember she still had to pay a "fine" while we waited for her and my dad in the car.

From then on, we made it a point to check our passports carefully each time we went through Malaysian customs. Good thing we did too because on another trip later on, my dad's passport was not stamped upon entry. We stopped the car by the roadside and my dad walked back to the booth to get his entry stamp. It was a long walk and we waited for him in the car for more than 30 minutes. Thank goodness, no complications because his immigration "white card" (Malaysian immigration form) was all in order.

It has been many years since I was last in JB. I do not see why I should go to JB for shopping and makan just to save some $10 or so per trip. Actually, the imported goods are cheaper in Singapore. 

Unless we have a penchant for buying large quantities of Buatan Malaysia (Made in Malaysia) products, we can't save much money. The potential risks and the angst are just not worth the small savings.

Anyway, I get the feeling that Singaporeans are not welcomed in JB as they look at us as the reason for higher cost of living there. Why should we be so thick skinned to go to a place which does not welcome us? 

Give JB a miss, I say.

Want a good and inexpensive meal? Go to one of our famed hawker centres! I have blogged about quite a few too. 

Happy and safe makan! Burp!

Read articles here:
S’pore duo to file complaint against M’sia Immigration




(Added in November 2016)

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My diet and dietary supplements.

I have blogged about some low cost meals which I could get outside as well as some which I cook at home. Some readers wonder if I eat like that all the time and some wonder if I could suffer from nutritional problems. I guess readers would only know as much as I reveal in my blog and, often, the picture is incomplete.

The answer is "no". I do not eat like that all the time. I enjoy a good dinner once or, sometimes, twice a week. I like stir fried venison with spring onions and ginger as well as stir fried small kailan (no garlic please). Complete with a bowl of steamed Thai fragrant rice would make me really happy. An occasional bowl of soup is good too.

I also make sure I have an orange or apple or both in the evenings. Sometimes, I would buy strawberries, the long stem type if they are available on special offers. What about junk food? I have a weakness for chocolates, potato chips, perserved mangos and ice cream. See a more complete picture now? Yes, I am likely to have all the illnesses of a typical modern civilised man.

Now, for many years, I have also been taking dietary supplements. Just in case I am not taking in a balanced diet, I take a good multivitamin daily. I also take Omega 3 which I understand is good for the heart but I take it more to balance up with the Omega 6 that I am sure is abundant in my diet. I also take glucosamine for my bad knee as well as a higher dose of Vitamin C to deal with stress.

My diet is not perfect, for sure, but I think it's OK. What I would need to do more of is physical exercise. I get a lot of mental exercise but not enough physical exercise. I know this is bad and I really should do something about it. OK, time to double highlight this in my "to do" list! Confirm and double confirm!

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CapitaMalls Asia and Capitaland: Daily versus Weekly.

The possibility of a positive divergence panning out for CapitaMalls Asia still exists. With a lower low in its share price, the MACD has stayed at a higher low. However, it seems to be having some difficulty making a positive crossover with the signal line.

I decided to look at the weekly chart and found that the MACD has just gone lower than the previous low. A lower low on the MACD in the weekly chart is a foregone conclusion. It scuttles the chances of a reversal without a positive divergence.

What am I concluding from this? In the short term, there could be support and possibly a rebound but in the longer term, continuing weakness would not surprise me. Any rebound off lows to retest resistance would be good opportunities to reduce exposure.

I recognise the technical signs and would act accordingly. Bearing in mind all the time that TA is about probabilities, I never fully divest. A partial divestment reduces exposure and would allow me to ride any unforeseen reversal to the upside as well.

What about Capitaland? I am going to be lazy here. See the daily and weekly charts below:

Do you see the similarities? No prizes for guessing what am I planning to do with my investment in Capitaland. Good luck to fellow shareholders.

Related post:
An elaboration on my methods.

An elaboration on my methods.

Someone asked me why have I given up on NOL. Naturally, he asked this after reading my blog post on NOL last night which was a rather short blog post and quite unlike my usual style. Well, the facts were simple and brevity was appropriate.

The reason for buying more shares in NOL is no longer valid, from a technical perspective. I buy in a downtrend only when I see the building up of a positive divergence. Once that picture is negated, I stop buying. I do not throw good money after the bad.

Do not throw good money after the bad? This sounds familiar. Yes, it is conventional wisdom and I have said this at other times in my blog too. Such wisdom is also applicable to someone who is investing based purely on fundamentals. For example, my decision not to add to my remaining long position in Healthway Medical was premised on its worsening fundamentals.

So, what am I going to do with my shares in NOL now? Unlike conventional cut loss strategy which would see a certain percentage of loss given as a trigger, I prefer to cut loss on technical rebounds. This would mean at or close to resistance. This would reduce the realised loss of the trade and the likelihood of whipsaws as well.

What if a rebound did not happen? Well, remember that downtrends are rivers of hope. They are rarely one straight line downwards. However, TA is about probability and never certainty. So, herein lies the flaw in my methods. If a rebound did not happen, I could end up with more shares in my frozen portfolio. Brrr...

If you like my methods, by all means, use them. I share them freely. If you are unsure, explore the different methods out there and take your time to decide on what you are comfortable with that works. Good luck.

Related post:
NOL: Positive divergence negated.

NOL: Positive divergence negated.

NOL's positive divergence has been negated. The ADX suggests a strengthening downtrend.

After strong moves downwards, a rebound is possible and if it were to test resistance, it would be a good opportunity to reduce exposure.

Neptune Orient said to plan $200m sale of 10-year bonds
Wednesday, 08 June 2011

© 2011 - The Edge Singapore

NOL completes US$1.1b loan agreements
Thursday, 02 June 2011

© 2011 - The Edge Singapore

Golden Agriculture: Critical support at 67.5c.

Regular readers might remember that I was queueing to buy some shares of Golden Agriculture at 67.5c, having divested most of my long position not too long ago. The reason was because 67.5c was support in an uptrend which started on 6 May 2011.

Did I say "was"? Yes, I did. The uptrend which started on 6 May 2011 has been broken as price closed below the trendline support in the last two sessions.

As the ADX suggests a lack of trend, I look to the Stochastics for clues and it has been in decline. Indeed, it could decline further as volume reduced with price unable to close higher.  Price could continue to weaken. It might look like a low volume pull back but it is not pulling back to support but a break in support.

It would be better to err on the side of caution and seek guidance from the gentler uptrend which started on 23 Feb 2011. Using Fibo lines to complement this, we see supports at 66c (138.2% Fibo) and 65.5 (150%) if 67.5c should give way.

We could see the Stochastics dipping into oversold territory just like it did earlier this year in February and late April. It would be more timely to add or initiate long positions then.

Hutchison Port Holdings Trust: 86c.

Hutchison Port Holdings Trust (HPH) saw its unit price sinking lower today to close at 86c per unit. This is almost 15% lower than its IPO price of US$1.01 per unit not too long ago.

Just like what I did with Sabana REIT when it was newly listed, I used Fibo lines to estimate where are the critical supports for HPH and 86c is where we find the 161.8% Fibo line.

If 86c breaks, we could see price hitting 81c as the next strong support using the high of US$1.02 as 0%.

At 81c, it could be too tempting to refuse even though it is denominated in US$.

Related post:
Hutchison Port Holdings Trust: A weak debut.

Perennial China Retail Trust: Weak debut?

On 19 May, I did a relatively lengthy blog post on why I found Perennial China Retail Trust (PCRT) unattractive as an investment.

At that time, they were going to price it between 70c to 76c per unit. Ultimately, the trust was offered at 70c per unit, the lowest price in the range, and it was only 1.6x subscribed. The suggestion that the market is not enthusiastic about the IPO is not far off the mark.

Today, it closed at 61c or 12.86% lower than its IPO price of 70c. A weak debut? That would be an understatement.

Would I be interested in PCRT if its price were to weaken further? Yes, I would be interested if its distribution yield for 2011 were to be much higher than the 5.3% at its IPO price of 70c.

At today's closing price of 61c, its distribution yield has improved to 6.08% for the year 2011. However, it is still not attractive enough for me to invest for income. In my last blog post on this, I compared the distribution yield to CapitaRetail China Trust which was offering a distribution yield of 6.83%.

So, unless PCRT trades at a much higher distribution yield and this is really to compensate for the rather risky investment that it is, I would not be tempted. At 54c per unit, PCRT would trade at a distribution yield of 6.87% and, perhaps, I would be interested then.

Read article here.

Related post:
Perennial China Retail Trust.

FSL Trust: Private placement.

On 2 June, I blogged about FSL Trust's acquisition of a vessel and I was wondering if it would be a positive catalyst for its unit price since distributable income would likely increase.  Read blog post here.

Fast on the heals of that acquisition is another one. This time, "the acquisition will be fully funded by the drawdown of US$23 million from the trust's existing revolving credit facility and US$23 million in cash - with around US$15 million to come from a private placement of up to 57 million new FSL Trust units." Read full article here.

So, although distributable income would likely increase, distribution per unit might not increase much since there is a private placement involved. The new units would be issued at a discounted price of 35c/unit and represent 8.6% of the total number of units in issue after the placement exercise is concluded.

Read announcement here.

Mid-life crisis? Investing for income continues.

I am going through some big changes in my life. I am monetising my investments in real estate and moving back to stay with my parents. With work giving me some rather bad headaches recently, I am thinking of what I should be doing next. What is the next step in my life?

Should I continue with the status quo? I could. I would have to suffer the rather constant bad headaches at work as they are caused mostly by problems which are beyond my control.

Should I just quit and do something else? Time for a change? Indeed, time for a long break? Unfortunately, often, things have a way of turning out differently from how we would like them to.

Anyway, whatever I plan to do or not to do, I continue to invest for income and if I should be unemployed one day whether by choice or not, I have no fear even if I should be unable to find alternative employment.

Today, I  bought more units of Sabana REIT at 92.5c per unit. Readers might remember that I said I would like to lighten my position in AIMS AMP Capital Industrial REIT and to increase the weight of Sabana REIT in my portfolio. The reasons were discussed in this blog post here.

Well, unit price of AIMS AMP Capital Industrial REIT has been testing 22c resistance on low volume and one wonders if it could be broken. Price is flirting with the declining 200dMA. The ADX shows the +DI having the advantage and that the trend is positive and strengthening. The MACD, on the other hand, is finding it hard to form a higher high.

If volume does not increase significantly to take out resistance presented at 22c, I would not be surprised if price should retreat to test 21c for support. This is where we find the rising 50dMA and the uptrend support. I would not panic as the uptrend would still be intact. The price action of the last two weeks has broken out of the downtrend which started on 17 Sep 2010.

As for Sabana REIT, technically, it is trapped between 93c and 92c. 93c is where we find the flat 50dMA and 92c is where we find the flat 20dMA. The ADX suggests that there is no trend. So, I look at the Stochastics for clues.

Drawing a trendline connecting the lows, we get a support line which suggests that the Stochastics could test 50% in future which suggests a weakness in price is possible. Immediate support is at 92c. 91.5c? Not very likely if we see where the trendline support is at. Currently, it coincides nicely with the 20dMA at 92c.

Although I have not managed to do a partial divestment of my investment in AIMS AMP Capital Industrial REIT, I decided to go ahead and buy more units in Sabana REIT at 92.5c a piece today. The fundamental reasons to increase my investment in Sabana REIT remain valid and a partial divestment of my investment in AIMS AMP Capital Industrial REIT is not a necessary condition for this to take place.

Due to the changes in my life and my current mental state, during the next few weeks, there could be a day or two or even a few days in a row when I might not be updating my blog. I will try to update it as frequently as possible, of course. Blogging remains an engaging hobby for me.

Golden Agriculture: Further growth.

Feeling somewhat groggy from watching two movies back to back but I have some thoughts about Golden Agriculture which I would like to pen. I like Golden Agriculture's business and I like its numbers. I also like its technicals.

I am still in the queue at 67.5c to add to my long position. The neckline of a potential head and shoulders pattern is at 65.5c thereabouts. I would like to accumulate on weakness.

The ADX suggests a lack of trend and the Stochastics in such an instance suggests that price could experience more weakness. Notice how volume seems to be reducing as well in the last few sessions.

Golden Agri targets production growth, more land: Update
Tuesday, 07 June 2011

© 2011 - The Edge Singapore

NOL: Moving average envelope.

NOL suffered heavy selling today and touched a low of $1.71 before closing at $1.73. Such an intense sell down could see a follow through the next day.

However, it is interesting to see that despite the heavy selling pressure, we still have the potential for a positive divergence to form. Much would depend the price action in the next session.

The lower range of the moving average envelope should provide some support at $1.68 in the event of further selling down. Any recovery in price could see gap cover at $1.82. The way I look at it, anyone who is still thinking of shorting NOL at the current prices should think twice.

I would probably add to my long position by purchasing at $1.68 if it should be tested as support. Downtrends are rivers of hope.

Investing in REITs: A flawed strategy?

I have been told by some that my strategy of investing in REITs is a flawed one. I am also sure that there is no paucity of investment blogs out there saying that one should avoid REITs as they are always hungry for funds and are likely to go hat in hand to unitholders regularly or indulge in private placements.

If I were to be in the mood, I would pen short comments to correct what I feel are bias thoughts. Of course, if the writer should be downright rude, I would return measure for measure. There is always room for discussion and even room to disagree. However, I take a very dim view of bigotry and bad behaviour.

One of the catalysts for the above paragraphs is an article I read in The EDGE regarding Olam's raising US$600 million through selling of more shares. This, I have no doubt, would dilute the interests of minority shareholders.

To the people who would avoid REITs but would invest in companies like Olam instead, I wonder how is Olam different in such an instance? Raising funds to buy more income generating assets sounds like a strategy for growth which any REIT might pursue.

Personally, my investments in REITs have done very well in the last two years with the exception of Saizen REIT but we know why that was so. If we are making money in our investments, we must be doing something right. However, we have to remain vigilant to ensure that our investments remain in good health. This is true whether we are invested in REITs or companies.

Olam International said to raise US$600m in share offer: Update
Monday, 06 June 2011

© 2011 - The Edge Singapore

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GLP versus ProLogis.

I was just reading an article in The EDGE and wonder what this would mean for GLP and its shareholders:

"GLP was listed on the SGX last year after it acquired the Japanese and Chinese portfolio of Prologis with the Singapore Government Investment Corp. (GIC) in 2008.

 "Last December, GLP had to clarify that it did not disclose during IPO that a non-compete agreement with ProLogis was due to expire this February as the deal requires GLP not compete with ProLogis in Japan while ProLogis reciprocally does not compete in GLP’s core market of China.

 "The clarification was made in response to a report in The Business Times that the prospectus for GLP’s initial public offer last October did not specifically disclose that the non-compete agreement was expiring in a couple of months."

Question. Was the non-disclosure misrepresentation on the part of GLP during its IPO? This is especially grave if the information omitted could have serious consequences for GLP's shareholders. I learned in business law many years ago that misrepresentation by omission is just as grave as misrepresentation through the giving of false information.

From a purely business perspective, I wonder how things would pan out in the next few years as ProLogis becomes more aggressive in its pursuit of growth in Asia. Is GLP up to the challenge? It did buy ProLogis' assets. I liken this to Akira asking an OEM to produce its products. Obviously, the OEM is the party with the knowledge and the production capabilities. If the OEM were to offer its products directly to the market, it could do so with an in-house brand and at a more competitive price. Consolation? Akira has a more established brand name but see what good it did for Akira? Did GLP have enough time to establish a strong brand name?

Of course, I am just thinking aloud here and playing the Devil's advocate. I am throwing the floor open to anyone, vested or not vested in GLP, to share any pertinent thoughts on the matter.

Prologis to double Asian holdings after biggest REIT deal
Saturday, 04 June 2011

© 2011 - The Edge Singapore

Related post:
GLP: A falling dagger?

Of primates and their diet!

The title of this blog post belies the gravity of the subject on hand. Before we go into the subject proper, a bit of background information is necessary for the uninitiated.

Some might know of an infamous cbox owned by LP, the blogmaster of Bully the Bear. LP is a very decent sort of chap and is always concerned about people, having their best interests at heart. LP is also G.O.D. (Gorilla of Design) in his realm (i.e. his blog and cbox).

G.O.D.? Yes, LP is able to decide on how things look, how emoticons should be abbreviated and how abbreviations would turn out in his cbox. Most of the time, he is a benign G.O.D. but he is fully capable of dishing out caustic remarks and more. He also has the ability to excommunicate any recalcitrant cboxer and eradicate spamsters! Now, that is power!

In the zoo that is LP's cbox, there are larger primates of the gorilla class and smaller primates of the spider monkey class.  I am sure there are also baboons, orang utans and, maybe, a Yeti or two. The primates of different sizes represent investors and traders of different financial means.

In the cbox, we also refer to Sabana REIT as banana REIT just for fun. I cannot remember who started it but it was probably by some disgruntled investor who bought into the REIT at $1.05 a piece thereabouts. Some have referred to it as an expensive banana.

Regular readers would know that I blog about Sabana REIT regularly, starting from its IPO days. However, I only initiated a long position at 92.5c a piece, weeks before it started trading CD with a maiden DPU of about 3c. This was where FA and TA married nicely. FA identified a good undevalued buy and TA gave some hints as to when to buy. If only I am so consistent every time.

Last night, someone whom I believe to be of gorilla class in LP's cbox told me that I was being "suan" (Hokkien for "teased") by a fellow blogger. I went to read the blog post and I share LP's opinion that the blogger was most probably trying to warn spider monkeys to behave like spider monkeys and not behave like gorillas. So, a gorilla might be able to eat a few kgs of bananas in one sitting, a spider monkey could suffer from heartburn doing the same thing or worse! This is generally good advice, of course.

Then again, I have met spider monkeys with great appetites. They could eat a lot of bananas and not grow fat, avoiding the complications of over-eating. Some might say that the complications could come much later in life. Well, this could indeed be the case.

What do I think? Personally, if I have identified something which I believe is a winner, I would go in big. By this, I mean building up my position in the company to be at least 10% of my total portfolio. I am also not averse to building it up to be 20% or more of my total portfolio.

I remember a time when my portfolio size was much smaller, ST Engineering and SPH were the lion share of my total portfolio. In mid 2009 to early 2010, Healthway Medical, Golden Agriculture and Saizen REIT formed the lion share of my total portfolio. How did I do? Quite well, I believe.

However, the recent triple disasters to hit Japan dealt a blow to my investment in Saizen REIT which by that time was about 40% of my total portfolio. 40%? Yes, I liked the fundamentals and I liked the turnaround story which did finally pan out by end of May 2011 with YK Shintoku's CMBS fully repaid.

Unfortunately for me, the triple disaster wrecked a picture of recovery, technically and fundamentally. Informed by TA, I partially divested my investment in the REIT and suffered a small loss. This is a pitfall of a strategy of concentration as compared to diversification. Potential rewards are greater but the level of risk would be proportionally higher. So, we have to stay nimble as circumstances are fluid. This applies to all primates, from gorillas to spider monkeys.

In conclusion, if a spider monkey sees a gorilla wolfing down bunches of bananas and if the spider monkey wants to eat just as many bananas, it could. If it did, I would not say that it would, for sure, suffer from indigestion since it could be a spider monkey with a huge appetite although it might. I would say that it could suffer from malnutrition because it might not have seen what other food the gorilla could be eating as well. Primates are, after all, omnivores.

Oh, if anyone is interested to know, my overnight buy order for more Sabana REIT units at 92c was filled this morning.

Capitaland, CapitaMalls Asia and NOL.

This is going to be a quick blog post as I am feeling somewhat enervated this evening.

Capitaland is causing some people some concern. Is the price going to retreat further after touching a new low of $3.07? I believe questions like this are futile. Nobody knows the answer. TA is about probability after all.

However, we can say that chances of a rebound, if not a reversal, are higher now. With a lower low in price, the MACD spots a higher low. Yes, we have a positive divergence. However, it does not mean that price could not go lower, mind you.

In the event that the positive divergence delivers the goods, look to the declining 50d and 100d MAs for resistance, currently at $3.28 and $3.37 respectively.

CapitaMalls Asia saw volume increasing significantly today with its previous low at $1.57 tested, forming a  black candle in the process. It remains to be seen if $1.57 could hold up as support or, if a lower low were to form, whether the MACD could spot a higher low. Yes, looking out for a positive divergence.

Things look pretty dicey right now.

NOL is yet another counter which is spotting a positive divergence. Lower low in the share price but a higher low in the MACD. However, with such a persistent downtrend and with a narrow trading range, it could take a mammoth effort for share price to break resistance provided by the declining 50dMA in case of a reversal effort.

Let's see if the share price could open and close higher than $1.81 (today's high) in the next session. If successful, we could have a morning star setup, a three stick reversal pattern. That would be promising.

NOL completes US$1.1b loan agreements
Thursday, 02 June 2011

© 2011 - The Edge Singapore

Tea with AK71: A loaf of bread.

I enjoy convenience and I have told quite a few people that I do not like to spend too much time preparing food or eating. Food to me is a necessity. That, very much, is it.

However, I do enjoy spending hours in a nice restaurant with good company. It is the company that makes it worthwhile for me in such instances.

Some of my earlier blog posts on the types of low cost food I enjoy attracted myriad comments, some encouraging, some discouraging and quite a few incredulous! Well, here is another.

I have been trying to avoid wheat because it is bad for my blood type, apparently. Unfortunately, I like bread very much and I particularly like those with raisins!

Raisins are good for my blood type and maybe, they would cancel out the negative effects of wheat. Oh, this loaf has rolled oats as well and oats are good for my blood type too. Two against one! This loaf of bread has my stamp of approval!

Blood type diet aside, this is a loaf of bread that is loaded with goodness. Periodically, I would buy a loaf and it would usually last me 2 to 3 days. 2 slices and I am full. There are about 10 slices or so per loaf. So, that makes 5 meals for me.

Cost? This loaf of bread usually retails at S$2.95 each. It was going for S$2.50 each at NTUC Fairprice. I don't know if  the special offer is still on though.

Convenient, low cost and something I enjoy. This formula never fails. :)

FSL Trust: Acquisition.

Nothing much has been happening to FSL Trust lately although its unit price has suffered from weakness. I suspect that the weakness of the US$ and the shipping sector as a whole could have been a dampener.

The latest news is an acquisition of a "Long Range II (LR2) product tanker from TORM Singapore, a wholly-owned subsidiary of TORM A/S for US$46 million ($56.7 million).... The transaction will be immediately cash flow accretive to the trust and will increase the trust’s total remaining contracted revenue to US$602 million, excluding extension options. The average remaining lease term of the trust’s portfolio will also remain at the current 6.8 years."

Will this be a positive catalyst enough to send its unit price higher?

First Ship Lease Trust to acquire long-range tanker for $57m
Wednesday, 01 June 2011

© 2011 - The Edge Singapore