Sabana REIT: Fundamental analysis.

Sabana REIT closed at $1.02 and touched a low of 97c at one point today. After the rather strong performance by MIT and GLP on debut not so long ago, the unenthusiastic response to Sabana REIT on its first day of trading by market participants was somewhat surprising. Let us do an analysis of the REIT and whether it is a good investment at the current price.

Sabana REIT has an aggregate leverage of 26.5% which is comfortable but bear in mind that a Shariah compliant REIT cannot lever beyond 35% while other REITs are quite comfortable levering to 45%. Its NAV per unit is 99c. So, it is trading at a slight premium to NAV and at 97c, the low of the day, it was only at a slight discount to NAV.

The total GFA of all its properties is 3,286,220 sq ft.  Its largest property which has a GFA of 810,710 sq ft has a remaining lease of 45 years. The rest of its properties have remaining leases of between 22 and 72 years. Three properties have remaining leases of 31 years or less and their combined GFA is 706,055 sq ft. Nothing irregular here. Although close to a quarter of its GFA would come to an end in 31 years or less, it does not seem worrisome at this point in time.

The REIT has an occupancy rate of near 100%. This is a good thing but it also means that there is little room to increase occupancy and revenue through renting out more space. 59.5% of its leases (by revenue) will expire in 2013 while the rest would expire in 2015. So, income should remain predictably stable till 2013.

The REIT will distribute 100% of its taxable income till 31 Dec 2012. Thereafter, at least 90% of taxable income will be distributed. Income distributions will be made quarterly to unitholders.

The estimated annualised DPU for 2011 is 8.63c and for 2012 is 8.67c. These represent yields of 8.22% and 8.25% respectively based on the IPO price of $1.05 per unit.

I believe that we have a fair offer here in Sabana REIT. Although I would rather invest in AIMS AMP Capital Industrial REIT which offers an annualised DPU of 2.08c for 2011 which would translate to a yield of 9.24% at a unit price of 22.5c, investing in Sabana REIT could provide some safety through diversification.

One thing that worries me is the lack of a track record of Sabana REIT's manager whereas AIMS is an old hand at managing REITs and Mr. George Wang's achievements are impressive. So, would I invest in Sabana REIT? If price weakens further, I might just buy some.

View prospectus here.

Related post:
Sabana REIT: IPO at $1.05/share.

Recent purchases: First REIT, AIMS AMP Capital Industrial REIT and Healthway Medical.

It is a wet evening and the stock market wasn't all that inspiring either. So, I decided to look at what I have bought recently and how they are doing.

First REIT
I bought some at 95c and again at 96.5c. Volume expanded today as price closed at 97c. It looks as if the rising 20dMA is pushing the price higher. Of course, FA proponents would say that the CR status is causing its unit price to stay bouyant which I believe too.

At the purchase price of 95c, my average price would be 95c x 4 + 50c x 5 /9 = 70c.  DPU of 6.4c in 2011 means a distribution yield of 9.14%.  At the purchase price of 96.5c, my average price would be 96.5 x 4 + 50c x 5 /9 =70.67c. Distribution yield would be 9.06%. Pretty attractive.

If I were to be successful in my excess rights application, the distribution yield would improve, of course. I am actually somewhat tempted to buy more. I might put myself in the buy queue at 96c which is where we find the rising 20dMA now.

 

However, a word of caution from the TA side: the MACD has formed a lower high while price formed a higher high on 9 Nov. This is a negative divergence and price could come down in time. Of course, we know that date is probably 1 Dec when the counter goes XR. Although I do not see any reason why it would trade below the TERP of 70c, it could.  If it does, I would buy more. Simple.

AIMS AMP Capital Industrial REIT
I bought more of this REIT and I blogged about it recently on 23 Nov. At 21.5c and an annualised DPU of 2.08c in 2011, the distribution yield of my latest purchase is 9.67%. This is very attractive to me. I am in the buy queue at 21c as well but with the rising 100dMA providing support at 21.5c, the chances of price going down to 21c aren't all that high.

Of course, with the MACD dipping into negative territory, we could see momentum remaining weak. Stochastics has similarly dipped into negative territory. Overall, the suggestion is that although we might not see much upside in the near future, the downside is similarly limited.  This is a great investment for anyone who is investing for income.

Healthway Medical
Although I have told myself before that I do not have to trade the market anymore and I could just sit back while waiting for dividends to come in from my investments, I just could not resist buying some Healthway Medical shares when I saw the positive divergence between price and MACD. I blogged about it on 22 Nov.

Well, it still looks rather promising. Volume is drying up as price consolidates at 15c. Immediate resistance is at 15.5c as provided by the 20dMA. Breaking this would give us an immediate target of 16.5c.  17c is where we find the downtrend resistance while 18.5c is the eventual target if the potential double bottom is a valid pattern. Now, if the downtrend resistance remains unbroken, there could be more downside to come. So, my strategy is to divest at resistance. This is purely a trade.

Related post:
Healthway Medical: Prime for a rebound?

MBLM, Genting SP and Healthway Medical.

Walked a lot this evening after having dinner with a friend at MBLM. Yes, it is my new favourite mall.  So quiet, cool, clean and the service staff are all so friendly. Again, I was given free parking for 4 hours and so, I took a walk to MBS and, boy, that place was a ghost town.  Salespeople were looking at me expectantly as I walked past some of the shops. I felt bad almost for just being there.

Now, my legs have a nice mildly aching feeling from so much walking and I am feeling very sleepy. So, just a short post tonight before I hit the sack.

Genting SP
Formed a short white candle today. We could see a rebound and if it does happen, resistance is at $2.10 which is where we find the 50dMA. Anyone who is thinking of reducing exposure could consider doing so here. After all, price goes down a river of hope and rarely in a straight line.

With the 20dMA turning down and seemingly set to do a dead cross with the 50dMA, there could be more downside to come. After all, the momentum oscillators are downtrending but being oversold or bordering on oversold, we could see the formation of a floor. This floor could be at $1.85 if price resumes its downward trajectory.

Healthway Medical
In my blog post last night, I mentioned that the jury is still out on this one. The positive divergence I saw a couple of days ago is still in play.

The MACD histogram has turned green again. There is a struggle going on but with the MFI and RSI going generally higher, momentum has turned up. Even the OBV has turned up today, suggesting an increase in accumulation activity. If a rebound happens, first resistance is at 16.5c, the neckline of a potential double bottom formation, with an eventual target at 18c if the double bottom pattern is valid.

This short blog post has taken me longer than usual to complete: 50 minutes! My brain is working at 50% this evening. Good night and good luck!

Related post:
Tea with AK71: A day at MBLM.

AIMS AMP Capital Industrial REIT, Saizen REIT, Genting SP, China Hongxing, Healthway Medical and Golden Agriculture.

There is much talk about the military confrontation in the Korean peninsula which took place today. Could this be the reason why the STI sank 2%? Fear is in the air?

Seoul (The Korea Herald/ANN) - North Korea fired dozens of coastal artillery shells, some of which fell on the South's Yeonpyaong Island near the tense western inter-Korean border, the Joint Chiefs of Staff said Tuesday.

"The North fired dozens of artillery rounds from its Gaemeori western coastal artillery base at 14:34 p.m. In response to the military provocations, we fired back dozens of rounds with K9 self-propelled howitzers," JCS spokesman Col. Lee Bung-woo told reporters.

In the artillery firing, one soldier was killed and four marine solider were seriously injured. The military was trying to evacuate civilians on the island near the border. Several civilians were reported to have suffered injuries.

Read full story here.

STI at new November low, off 1.4%; 3,119 support
Tuesday, 23 November 2010

© 2010 - The Edge Singapore

I would keep calm and question how would the events affect my investments. As far as I could see, my investments are relatively unscathed. If there should be some irrational selling down, I could buy more. Let us look at some counters:


AIMS AMP Capital Industrial REIT
The recent buying up of units in this REIT at 22.5c and 23c evaporated today. On 25 Oct, I mentioned that "A reader asked if I managed to get more at 22c today. No, I didn't. I am waiting at 21.5c." Today, I got what I have been waiting for. My overnight buy queue at 21.5c was filled.

Fundamentally, there is no reason for a weakening of price here. Technically, it could weaken and I decided to wait and it paid off. Now, could it weaken further and I know for a fact that someone in LP's infamous cbox is waiting to buy at 1 bid lower than my purchase price today.

21c looks like a many times tested resistance of an earlier base formation and this could be a strong support if price ever goes that low. I would buy more then. In fact, I am already in the buy queue. The MACD is testing its own trendline support and I would be surprised if price goes much lower.

Related post:
AIMS AMP Capital Industrial REIT: Accumulation price?

Saizen REIT
This REIT's unit price has been showing some resilience lately which leads me to believe that most of the people who would sell at 15.5c have sold. Despite a rather large sell down of more than 5,000 lots today, unit price remained at 16c. I believe that is a sign of strength.

Looking at the chart, it seems that 16.5c is the upper limit of the Bollinger bands and at 16c, this REIT is trading above all the daily MAs except the 200dMA. I like the rising MACD. All the daily MAs are coming together, bunching together, creating much tension. One day, the spring would have to uncoil.

Genting SP
A friend has money tied up here and I am sure quite a few readers too including someone who wrote recently that he gave up on Saizen REIT and shifted his money into Genting SP instead. On 18 Nov, I mentioned that "If price does not recapture the 50dMA as support, immediate support is at $2 with the next support after that at $1.85."

The support at $2 cracked today and it looked, for a few moments, as if it could just cling on but the bears proved too strong and a wickless black candle was formed as price closed at $1.95 on high volume. $2 could now be resistance. The gap down on 12 Nov was indeed a bad omen.

With the 20dMA turning down and the MACD dipping into negative territory, we could see a further weakening of price here. $1.85 as a support could be tested in due course. Since peaking on 9 Nov, OBV has been in decline which suggests that distribution is ongoing. This could exert further downward pressure on the share price.

Genting Singapore off 2.9%; Support at $1.85
Tuesday, 23 November 2010

© 2010 - The Edge Singapore

China Hongxing
The support provided by the 200dMA has been taken out and price closed at 14.5c. If 14.5c fails to hold, we could see support at 13c tested in due course. 13c was the neckline of the double bottom formed in June/July and should be a stronger support.

MFI could be testing its uptrend support soon. RSI and Stochastics are both in oversold region. However, the MACD histogram's buy signal has been negated.  It would be prudent to wait for clearer signs of a reversal before wading into a long position here, especially with the support at 200dMA compromised.

Related post:
China Hongxing: Testing support.

Healthway Medical
Technically, the picture remains largely the same. However, the buy signal on the MACD histogram has been negated. Volume remains low and there was some selling down at 15c, the floor identified earlier.

Immediate resistance is at 15.5c which is also where the 20dMA is approximating. The jury is still out on this one.

Related post:
Healthway Medical: Prime for a rebound?

Golden Agriculture
On 18 Nov, I said "I still see a negative divergence between price and volume. The MACD has completed a bearish crossover with the signal line but being in positive territory, it suggests that the retreat in price could just be a correction. In such a case, we could see price weakening further to 65c, the next major support, if the support at 70c fails to hold up."

Support at 70c was taken out convincingly today. The MACD continues to decline, pulling away below the signal line although still in positive territory. MFI and RSI have been forming lower highs.  All suggest that positive momentum is declining. 65c support could be tested sooner rather than later. Buy at 65c? As a hedge, sure. If 65c breaks, the next support is at 61c.