CapitaMalls Asia: Borrowing on the cheap.

On 6 Jan, this was reported on Channel News Asia:

"...CMA will issue $200 million worth of retail bonds.

It aims to raise $100 million by selling one-year bonds, which will pay 1 per cent interest.

The remainder will be raised by issuing 3-year bonds, which carry an annual interest rate of 2.15 percent.

The minimum sum that a retail investor needs to invest is $2,000.

...... Experts say bonds of highly rated corporates are an attractive investment, compared with government bonds.

One-year Singapore government bonds currently yield 0.4 percent annually.

Wilson Liew, an investment analyst, said the bond issuance should have little influence on CMA's performance.

"If you look at the quantum of the bonds, it is not large compared to the total size of the business," said Mr Liew.

CMA has retail properties worth $21.6 billion in its portfolio.

"They are making use of low interest rate environment to raise some money but they are lowly geared anyway so raising money isn't so difficult," added Mr Liew."

On 21 Jan, it was reported that the offer was approximately 1.82 times subscribed. Read report here.

Cheap debt is a good thing for a growing business. I am sure the management of CapitaMalls Asia will put the money to good use. Fundamentally, this company is in a net cash position and has predictable cash flow from its management business while divesting mature shopping malls to the REITs it manages could result in attractive gains periodically. I am looking forward to stronger numbers in the future.

Technically, I have not looked at the weekly chart for this counter before. Let's take a look:

The candlesticks are detaching from the lower Bollinger and we could see price moving towards the 20wMA which is currently at $2.06. There is still a downward bias but I like the higher lows on the MFI and RSI. Both momentum oscillators are still in oversold territories and this situation could be corrected sooner than later. 

We cannot say that we are surely seeing a reversal at this stage but a rebound to the 20wMA is not unattainable and could result in some decent gains for anyone buying at the trendline support which approximates $1.90 currently. I am, of course, vested.

A Chinese government think tank has forecast the nation's economy will grow around 9.8 per cent this year, with inflation likely to come in at 3.7 per cent, state media reported Sunday. Experts at the Chinese Academy of Sciences also predicted that gross domestic product would rev up in the latter part of the year, and would be driven largely by domestic consumption, the official China News Service said. Read article here.

Related post:
CapitaMalls Asia: Pulling back on low volume.

AIMS AMP Capital Industrial REIT: Worried?

A friend told me that a friend of his is desperate for reassurance regarding her investment in this REIT. Reassurance? I was baffled why his friend needs reassurance. Then, he explained that it is because there were massive sell downs at 21.5c in recent sessions, yesterday inclusive.

I told my friend I was happy that there was a sell down yesterday because my overnight BUY queue at 21.5c was filled.  Well, his friend's overnight BUY queue was filled too at 21.5c but she's worried now. I find that mind boggling. We put in an overnight BUY queue in the hope that it would be filled and when it was filled, we worry? Something is wrong here. I think popping the champagne could be overdoing it but some happiness is more appropriate, don't you think?

A quick look at the daily chart shows immediate support at 21.5c. The MFI is still uptrending and is now testing resistance at 50%. The confluence of 20d, 50d and 100d MAs at 22c makes this price level a strong resistance. What is the chance of this resistance being taken out?

Let us take a look at the weekly chart for clues on the longer term trend. The trend is obviously still up. If we think of the white candle formed in the week of 13 Sep, could we be seeing the formation of a flag? Is price consolidating before moving up further?

Now, look at the Bollinger Bands and they are definitely narrowing. So? Volatility is reducing which supports the idea that price is consolidating. Will price go up or down? An educated guess is that it is more likely to go up than to go down because the upcoming DPU is likely to increase over the last one by a large margin. Numbers are likely to improve and we will know for sure next week when the results are announced on the 25th (Tuesday).

Does this mean that price would not weaken at all in the meantime? Who can say for sure? However, in view of the fact that the REIT is on a longer term uptrend and that the rising 50wMA is at 21c, I have already put in a BUY order at 21c and if this price level was ever tested, I hope my BUY order could be filled.  At 21c and an estimated DPU of 2c per year, that is a distribution yield of 9.52%.

Finally, someone told me that his broker advised him against investing in AIMS AMP Capital Industrial REIT because it has been losing money for years. I find this baffling as the REIT is only slightly more than a year old since the old MI-REIT was recapitalised.

Looking at the last quarterly report, we see positive net income and positive cash flow. MI-REIT is a thing of the past, AIMS AMP Capital Industrial REIT is a much stronger outfit and I am putting my money where my mouth is.

See 2Q FY2011 Unaudited Financial Results here.

Related posts:
AIMS AMP Capital Industrial REIT: Sell down at 21.5c.
AIMS AMP Capital Industrial REIT: Revised DPU and fair value.

First REIT: FY2010 results.

1. Projected DPU for FY2011 remains at 6.4c.

2. NAV/unit as at 31 Dec 2010 is 77c.

3. Gearing in 2011 at 17.25%.

DPU is lower for 4Q FY2010 at 0.87c "due to the issuance of 345,664,382 Rights Units on 31 December2010 in relation to the acquisition of Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals LippoCikarang. These new rights units are entitled to participate in the 4Q 2010 distribution. If the new rights units issued on 31 December 2010 are excluded in the computation, the adjusted distribution per unit would have been 1.96 cents."

New properties will start contributing to earnings and distributions in 2011. Expecting the DPU for 1Q FY2011 to be 1.6c, therefore.

4Q FY2010 DPU of 0.87c will be payable on 28 Feb 2011.

See presentation slides here.

See report by OCBC Investment Research here.

We believe that FREIT’s current valuations are still compelling, boosted by its attractive yield (estimated yield of 8.3% in FY11F). Future growth will be supported by its stable master lease terms, which has downside revenue protection and built-in step-up rental features. We continue to like FREIT’s strong sponsor support as well as management’s execution capabilities. Maintain BUY with a revised RNAV-derived fair value estimate of S$0.82 (total returns of 15.5%) as we incorporate the latest figures into our assumptions.

Related post:
First REIT: Simply amazing.

Golden Agriculture and First Resources.

Golden Agriculture is closing in on the 100dMA as it ended the day at 71c today on high volume. We could very well see the support provided by the 100dMA tested at 70c in the next session. If it should break, next support could be found at 66c where the rising 200dEMA would be approximating soon.  The 200dEMA, being a long term MA, should be able to provide a much stronger support in case of further decline in price.

The MACD is falling in negative territory. Both MFI and RSI are also declining in overbought territories. The OBV shows clear distribution ongoing. The time to buy some shares in Golden Agriculture could be near.

First Resources declined with a vengeance yesterday on extremely high volume but volume dried up today as price declined another 4c. Could price decline further next week? It certainly could but with volume drying up, drastic price decline similar to what was witnessed yesterday is less likely to happen again.

For anyone thinking of initiating a long position in the counter, the 100dEMA at $1.38 and the 100dMA at $1.35, if tested, could be nice entry prices.

See analysis by DBS Group Research here.

First Resources drop a buying opportunity. Major shareholder Eight Capital sells 75 million ordinary shares and Citigroup places 15 million treasury shares held by the company at $1.48 each.
Thursday, 20 January 2011

© 2011 - The Edge Singapore

Related post:
Golden Agriculture: Looking to the 100dMA.