Saturday, November 28, 2009

Random Thoughts: Stars stars stars

Recently, I shared that I will still be waiting for Starhub at $1.88 and Starhill at $0.50... Why?

I combined a little FA with a little TA to derive these values.

My FA is purely (and simply) dividend investing... I believe in the long term dividend sustainability of these two companies...

Starhub is a telco, which is defensive in nature. It is in their culture to lead the market (they are the first to have pay TV, free incoming calls, free dial up internet in SG). Hence I believe they have the capability to sustain dividends via their innovativeness. 10.5% yield is attractive.

$1.88 is chosen not only on 10.5% dividend yield, but also, by TA, it is near the previous low. The lowest so far is $1.76... It's only 12 cents lower than my target entry price. The probability of a profit given a 12 months horizon at $1.88 is near 100% in my opinion. This is why I will wait at $1.88 only.

However, there are concerns of a giant H&S formation, which might lead Starhub to achieve $1.15. We shall see... I believe in its sustainability of dividends, so I will buy at every support if it does move down like this.

Disclaimer: Already vested 6 lots at $1.895

As for Starhill, it owns a part of Ngee Ann and Wisma. The REIT also own buildings in prime areas in Japan as well. Recently, they bought buildings in Malaysia and Aussie as well. I checked with my colleague that the two buildings they bought from their sister REIT is almost like Ngee Ann and Wisma (and he don't know about this REIT till I told him). There were rumours that they bought too expensive, but I don't think so.

Starhill has a strong backer in YTL Corporation in Malaysia. They also own properties which are in prime location. Their rents are longer term leases with some soon-to-expire leases charging at below market rate. The potential to increase dividends is very high. The previous dividends was an annualised 7% p.a. amount at 54 cents. There's potential to raise to 9% p.a. at current price with the acquisition of the two new properties.

50 cents is targetted because it is at the 200 MA. 51.5 cents is double support according to hahalol, but it is not worth for me to average down my 54 cents at that level.

Disclaimer: Already vested 10 lots at 54 cents.

This is how I combine FA plus TA for short term entry... So far, it has been my most successful method of all the methods I tried. I did it before for Macquarie International Infrastructure Fund at 30+ cents.... I'm trying to see if I can replicate the same method on these two stars.

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