CapitaMallsAsia and First REIT Purchase

Recently I bought 3 counters, FIRST REIT, Silverlake, and CapMallsAsia (CMA). This post will focus on CMA and FIRST REIT, and the simple reasons why I bought it.

The first and foremost reason is that CMA has fallen below it's IPO price of $2.12. While on hindsight, it would have been better to load GLP at $2.11, I went with CMA for the reason above :x

The second reason is more technical. Doing a basic Fibonacci retracement, 1.844 appears to be a nice support. However, I was a little impatient, and went in 3 lots at $1.86, along with 1 lot at $1.85.  

Of course, it could go lower. However, I believe in its business, another reason why I decide to buy into this. I'm willing to load at a lower price if it goes lower.


There have been talks about CMA's NAV and P/E ratio. In my opinion, CMA is in the business of development. NAV isn't a good judge because in developing malls, you are basically in the business of enhancing and increasing the NAV.

You buy a land for $X, you build a mall for $Y, you enhance and improve visibility and attractiveness of mall to draw crowds for $Z. The final valuation would and should be greater than $X +$Y +$Z, else they should just get out of business. What this means to me is that they "grow" their NAV over time.

Who to sell to after that? Pick CMT, CRCT or CCT. Job done for CMA, buy another land for $X next. The P/E ratio will then increase accordingly. 


In other words, NAV should logically grow over time, while P/E ratio will likely fluctuate rather widely. 


The only concern is that CMA isn't dividend friendly, or so it seems. I would still sell it eventually for a capital gain just for this reason.


While it is not technical discipline to catch a falling knife (one should catch a fallen knife instead), I'm too tempted by what I perceived as value in a blue chip that is linked to ah gong. Shall see how it goes.

 

This is another quick technical buy without much analysis. First REIT is basically one of two healthcare REITs listed in Singapore.


I bought 12 lots of rights at 0.165, which translates to an average price of 0.665 after paying for the rights and an eventual expected yield of 9.6%.


First REIT is a REIT which I had wanted for a long time since the days of 40+c. Subsequently, it shot up to 0.985 before giving rights, which gives a TERP of 0.7+. At 0.665, it's a small bargain, given that the rights are for acquisition purposes and hence yield accretive.


The expected reason for the sell-down is because international investors are not eligible for the rights issue. Hence, the nil paid rights are being sold on behalf of these international investors. At the same time, if the spread between the mother share and the rights are too big, it's worth it for investors to sell the mother share and buy the rights to capitalise on the difference. Hence the overall selling pressure.


And with the expected reason, I scooped up some. Hopefully it will turn out right eventually.




With my loadings, my warchest has dwindled substantially. I'll be looking to cut loss and take profit for some counters before year 2010 ends. Just to rebalance the game of numbers....