Going for 1-week reservist

I will be off from market for 1-week of reservist. Will still be getting my girlfriend to help me queue for these 2 stocks for dividend investments.

1) 3 lots of Starhub
Tgt Price: $1.83 (changed to reflect 5 cents dividend after it was at $1.88)

2) 10 lots of Starhill Global REIT
Tgt Price: $0.500

Total price: $10640 excluding brokerage.

The technicals of Starhub does not look favourable. However, I believe in the long term management. So I would queue to buy at the support price.

Starhill has 2 supports. Depending on the price actions, I might enter at a later date of $0.520....


If these two trades went through, they would sort of finish up my spare cash and my salary + 2 months of annual wage supplement, with only my coming dividends left for me to spend. However, it would increase my monthly dividend amount to about $540 from my dividend and investing basket, bringing me one step closer to my first target of $1000 per month.

Tuition is starting soon, so I will be able to build up more funds again to do more things.

Starhill Global Reit -- selldown unwarranted?

Starhill REIT recently made some acquisitions.

Starhill Global REIT proposes to acquire David Jones Building in Perth for S$148.0 million; And enters into heads of agreement to acquire Starhill Gallery and Lot 10 in Malaysia for S$423.3 million


Simply put, this acquisition will result in increased dividends per unit (DPU). Why not?
Without adding the three new properties, at current price of 53 cents, it's about 7~8% dividend yield. Adding the acquisitions, we could possibly be looking at nearly 9% dividend yield per annum at the current price.

Yet... why the selldown? Some reasons I could think of:

1) Rights issue was supposed to reduce debt, but instead, with these purchases, the amount of debt increased.

But.... If all the rights proceeds are used to pay debt, it would be very silly, because loan interest is much lower than net property yield. In so doing, there will be very little upside on DPU on saved interest.

Acquiring assets which you're familiar with and possess potential for enhancement will generate higher yield than loan interest. Question is, when you have cash on hand, and asset prices to the low side, with bank lending interest at a low too, do you use the cash plus loan to buy cash generating assets or do you use up your cash to pay existing loan? The answer should be obvious.


2) The two Malaysian REITs are bought too expensively. Suck thumbs to retail investors for you have no control.

The key thing is, other than because they buy from their own sister REIT, what are the other reasons? Who determines whether they bought it too high? What and who determines the "too high"...? From the other REIT's investor point of view, it might have been sold too cheaply?

Taking a leaf from MIIF... They sold MEIF... There were also rumours here that claimed that they sold too cheaply to their own people... But the share price has been rising since then...


3) The two Malaysian malls they bought are not good.

Huh?

I asked my Malaysian colleague about the two Malaysian malls... Without knowing anything about Starhill, he told me it's almost like Ngee Ann City and Wisma at Orchard... Is it a coincidence that Ngee Ann City and Wisma are owned by Starhill as well?

Starhill seems to have succeeded in their quest of acquiring assets in prime locations.



Why the selldown? Perhaps some big institution is rebalancing their portfolio. As to whether I can get it at 50 cents.... only Mr. Market knows. Depending on the price actions, I might just buy in more at the 51.5 cents to 52 cents region.

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.

STI Updates

Nothing much to update. So won't be posting a chart here.

MACD remains bullish. Waiting for a turn.
CCI is still high.
MFI's negative divergence remains.
Stochastics and %R both remains at a high, overbought region.

The bollinger band is opening up, signifying greater volatility. When will the party end? Perhaps when the bollinger band starts to close up.... all the stars will align....


Investors should only take on highly selective longs. On my radar are Starhill and Starhub. Patience is key now.