Reits - The Breakout

For those who have been braved enough to invest into the Reits counters during the March correction, most would have been at least 20% gain on paper by now. Not all the Reits are the same though, I classified them into 3 categories; the Leaders, Late Blommer and the catching up.

Today, I want to talk about the Late Blommer and they are still under their NAV. Over the last week, a few of these Reits counters made a breakout from their Norm.

Below are the 5 Reits which have broken the resistance and breakout.

Retail reits - Are they still worth looking?

It's a festive month and many people are in the mood of spending for their love ones or themselves. There are many reits listed on SGX, who owns large shopping malls, is it worth looking at them now. Before you look at these reits, do take some time to read these articles below first, and it might change your thinking.
Alibaba Singles Day sales;
1. Alibaba busts Singles Day sales record
2. Alibaba rings up record sales
3. Alibaba tops Singles Day sales despite slowing China economy

Amazon's Black Friday and Cyber Monday sales;
1. Amazon gains the most on record-high cyber monday sales
2. Amazon capturing big slice of US online shopping
3. Online sales hit record

In the coming months, will this be the trend as to how Singaporeans will be shopping or has it already started?

Singapore REITs still cheap ?

For those who had been thinking of investing into REITs, you would probably have noticed most of the REITs counters have started trending up since middle of the year. REITs are one of my favourite sector which I like to invest, as one is able to see and visit the property portfolio that they hold, and it is simple to understand. Just last week, I have the same question asked by 2 different friends, if it is a good time to invest into REITs, they were looking at Suntec and Lippomall.

How to pick the leader in Reits

For the past 12 months, Singapore Reits have fared poorly, and according to a BTinvest article, most had corrected up to 20% from the high. In the recent weeks, some of the Reits counters, had shown sign of reversal from this down trend. 

How do we then choose the leader of the pack?

There are many parameters that one can use to select Reits for investment. You may view these parameters from the table generously prepared by another blogger mystocksinvesting.com. All of us know that it is just a matter of time the interest rate will increased, by how much, no one knows. In view of this, the first parameter that I used is the debt gearing ratio, and follow by more than 10% discount(more the better) to it's NAV. From the table, these were the ones identified:

1. CapitaComm (5.3% yield)
2. Starhill Global (6.25% yield)

The last parameter to consider will be the yield, and the higher the better. Does that mean that Starhill Global is the chosen one?

Up to now, we have only selected the strongest ones, in terms of lower debt and good margin of safety . Next we need to review the TA of these 2 counters, can you tell which one has broken the resistance and trended upwards.

Stock Watch: Suntec Reit

Yes, this post is about Suntec Reit again. The last 2 weeks we have seen how the Reits have corrected due to the start of the QE tapering and the possibilities of increase in interest rates(nobody knows when), although from one of the FOMC meeting it was understood that the low interest rate should last till 2015. Reits are not the only sector that is affected, across the market, all the counters have reacted negatively too.

As I was doing my lazy surfing, I came across a few interesting posts by fellow blogger about reits and suntec reits. One of the post is from mystocksinvesting.com; he has been tabulating the reits data for a while and it helps one to do analysis easily. In another post, he also included charts from most of the Reits, and if you looked at them, most of them are either in downward trend or in consolidation.

And you may ask, why Suntec Reit. Comparing to the other reits, it is one of the highest debt gearing, which is a concern. And apart from trading below it's NAV, yield about close to 5.8%, these are also not too compelling to be in one's shortlist.

However, looking at the daily and weekly chart below, do you noticed that it is different from the other reits counter. Would this trend continue ...

Daily Chart

Weekly Chart

Why I am not buying REITS now ...

Market has recovered last week and continue to sustain today. Most of the counters are back in the run and especially the REITS which have been beaten for a while, has made some gains. At the current price, it seems attractive to invest as passive income given that most will give about 5 to 6% dividend.

However, after thinking through, I have stopped my itchy finger from pressing the 'BUY' button. 

And here are the reasons:

1. Based on the broad index(chart below), there seem to be a reversal looking at past week candle stick but 10MA is still pointing down. Would it be a case of rebound after deep correction and then continue downtrend again?
2. How much of the QE will Fed withdraw, no one knows. Will there be a shock?
3. And when interest rate increases, how will it impact REITS, especially those who's debt is on the high side.
4. 10 yr SGS bond yield is close to 3%, is 5% from REITS attractive then?

As much as I want to collect them for passive income, I dont want to caught myself losing, due to capital loss.