First REIT part II

Referring to my previous post titled: First REIT Oct 2013

OCBC research's take on First REIT below:
First REIT: Upgrade to BUY on valuation grounds

Summary: We visited five of First REIT’s (FREIT) properties (four hospitals and one hotel and country club) in Indonesia over a two-day period last week. The hospitals are operated by Siloam International Hospitals (subsidiary of Lippo Karawaci) and are generally well-maintained and equipped with modern medical equipment from international brands such as Siemens and Philips. Meanwhile, FREIT recently lowered its floating rate exposure from 72% to 46% of its total debt following a refinancing exercise. Its next refinancing need will only come in 2016. We believe that FREIT’s sharp share price correction has been overdone, as it has minimal exposure to the volatility in the IDR thanks to its lease structure. Hence we upgrade FREIT from Hold to BUY on valuation grounds, with an unchanged fair value estimate of S$1.20. FREIT also offers an attractive forecasted distribution yield of 7.6% in FY13 and 8.3% in FY14. (Wong Teck Ching Andy)


I have to agree with the above, based on valuation First REIT is quite attractive. In fact i really like their aggressive strategy in Indonesia plus they are doing a good service to the people by building more hospitals around the country. From an ethical standpoint, I like their business model. It is also going to give 7-8% returns looking forward into the near future. Obviously there are risks involved. Key risks would be volatility in the Indonesian Rupiah and rising interest rates for borrowing. Hmm... i wish had more money to invest, cannot really free up any cash from other investments just yet. 
Remember you can't just buy and sit on your investments, If it gets cheaper, buy another equal part or if it rises by 20%, sell half for profit and keep the rest. Key strategy is not to be greedy. 

First REIT Oct 2013

So here we are again in familiar territory, after the August sell Off which happens almost every year by the way. Stocks come down, Banks and financial institutions adjust their target prices. History keeps repeating in front of our eyes. Anyway lets look at First REIT, I enjoyed the ride from 90cents to $1.25, sold if off to early. Now i am taking a second look at this because it is more attractive now after plunging by >40cents. But i did not excecute the order after looking at the following graph.

If my memory serves me right. Fibonacci retracement will show us significant levels in a bull run. usually prices will correct to 50% level after a good bull run, that means a good place to buy into First REIT again would be in the $0.855 region. 

Hmm,,, what to do? just wait and see.

First REIT pullback

Been watching REITs closely for some time now. The recent pullback in REITs has me more interested for 2 reasons:
-Their still relatively high yields
-Healthy correction driven mostly by FEAR

Of particular interest is First REIT because of the fact that i like the business sector they are in: Hospitals/Nursing Homes in Indonesia/Singapore/Korea. They have shown themselves to be aggressive in expansion and since 2009, their stock price have gone up significantly from 30cents a piece to almost 1.44 at its recent peak.

At the moment, the counter is undergoing a retracement to 23.6% on the Fibo chart, testing levels on $1.17 so i am happy to see this an another opportunity to get into this again. But i would wait until 50% retracement from its peak to $0.99. Am i being too ambitious? According to the chart though, a 50% retracement correlates with the major supporting uptrend for the past 4 years. Something to note here: we are seeing low volumes being traded.

I regretted selling FirstREIT prematurely at $1.04 but was happy to clock in almost 30% profit last year. Maybe this pullback is going to be a good chance for other people who have been sitting in the sidelines.

Most of the REITs are displaying similar behaviour, I just feel there has been some profit taking from retail investors and institutional investors alike, the general market trend still Bullish. Its not over till the fat lady sings. At the moment though, just sit back and wait till markets stabilise before going in again. Here is Keppel REIT analysis below which is similar retracement but general trend still upwards:

Note: High volume traded recently suggest there might not be much reversal for Keppel REIT. But the bottom uptrend line is still intact. Currently resistance turned support line @ 1.40 is being tested. Wait and see if this breaks down.

Disclaimer: We have not reached a market peak yet but dont take my word for it. Do your own research before making any investment decision. We could as well be experiencing the beginning of a downward trend.