UOA REIT has just broken above its downtrend line

Background

UOA REIT was listed in December 2005. It has 3 properties under its portfolio i.e. Wisma UOA Central Parcels, Wisma UOA II Parcels and Wisma UOA Damansara Parcels. Based on a company's Interim Report for June 2006, the occupancy rate of these 3 buildings ranges from 90.0% to 99.4%.

Recent Financial Results

UOA REIT has recently announced its results for QE31/12/2006. A quick look at the results show that the topline & bottomline have been rising steadily. Based on these 4 quarterly results, we can see that UOA recorded a net profit of RM20.25 mil on a turnover of RM31.38 mil for FY2006. UOA REIT pays a dividend of 8.5% per annum, representing about 98% of its EPS of 8.67 sen.



Valuation

Based on its closing price of RM1.13 at the close of the morning, UOA REIT is now trading at a price to book of 1.07 times. Its yield is about 7.5%.

Technical Ootlook

From the chart below, we can see that UOA REIT has been in a downtrend since its listing. If it can close above RM1.12, UOA REIT would have broken above the downtrend line. Undoubtedly, the last few days price run-up was due to the results announcement & the upcoming dividend. However, the breakout of the downtrend line could be signaling a change of trend for this REIT.


Chart: UOA REIT's weekly chart as at Jan 26

Conclusion

Based on good yield & improving results, UOA REIT is an attractive REIT to invest for the long-term. The potential breakout of its downtrend line could also signal the potential of this REIT to give investors a capital gain for the medium-term.