Monday, November 19, 2007

QCAPITA may have broken above its downtrend

In today’s Business Times, it is reported that QUILL Capita Trust (‘QCAPITA’), "a property trust partly owned by CapitaLand Ltd of Singapore, plans to buy two yield-accretive assets from its sponsors in the next three to six months to grow the trust, its manager said.”After the completion of a share placement in September, which raised RM226 million, QCAPITA's gearing was lowered to 0.7 per cent. “This means it can buy around RM400 million worth of properties via borrowing before it needs to sell more shares. Gearing of a real estate investment trust (REIT) cannot exceed 50 per cent under the Securities Commission's rules.” For more, go here.

A closer look at QCAPITA's daily chart revealed that its price peaked at RM2.00 on May 14th & has been trending lower before hitting a low of RM1.11 in early part of November. QCAPITA appears to have broke above its downtrend line at RM1.15 on November 11th. The 10-day SMA is poised to cut above the 20-day SMA in the next day or so. With these, QCAPITA is likely to have made a bottom and it may move sideway for a period of time before making its next upleg. The catalyst for the next upleg could be the announcement of new acquisition of properties (such as those highlighted by the above Business Times report). Buying this REIT at RM1.15-1.20 is a relatively safe entry to well-managed REIT.

Chart: QCAPITA's daily chart as at November 16 (courtesy of Quickcharts)

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