Jul 4-8, TA for CitySpring (Daily Chart)
- Trend - Side
- Momentum - Oversold
- Support - 0.465
- Resistance - 0.535 (Support turn Resistance) - bearish reversal signal
- Candlestick - 1x black crow (formation) - bearish reversal signal
- Volume - huge volume sold down - bearish signal
In general, TA for CitySpring is not that effective as it tends to have a flat indicators. But we can use the classic indicator like support and resistance to guide us. From the last support, it will fall on the 0.465 as good support entry level. I would explain more on Fundamental Support on the FA side.
Jul 2, FA - 11 rights for 20 Shares Proposal
Before Proposal (circulating shares - 979kk)
- NAV - 0.3545 ( not a discounted NAV)
- Yield - 8.2 (Very attractive yield)
- Average Support is at 0.535
- Current Asset/Current Liability = 0.669 (If it is not a utility/Monopoly, should avoid such company - in general, poor balance sheet)
After Proposal, (circulating shares increased by 35% - est 1327kk)
- Estimated New Average Support is at 0.4835 (Note: this is what Market agreed to pay for it before proposal)
As usual, dilution of shares are negative news unless new money is used for quality acquisition to expand asset. In this case, it is important to know the new reference or support after the dilution - assume everyone still likes this stock. A quick look at the CitySpring Presentation Slide, the good reference should be at 0.485 as the new fundamental support.
Is CitySpring a Value Investment?
CitySpring uses the Cash Flow as an indicator rather than the Profit/Loss - making computation of intrinsic value difficult. Infrastructure/Utilities are very stable and monopolistic business. At least, in his slide, they indicates no more fund raising till 2014. So can reconsider only after it hits below 0,485 - using TA - Classical Support and Resistance as your reference.
