OVERVIEW
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For this week’s blog, we will look at our Mapletree Industrial Trust Forecast using the Elliott Wave Principle.
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For those who are not not familiar with one of the most popular Singapore REITs, here a quick introduction.
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Mapletree Industrial Trust (SGX : ME8U) a.k.a MIT is a Real Estate Investment Trust (REIT) listed on the Main Board of Singapore Exchange.
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MIT’s primary investment strategy is to invest in a diversified portfolio of income-producing real estate used primarily for industrial purposes in Singapore.
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It also invests in income-producing real estate used primarily as “Data Centres” globally.
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As well as other miscellaneous real estate-related assets.
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In a nut shell, MITโs property portfolio comprises of 85 industrial properties in Singapore.
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These includes the following :
- Hi-Tech Buildings
- Flatted Factories
- Business Park Buildings
- Stack-up/Ramp-up Buildings
- Light Industrial Buildings
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MIT also invested in 14 Data Centres in the United States of America.
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With a 40% interest through the joint venture with Mapletree Investments Pte Ltd.
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BRIEF FUNDAMENTAL ANALYSIS
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For our Mapletree Industrial Trust Forecast, we will focus more on the Technical Analysis aspect using Elliott Wave Theory.
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And will only touch on certain key fundamental data that supports our stock selection.
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Besides a sustainable Economic Moat as well as a Proven Managements Teamย as the main 2 criteria for any REIT selection.
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We also look at 3 basic fundamental data in order to gauge whether a certain REIT is a good long term investment.
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To cut a long story short, we namely look for the following 3 criterias :
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(A) Growing DPU :
One of the key criteria for any REIT selection is at least 3 to 5 years of continual DPU growth.
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No issues here as MIT has grown its DPU steadily over the last decade.
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(B) Growing NAV :
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Another key criteria for any REIT selection is at least 3 to 5 years of continual NAV growth.
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Again, no issues here as MIT has grown its NAV at an increasing rate over the last decade.
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(C) Sustainable Interest Coverage :
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Lastly, our final criteria for any REIT selection is the Interest Coverage Ratio (ICR) to be at least 5 times.
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Although the ICR might be fluctuating over the last 10 years, it has never gone below the 5X mark.ย
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A more than satisfactory PASS in my opinion.
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TECHNICAL ANALYSIS USING ELLIOTT WAVE PRINCIPLE
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According to the Mapletree Industrial Trust Forecast of some of the Elliott Wavers I have spoken to.
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It seems that many believe that MIT’s ATH of $3.34 on the 12th Oct 2020 signifies the completion of its Primary Cycle.
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And currently, we are in the Corrective Phase of the larger degree.
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POSSIBILITY OF AN EXTENDED WAVE 3
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However, I have a slightly different view of the Mapletree Industrial Trust Forecastย according to my latest Elliott Wave count.
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The ATH on the 12th Oct 2020 looks more like the completion of an extended Wave 3 in Green instead of the completion of the overall Wave 5 of the Primary Cycle.
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From the chart above, the extended Wave 3 in Green can be further sub-divided into another 5 Wave sequence highlighted in Orange.
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And the current correction is actually a Corrective Wave 4 in Green that has yet to complete.ย
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FORMATION OF A COMPLEX WAVE 4
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According to Elliott Wave’s Law Of Alternation, if the Wave 2 Correction is “Shallow”.
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Then,ย the corresponding Wave 4 Correction is likely to be “Deep” and vice versa.
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Thus, if this holds true, then we are expecting the Wave 4 in Green to be more complex in the case of our Mapletree Industrial Trust Forecast.
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If you examine closely the prior price action that unfolded in the initial “A” or “W” leg drop that began after MIT’s ATH.
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One can easily identify the presence of a long tailed candle that looks like an hammer candlestick pattern.
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Depending on how you label this spike, we can either count this initial leg down as either an “A” or “W” wave.
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Fortunately, no matter how we label it, this does not change the structural direction that it has more downward bias.
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Currently, the share price of MIT has retraced higher to the 61.8% region of the first leg down.
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If the prior Elliott Wave Count is correct, then we might just have completed the “B” or “X” leg of the ABC or WXY corrective structure respectively.
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POTENTIAL FINAL LEG DOWN
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From a structural view point, our Mapletree Industrial Trust Forecast seems to be shaping up for a Zig-Zag correction.
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This is irregardless of whether it is an ABC or WXY type Zig-Zag correction.
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And if this forecast holds up, statistically speaking we are looking for MIT share price to further slide to complete the final leg.
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This final leg down could unfold in a 5-wave sequence as either a “C” leg.
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Or in a 3-wave sequence into a “Y” leg down.
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With a high probability of dropping into the 50% to 61.8 Fibonacci Retracement Zone of the previous Wave 3 in Green.
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This Mapletree Industrial Trust Forecast is based on our blog’s Elliott Wave Analysis and is not a trade recommendation.
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Please do your own due diligence before trading or investing.
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Trade Safe and never risk more than 1% to 2% of your account equity on any trades.
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For more potential trade setup suggestions on the Singapore Stock Markets, check our Blog Posts On SG Stocks.
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Shorten your learning curve by downloading our complimentaryย Elliott Wave Cheat Sheets.
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For more articles on the Elliott Wave Principle, check out our other posts in ourย ย Elliott Wave Blog.
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