Entree Aveo.

By Kenneth Robson on December 5, 2013 • ( 1 )

Rights issue sees FKP Property re-rated above $2.

FKP Property

This 12 month Daily Chart, shows that in the last six months a strong impulsive move higher of the share-price has finally brought to an end three years of shareholder misery, as the share-price languished lower from $4.74 to a low of about 90 cents

In July 2013 this blog pointed out technical evidence of trend change and predicted higher prices in the range $1.67 to $1.80 before the end of 2013.

Capital raising

A 5 for 9 rights issue at $1.30 was announced in October to raise $232 million to reduce debt and facilitate the reconstruction of the company to one specializing in retirement property. This initiative was welcomed by the market, with the share-price lifting to $1.80.

Contrary to the expectation of some, the share-price has continued to lift to $2.20 reflecting market approval of the new-look Aveo Limited. Debt has been reduced, properties surplus to the company’s objectives have been sold, and management has heralded a return to the payment of distributions by the end of 2014.

Loosing momentum, but next target is $3.

What now?

Aveo has a new re-invigorated image. It has become Australia’s largest provider of avant-garde retirement accommodation with 76 villages in five states, all in choice locations.

It has now little debt, and is looking to do well in 2014.

This is a five-year weekly chart showing Fibonacci retracement levels, and some support and resistance levels.

It would seem to me that the next target with further appreciation is resistance at $3, just above the 50% retracement level at $2.90.

A pause from trending in the immediate future?

The parabolic indicator included (faintly) in the charts above demonstrates loss of momentum in the last few days alerting traders of the possibility of a corrective move lower. This would be a logical development since many shareholders would be sitting of profits from the last few months.

Happily this would seem to be a win-win outcome for both buyers and sellers of the new look Aveo shares.