FY08 revenue grew 27% YoY to S$130.1m mainly due to progressively recognition of 6 development projects ? The Treeline (TOP in Apr 08), St. Patrick's Loft (TOP in Nov 08), Axis@Siglap (TOP in Jan 09), The Montage, The Marque@Irrawaddy and The Medley.

Revenue from hotel and investment property also improved from S$37.3m to S$48.5m in FY08. This was backed by higher RevPar of S$176.1, an increase of near 23%. AOR however dropped by 4.6ppt to 87.9% for the full year.

Cost of sales and operating expenses remained mainly in line with revenue growth and our expectation. However, Roxy recognized fair value loss of S$2.8m on its investment properties (Roxy shopping center) and made provision for impairment loss of S$1.7m on The Ambra in 4Q08.

FY08's net profit growth of 28% to S$24.7m was lifted by earlier fair value gain in the year. Roxy has currently S$257.8m of unrecognized presale to be booked progressively into FY11.

Balance sheet strengthened significantly with the assistant of two TOPs in FY08. Debt-to-equity ratio improved from 4.1x in FY07 to 2.4x in FY08. During the year, CBRE revalued (on a desktop basis) Grand Mercure Roxy Hotel at S$278.4m, a drop of about 9%.

Net cash flow from operation saw black at S$12.6m for the first time since FY05 as the Roxy begin to reap fruits from its properties. Total cash holding increased from S$10m in FY07 to S$50m in FY08. (partly due to IPO proceeds during the year)

Reiterate BUY; target price revised upward to S$0.31. We see value in Roxy. We see stability in Roxy. Our RNAV per share estimate is revised upward to S$0.51 from S$0.41. However due to illiquidity of its stock and current market discount to NAV, we applied a discount rate of 40% to its RNAV per share. We derived a target price of S$0.31, representing a potential upside of 59%. We reiterate a BUY.