Residential Projects — Revenue in 09E will continue to come from Cairnhill Residence (Expected TOP: 4Q09), Cascadia (TOP: end-10) and Pavilion Park. While Allgreen acknowledges the recent trend of selling smaller units and/or lower absolute quantum, there are no plans to alter the design/layout of its proposed projects yet. This is partly due to the GFA ruling on bay windows and balcony space. Most of its projects have already secured planning approvals prior to Oct-08 and hence any re-submission would mean forgoing the extra GFA.

Construction to be held back — Ongoing construction will be held back for several (un-launched) projects in the hope that construction costs will drop. Allgreen will be looking to selectively launch various projects (RV Residence, One Devonshire, Mar Thoma site). Regent Garden (en-bloc site at West Coast) will be put back on the rental market.
Provisions — Management guided that the S$24.6m provision made in 4Q08 is largely attributed to its sites at Enggor St and Handy Rd. While revaluation of investment properties only takes place at the end of the FY, provisions for its residential sites could come in any quarter, pending market movements.

Investment properties — Office: Passing rents at Great World City about S$6 psf, asking rentals at about $8psf. Retail: Passing rents - Tanglin S$8.50, Great World - S$7.20. Traders Hotel: 65% occupancy at S$210 ARR, vs 85% and $250 ARR last yr (implied RevPar fall of ~35%); SVC apartment occupancy: >80%.

China — Allgreen will continue to enter the China market, largely in mixed developments, and as part of a consortium. We estimate that the total attributed investments for the sites bought since 2007 amounts to S$1.4b, of which S$500m to S$600m would be paid in equity. About S$450m has already been paid for as at Dec-08.

Maintain Buy/Low Risk — Allgreen remains our only Buy in the developers’ space, purely on valuation grounds. While we expect net debt to equity to rise to about 0.8x in 2011E, it is still within management’s guidance of below 0.9x. Allgreen’s outperformance since the start of the year has been wiped out of late. Allgreen is at a 73% discount to its 2008 book value of S$1.41 and 70% discount to its 2009E RNAV.