Strong 1Q09 results — Allgreen reported net profit of $29.2m for 1Q09, ahead of both our (36%) and consensus estimates (33%). Despite the slight 8% yoy fall in revenue, due to lower revenue from development properties and hotel segments, PBIT improved 31% yoy while PATMI rose 67% from $17.5m in 1Q08. We believe this is attributable to better margin for the Allgreen investment properties and progressive recognition of higher margin projects such as Cairnhill Residences and Cascadia.

Other highlights — Effective tax in 1Q09 was lower due to the write-back of deferred tax of approximately S$2m as a result of the lower income tax rate of 17% vs. 18% previously. As at Mar-09, gearing improved slightly to 0.43x with net borrowings of $1.12b vs. 0.45x and net borrowings of $1.14b as at Dec-09. NAV is $1.44 as at Mar-09.

Hotel segment was hit — Traders Hotel suffered lower revenue as a result of lower room rates and occupancy. According to the latest hotel stats by Singapore Tourism Board, islandwide occupancy fell to 74% in Mar-09 compared to 87% a year ago, and RevPar has fallen 29% yoy.

Maintain BUY, target price $0.70 — We raise our 2009E-2011E earnings by 9- 29% on faster recognition of its development properties and improved revenue from its investment portfolio, offset by lower contribution from hotel properties. Our RNAV of $1.27 and target price of $0.70 remain unchanged. We maintain our BUY rating on what we view as Allgreen’s cheap valuation, a 67% discount to NAV of $1.44 and a 62% discount to RNAV of $1.27.