Allgreen Properties - Sell: Valuations No Longer Compelling

Downgrade to Sell — Allgreen has risen 150% YTD and has outperformed the STI by a hefty 85%, making it the best performing developer in our coverage. The stock is now back to June 08 levels. In addition, the discount has narrowed significantly to 25-30% currently (from a peak of 75-80%) vs. its historical average discount of 40%. We think upside from here is likely to be limited and hence we downgrade Allgreen from Buy to Sell.

Increasing RNAV to S$1.43, target S$1.07 — We raise our RNAV from S$1.27 to S$1.43 on higher clearing prices for Allgreen’s residential projects. We have raised selling prices by 10-15% depending on the timing of launches. Allgreen should be able to ride the positive sentiment given it has several launch-ready projects waiting to enter the market.

Ready-for-launch sites available — Allgreen has just soft-launched One Devonshire at S$1700-1850psf. We understand that at least 10 units have been booked during the first days of the preview. There are a total of 156 units. We understand that interest for the project is strong. Aside from One Devonshire, we expect Allgreen to launch its RV Residences (220 units) at River Valley and Suites at Orchard (118 units) at Handy Rd. We expect selling prices of $1,200 to $1,400psf.

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