Allco – Nomura

First look

Allco’s 2Q08 results were in line, with the positive reversionary profile in Singapore over FY08-09F underpinning valuations. We see the acquisition of a 17.7% stake in the REIT by FNN as positive, enabling the REIT to leverage off a pipeline of assets (circa S$640mn), with DPU potentially seeing a fillip on lower funding costs consequent to a review of the REIT’s credit rating and a realised gain on a derivative financial instrument of S$3.9mn. Our STRONG BUY and FV stand.

2Q08: in line with expectations