Our valuation of Allos, yielding a 12M TP of R$30.00, is based on a DCF analysis, including a WACC of 20.9% in 2024-2027E. Our 12M TP also comprises an estimated exit valuation based on a long-term cap-rate of 9.5%.

Key sector risks include sensitivity to employment, real wages and retail sales growth. Sector shares also face above-average sensitivity to real interest rates due to the bond-like long-term, income-producing nature of companies' cash flow.

Company-specific risks include delinquency, vacancy and tenant turnover, as occupancy is a key driver of revenues. A slower/more difficult integration, which would diminish synergies, is an added risk.

If the impact from the above risks turns out to be greater/less than we anticipate, the shares may fail to achieve/exceed our target price.