Bank Hapoalim has published an updated review on Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK), in which it cut its target price by 28% to NIS 390 from NIS 540, but retained its "Market Perform" rating for the stock. The bank feels that Africa-Israel subsidiary AFI Development plc (LSE:AFID), which manages the group's property portfolio in Russia, and the real estate crisis in the US will continue to weigh down the conglomerate as a whole.
"We believe that Africa-Israel will continue to expand in the coming years, posting larger revenue and net profit," says Bank Hapoalim. "However, one cannot ignore the recent increase in the level of risk in the company's core business - the global real estate market. Likewise, we expect the stock to experience increasing volatility, commensurate with the trading in London of AFI Development, which accounts for 60% of the group's combined asset value."
Bank Hapoalim notes that Africa-Israel is currently traded at a discount of 14% to its net asset value (NAV). "We reiterate our "Market Perform" rating with a target price of NIS 390 for the coming year, on the basis of a NAV of NIS 4.7 billion."
Bank Hapoalim notes the US real estate crisis and predicts that "the crisis in the sub-prime market could well cause real estate stocks to suffer further volatility and instability over the short-term."
Published by Globes [online], Israel business news - www.globes.co.il - on September 16, 2007
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