Africa-Israel Surges as IBI Says Buy Units: Tel Aviv Mover

Africa-Israel Investments Ltd. advanced the most in four months as IBI-Israel Brokerage & Investments Ltd. recommended investors buy shares of the holding company’s units.

The shares of the company owned by businessman Lev Leviev advanced 5.7 percent, the most since Jan. 1, to 8.681 shekels at the close in Tel Aviv. Unit Africa Israel Properties Ltd., rated a new buy at IBI, gained 3.5 percent to 42.28 shekels. The benchmark TA-25 index rose 0.8 percent today, trimming this month’s 2.9 percent decline.

Africa-Israel, which in 2010 agreed to a 7.5 billion-shekel ($2.1 billion) debt restructuring, has been showing consistent improvement in operations driven by property development and profitable assets sales, IBI’s Ori Licht and Shai Azar wrote in an e-mailed note to clients today. They rated the shares neutral in new coverage. AFI’s mall in Russia has a 77 percent occupancy rate, while its U.S. unit and AFI Development Plc unit have sold assets for millions of dollars, Azar wrote in today’s report.

“We recommend gaining exposure to Africa through its subsidiaries, which are trading way below their economic value,” Licht wrote in the report, setting a price target of 11.5 shekels.

Standard & Poor’s Maalot reiterated the ilBBB+ rating for Africa Israel Properties on March 17 saying the company’s assets in Israel and Europe are showing consistent growth in net operating income. The shares of the real estate developer have advanced 22 percent this year compared with a 3.2 percent increase for the TA-100 in the same period.

AFI Development shares gained 18 percent the past 12 months boosted by a 21 percent increase in sales last year, according to data compiled by Bloomberg. The shares, started a buy at IBI, rose 2.3 percent at 3:10 p.m. in London and have added 18 percent this year.