OREANDA-NEWS. July 05, 2010. AFI Development will issue bonus shares to existing shareholders. These new class B shares will start trading on the LSE premium listing from Monday, 5 July. There were breaches of construction contracts by the company mentioned in the new class B shares prospectus, such as paying for land lease after the due date and not finishing construction on time, reported the press-centre of OTKRITIE Financial Corporation.

View: The issuance of the new class B shares is a technical move necessary for a premium listing. We regard a premium listing admission as positive because it should help increase the liquidity of AFI’s shares. That being said, the breaches of construction contracts could compel the Moscow City Government to terminate these lease agreements, which means that AFI would not be able to obtain construction permits.

Valuation and Action: AFI trades at a P/NAV multiple of 0.47x, versus 0.82x for EM peers.