XXI Century Portfolio Value up 31% in 2H07

According to today’s press-release, XXI Century’s (XXIC LN: BUY) portfolio value increased 31% from USD 1.54 bln as of June 30, 2007 to USD 2.02 bln as of Dec. 31, 2007, as a result of Jones Lang LaSalle’s (JLL) reappraisal. The growth reflects the significant progress of existing projects and the increased value of recent acquisitions. Approximately 79% of the growth is attributable to the change in status of 34 assets that were included in the company’s portfolio at the end of the first six months of 2007. The remaining 21% is due to the revaluation of eight new projects in Kyiv, Dnipropetrovsk, Kharkiv, Donetsk, Cherkasy and Simferopol included in the portfolio in the second half of 2007. Andriy Gostik: In our report dated Dec. 12, 2007, we point out that the developer will likely face financing issues in realizing its portfolio. The company’s planned construction schedule is quite aggressive and according to it, XXI Century needs some USD 2.5 bln in external financing. At the same time, JLL’s appraisal assumes that the company has all funding available to complete its projects within the time frames declared. We evaluate the risk of construction delays for XXI Century as high but remain bullish on the stock, considering it a play on portfolio appreciation. Our target remains intact at USD 37.24 per share, implying an upside of 46%.