Mega Or Holdings Ltd engages in the initiation, construction, acquisition, rental, improvement, management, and maintenance of real estate properties in Israel. It primarily develops and manages logistic, commercial, and future centers. The company was formerly known as Zahi Nahmias Holdings Ltd. and changed its name to Mega Or Holdings Ltd in May 2006. Mega Or Holdings Ltd was incorporated in 2002 and is based in Modi'in, Israel.

Israel

Mega Or Holdings Ltd

Real Estate

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends twice a year. 

MGOR.TA reported revenue of ILS 325mn in the last 12 months, up 34% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 159% from FY23 to ILS 17.98.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 34ppts over past six months and grown 21ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

Another important profitability metric, return on assets (RoA), amounted to 8.0% in the last 12 months, an increase from 3.4% in FY23. 

Mega Or Holdings Ltd reported a return on equity (RoE) of 22.5% in the last 12 months, up from 10.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 9.3%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.0 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

MGOR.TA has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, excessive margin volatility, poor working capital management, weak debt servicing capacity, and an unfavourable capital structure. We note resilient historical revenue growth, robust profitability, and solid return on capital, among the positive credit factors. 

In highly turbulent market conditions, MGOR.TA is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, MGOR.TA is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. We would also like to highlight the minimal intraday volatility of the instrument. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. In particular, the stock is underpriced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Mega Or Holdings Ltd

ILA 16410

5

Mega Or Holdings Ltd

ILA 16410

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 16410

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