Meshek Energy - Renewable Energies Ltd. engages in the renewable energy business. The company is involved in the initiation, construction, and operation of photovoltaic electricity generation facilities. Meshek Energy - Renewable Energies Ltd. was founded in 2016 and is based in Tel Aviv-Yafo, Israel.

Israel

Meshek Energy - Renewable Energies Ltd.

Energy

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

MSKE.TA reported revenue of ILS 100mn in the last 12 months, up 43% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock has been growing steadily in the past six months, adding 42% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 44ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 20ppts over the past six months and grew 2ppts slower in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 55.7% in the last 12 months, a decline from 88.4% in FY23. 

Historically, MSKE.TA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -51.9%, down from 9.6% in FY23. 

Meshek Energy - Renewable Energies Ltd. reported a return on equity (RoE) of -2.2% in the last 12 months, down from 0.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -1.4% in the last 12 months, a decrease from 0.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.5%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.3 in the past several years. This ratio implies a fragile 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.

MSKE.TA has very poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 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, negligible return on capital, excessive margin volatility, poor working capital management, weak debt servicing capacity, and inadequate interest coverage. We note resilient historical revenue growth, robust profitability, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, MSKE.TA is as volatile as an index. In other words, the stock will move with 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 limited. 

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

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. In particular, the stock is 'expensive' on EV/EBITDA. 

Meshek Energy - Renewable Energies Ltd.

ILA 363.4

3

Meshek Energy - Renewable Energies Ltd.

ILA 363.4

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 363.4

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