Meitav Investment House Ltd is a publicly owned investment manager. The firm provides its services to private, business and institutional clients. It engages in the fund management activities in Israel. The firm manages investment portfolios, mutual funds, and provident funds, as well as pension, education, and other purpose funds. It also manages separate client-focused portfolios. Meitav Investment House Ltd was formerly known as DS Apex Holdings Ltd. and changed its name in July 2013. Meitav Investment House Ltd is based in Tel Aviv, Israel.

Israel

Meitav Investment House Ltd

Financial Services

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. 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. 

MTAV.TA reported revenue of ILS 1 619mn in the last 12 months, up 29% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 92% from FY23 to ILS 3.27.

The stock has been growing steadily in the past six months, adding 135% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 132ppts 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 107ppts over the past six months and grew 23ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 35.6% in the last 12 months, up from 35.5% in FY23. 

Historically, MTAV.TA has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 15.8%, a growth from 10.4% in FY23. 

Meitav Investment House Ltd reported a return on equity (RoE) of 32.6% in the last 12 months, up from 21.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.9% in the last 12 months, an increase from 2.7% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 11.4%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.1 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.

MTAV.TA has very poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is very unstable and remains 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, MTAV.TA is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, MTAV.TA is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to notable. 

From both historical and forecast perspectives, the stock is underpriced compared to similar stocks. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, underpriced on P/FCF. 

Meitav Investment House Ltd

ILA 7770

4

Meitav Investment House Ltd

ILA 7770

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 7770

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