Mivne Real Estate (K.D) Ltd engages in the initiation, purchase, construction, renting, and management of buildings in Israel, Switzerland, and internationally. The company's property portfolio includes offices, housing units, hi-tech, commercial centers, and industry and logistics. It also provides planning and supervising services for the implementation of infrastructure development projects; and operates and rents gas stations, as well as engages in renewable energy and residential real estate activities. The company was formerly known as Industrial Buildings Corporation Ltd. and changed its name to Mivne Real Estate (K.D) Ltd. Mivne Real Estate (K.D) Ltd was founded in 1961 and is based in Tel Aviv, Israel.

Israel

Mivne Real Estate (K.D) Ltd

Real Estate

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 every four months. 

MVNE.TA reported revenue of ILS 1 425mn in the last 12 months, up 19% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 64% from FY23 to ILS 0.74.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 13ppts and its growth decelerated by 0ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 65.4% in the last 12 months, up from 51.0% in FY23. 

Historically, MVNE.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 38.6%, a growth from 27.8% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 3.1%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 3.0% in the last 12 months, an increase from 1.9% in FY23. 

Mivne Real Estate (K.D) Ltd reported a return on equity (RoE) of 6.7% in the last 12 months, up from 4.1% in FY23. 

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.

MVNE.TA has poor trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is relatively 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, and weak debt servicing capacity. We note robust profitability, among the positive credit factors. 

In highly turbulent market conditions, MVNE.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, MVNE.TA is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to immense. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Mivne Real Estate (K.D) Ltd

ILA 1079

4

Mivne Real Estate (K.D) Ltd

ILA 1079

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 1079

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