Nawi Brothers Group Ltd provides finance and non-bank credit services in Israel. The company's services include real estate initiative financing and completion of equity, import/suppliers financing, credit insurance for companies and businesses, financing for companies and businesses, equipment financing, financing against commercial checks, and bridging loans. It serves corporations, companies, partnerships, licensed dealers, and businessmen in various industries. The company was formerly known as Golden Equity Holdings Ltd. and changed its name to Nawi Brothers Group Ltd in January 2011. Nawi Brothers Group Ltd was incorporated in 1984 and is based in Tel Aviv, Israel.

Israel

Nawi Brothers Group 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 every four months. 

NAWI.TA reported revenue of ILS 307mn in the last 12 months, down 18% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 10% from FY23 to ILS 4.79.

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 63ppts over past six months and grown 3ppts 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'.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 49.8% in the last 12 months, a decline from 50.4% in FY23. 

Historically, NAWI.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 51.1%, a growth from 38.3% in FY23. 

Nawi Brothers Group Ltd reported a return on equity (RoE) of 18.2% in the last 12 months, down from 19.1% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.2% in the last 12 months, a decrease from 4.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 17.4%, below 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.

NAWI.TA has above average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is unstable 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. 

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, poor cash flow generation, and an unfavourable capital structure. We note robust profitability and solid return on capital, among the positive credit factors. 

In highly turbulent market conditions, NAWI.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, NAWI.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 negligible. We would also like to highlight the negligible 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 reasonably priced on P/E, 'expensive' on EV/EBITD. 

Nawi Brothers Group Ltd

ILA 4668

5

Nawi Brothers Group Ltd

ILA 4668

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 4668

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