O.Y. Nofar Energy Ltd develops, designs, licenses, constructs, and operates photovoltaic systems on rooftops in Israel. It engages in the initiation, financing, construction, operation, and maintenance of solar power generation systems, wind power generation systems, and battery storage systems in the United States, Poland, Romania, Spain, Italy, England, Serbia and Czech Republic. The company was incorporated in 2011 and is based in Ashdod, Israel.

Israel

O.Y. Nofar Energy Ltd

Technology

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. 

NOFR.TA reported revenue of ILS 314mn in the last 12 months, down 2% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 70% from FY23 to ILS -0.76.

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 8ppts and its growth decelerated by 10ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 12ppts and its growth decelerated by 8ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 35.9% in the last 12 months, up from 1.5% in FY23. 

Historically, NOFR.TA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -8.6%, a growth from -27.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -0.5%, below the peers. 

O.Y. Nofar Energy Ltd reported a return on equity (RoE) of -1.6% in the last 12 months, up from -5.2% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -0.5% in the last 12 months, an increase from -1.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.0 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.

NOFR.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. 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, slow historical revenue growth, negligible return on capital, excessive margin volatility, weak debt servicing capacity, and inadequate interest coverage. We note robust profitability, among the positive credit factors. 

In highly turbulent market conditions, NOFR.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, NOFR.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. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. Specifically, the stock is overvalued on EV/EBITDA. 

O.Y. Nofar Energy Ltd

ILA 8398

4

O.Y. Nofar Energy Ltd

ILA 8398

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 8398

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