Polyram Plastic Industries LTD engages in the manufacture and supply of thermoplastic compounds in Israel and internationally. It offers engineering plastics; functional polymers, including coupling agents, compatibilizers, impact modifiers, and adhesive resins for automotive, multi-layer film, industrial, and packaging applications; Polytron materials, which are primarily used in automotive sector; and purging agents. The company offers its products through distributors. Polyram Plastic Industries LTD was founded in 1986 and is headquartered in Gilboa, Israel.

Israel

Polyram Plastic Industries LTD

Basic Materials

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, and there is a clear trend. 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. 

POLP.TA reported revenue of ILS 1 001mn in the last 12 months, up 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 6% from FY23 to ILS 0.83.

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 3ppts over past six months and grown 6ppts 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 average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 15.4% in the last 12 months, up from 15.0% in FY23. 

Historically, POLP.TA has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 8.9%, a growth from 8.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 11.2%, above the peers. 

Another important profitability metric, return on assets (RoA), amounted to 8.1% in the last 12 months, an increase from 7.4% in FY23. 

Polyram Plastic Industries LTD reported a return on equity (RoE) of 14.2% in the last 12 months, up from 13.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.5 in the past several years. This ratio implies a strong 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.

POLP.TA has above average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is very 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 moderate. We note solid return on capital and solid cash flow generation, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, slow historical revenue growth.

In highly turbulent market conditions, POLP.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, POLP.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 very low to notable. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Polyram Plastic Industries LTD

ILA 1034

4

Polyram Plastic Industries LTD

ILA 1034

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 1034

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