Prime Energy P.E. Ltd engages in the renewable energy business in Israel and internationally. It is involved in initiating, developing, financing, constructing, managing, and operating solar projects. The company was incorporated in 2013 and is based in Tel Aviv, Israel.

Israel

Prime Energy P.E. Ltd

Energy

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. 

PRIM.TA reported revenue of ILS 13mn 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 fell 42% from FY23 to ILS -0.38.

Over the past six months, the stock has consistently climbed, resulting in 143% total increase. When compared to its international counterparts in the same sector and industry (as shown above), the stock has exceeded their performances, leading by 156ppts in total. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months it exceeded the performance of this peer group by 127ppts and accelerated its growth by 24ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 22.2% in the last 12 months, up from -63.6% in FY23. 

Historically, PRIM.TA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -84.3%, a growth from -190.9% in FY23. 

Prime Energy P.E. Ltd reported a return on equity (RoE) of -26.6% in the last 12 months, up from -35.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -3.4% in the last 12 months, an increase from -7.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -4.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.0 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.

PRIM.TA has below average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is unstable and is average 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 small 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, bleak profitability, negligible return on capital, poor working capital management, weak debt servicing capacity, inadequate interest coverage, and an unfavourable capital structure. We note resilient historical revenue growth and low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, PRIM.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, PRIM.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 significant to immense. 

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

Prime Energy P.E. Ltd

ILA 1364

2

Prime Energy P.E. Ltd

ILA 1364

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 1364

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