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.

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 93ppts over past six months and grown 6ppts slower 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 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. 

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

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. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.8 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. 

Based on key historical and expected multiples, the stock is slightly overvalued relative to its peers. In particular, the stock is 'expensive' on EV/EBITDA. 

Prime Energy P.E. Ltd

ILA 1285

2

Prime Energy P.E. Ltd

ILA 1285

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 1285

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