Prashkovsky Investments and Construction Ltd. develops, constructs, and sells properties in Israel and the United States. It constructs residential, commercial, industrial, and office spaces. The company was incorporated in 2006 and is based in Rehovot, Israel.

Israel

Prashkovsky Investments and Construction Ltd.

Real Estate

The company has a track record of regular dividend payments. It has paid dividends in each 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. 

PRSK.TA reported revenue of ILS 626mn in the last 12 months, up 49% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 36% from FY23 to ILS 10.01.

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 11ppts over past six months and grown 2ppts 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 neutral.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 38.5% in the last 12 months, a decline from 50.5% in FY23. 

Historically, PRSK.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 33.7%, down from 37.0% in FY23. 

Prashkovsky Investments and Construction Ltd. reported a return on equity (RoE) of 11.2% in the last 12 months, up from 9.0% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 3.9% in the last 12 months, an increase from 3.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 7.8%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.5 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.

PRSK.TA has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is usually quite stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 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, excessive margin volatility, poor working capital management, weak debt servicing capacity, poor cash flow generation, and an unfavourable capital structure. We note robust profitability, among the positive credit factors. 

In highly turbulent market conditions, PRSK.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, PRSK.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. 

Based on key historical and expected multiples, the stock is slightly undervalued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITD. 

Prashkovsky Investments and Construction Ltd.

ILA 9339

4

Prashkovsky Investments and Construction Ltd.

ILA 9339

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 9339

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