Petrotx - Limited Partnership engages in the development and production of oil and gas properties in Texas and Mississippi. The company was founded in 2006 and is headquartered in Tel Aviv-Yafo, Israel.

Israel

Petrotx - Limited Partnership

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. 

PTX.TA reported revenue of USD 5mn in the last 12 months, down 39% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock has been falling steadily in the past six months, losing 19% in total. The stock has lagged its global peers from the same sector and industry (as shown above), underperforming then by 12ppts in total. 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 very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 13.5% in the last 12 months, up from -42.8% in FY23. 

Historically, PTX.TA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -22.0%, a growth from -49.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -8.0%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -5.5% in the last 12 months, an increase from -14.6% in FY23. 

Petrotx - Limited Partnership reported a return on equity (RoE) of -16.4% in the last 12 months, up from -44.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.4 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.

PTX.TA has very 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 very unstable and is unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve 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, bleak profitability, negligible return on capital, and inadequate interest coverage. We note low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, PTX.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, PTX.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 critical to immense. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. In particular, the stock is of fair value on EV/EBITDA. 

Petrotx - Limited Partnership

ILA 31

2

Petrotx - Limited Partnership

ILA 31

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 31

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