Rani Zim Shopping Centers Ltd engages in the development, construction, and management of commercial projects in Israel. It operates, manages, and rents shopping centers. The company is based in Petah Tikva, Israel.

Israel

Rani Zim Shopping Centers Ltd

Real Estate

The company pays dividends irregularly. There have only been a few years with dividend payments in 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. On average, the company pays dividends annually. 

RANI.TA reported revenue of ILS 182mn in the last 12 months, up 61% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 12% from FY23 to ILS 0.54.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 60ppts and its growth decelerated by 9ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

Historically, RANI.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 35.1%, down from 76.7% in FY23. 

Rani Zim Shopping Centers Ltd reported a return on equity (RoE) of 8.4% in the last 12 months, down from 12.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 2.2% in the last 12 months, a decrease from 3.4% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 2.9%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.7 in the past several years. This ratio implies a poor 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.

RANI.TA has average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is relatively 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 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, excessive margin volatility, weak debt servicing capacity, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure. We note resilient historical revenue growth and robust profitability, among the positive credit factors. 

In highly turbulent market conditions, RANI.TA is as volatile as an index. In other words, the stock will move with 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 limited. 

In normal market circumstances, RANI.TA is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Rani Zim Shopping Centers Ltd

ILA 422.1

5

Rani Zim Shopping Centers Ltd

ILA 422.1

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 422.1

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