Tamar Petroleum Ltd engages in the exploration and production of natural gas in Israel. It has 16.75% interest rights in the Tamar and Dalit reservoirs located in west of Haifa. The company supplies natural gas to the State of Israel, private electricity producers, industrial customers, and natural gas marketing firms, as well as exports to Jordan, Egypt, Italy, Cyprus, and Greece. In addition, it sells condensate produced from the Tamar project to Paz Ashdod Oil Refineries. The company was formerly known as Karish and Tanin Management Ltd. and changed its name to Tamar Petroleum Ltd in May 2017. Tamar Petroleum Ltd was incorporated in 2015 and is headquartered in Herzliya Pituach, Israel.

Israel

Tamar Petroleum Ltd

Energy

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 annually. 

TMRP.TA reported revenue of USD 300mn in the last 12 months, up 8% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 14% from FY23 to USD 0.64.

The stock has been growing steadily in the past six months, adding 59% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 70ppts 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 'fair'.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 51.6% in the last 12 months, up from 49.6% in FY23. 

Historically, TMRP.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 19.5%, a growth from 17.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.8% in the last 12 months, an increase from 4.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 5.3%, below the peers. 

Tamar Petroleum Ltd reported a return on equity (RoE) of 14.3% in the last 12 months, up from 13.1% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.1 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.

TMRP.TA has very poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and remains extremely favourable 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 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 slow historical revenue growth, excessive margin volatility, weak debt servicing capacity, and an unfavourable capital structure. We note robust profitability, among the positive credit factors. 

In highly turbulent market conditions, TMRP.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, TMRP.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. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, underpriced on P/FCF. 

Tamar Petroleum Ltd

ILA 3498

4

Tamar Petroleum Ltd

ILA 3498

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 3498

About

About

About

About