Vitania Ltd. acquires, plans, develops, constructs, leases, manages, and markets real estate properties in Israel. Its properties include office, commercial, and residential buildings. The company was incorporated in 1995 and is based in Tel Aviv, Israel.

Israel

Vitania 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 somewhat mixed. 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 twice a year. 

VTNA.TA reported revenue of ILS 286mn in the last 12 months, up 42% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 100% from FY23 to ILS 0.00.

The stock has been falling steadily in the past six months, losing 1% in total. 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 7ppts over past six months and grown 0ppts faster in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. It underperformed these peers by 14ppts over six months and grew 5ppts slower in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 55.0% in the last 12 months, a decline from 70.6% in FY23. 

Historically, VTNA.TA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 32.7%, down from 38.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 3.2% in the last 12 months, an increase from 3.0% in FY23. 

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

Vitania Ltd. reported a return on equity (RoE) of 8.4% in the last 12 months, up 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 good 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.

VTNA.TA has above average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity may be unstable and remains 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. 

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, and weak debt servicing capacity. We note resilient historical revenue growth and robust profitability, among the positive credit factors. 

In highly turbulent market conditions, VTNA.TA is not volatile. In other words, the stock will fall far 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 very low. 

In normal market circumstances, VTNA.TA is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. 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 greatly undervalued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, underpriced on P/FCF. 

Vitania Ltd.

ILA 2156

6

Vitania Ltd.

ILA 2156

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 2156

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