AFCON Holdings Ltd. – Value Analysis (TEL AVIV:AFHL) : December 28, 2017

Capitalcube gives AFCON Holdings Ltd. a score of 66.

Our analysis is based on comparing AFCON Holdings Ltd. with the following peers – Elco Ltd., Baran Group Ltd. and Electra Consumer Products Ltd. (ELCO-IL, BRAN-IL and ECP-IL).

Investment Outlook

AFCON Holdings Ltd. has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It currently trades at a Price/Book ratio of (1.95).
  • AFHL-IL‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • AFHL-IL has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • AFHL-IL‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While AFHL-IL‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • AFHL-IL might have enough interest coverage to take-on additional debt prudently.

Access our research and ratings on AFCON Holdings Ltd.

Leverage & Liquidity

AFHL-IL might have enough interest coverage to take-on additional debt.

  • While AFHL-IL‘s debt to enterprise ratio of 42.99% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 49.45%), it also enjoys a relatively high interest coverage level of 4.10x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • All 3 peers for the company have an outstanding debt balance.

AFHL-IL has maintained its Some Capacity profile from the recent year-end.

  • AFHL-IL‘s interest coverage is similar to last year’s high of 4.27x, which compares to a low of 2.07x in 2012.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (4.10x) and the peer median (2.89x).
  • AFHL-IL‘s debt-EV is its lowest relative to the last five years and compares to a high of 80.51% in 2012.
  • The decrease in its debt-EV to 42.99% from 52.72% (in 2016) was also accompanied by a decrease in its peer median during this period to 49.45% from 57.73%.
  • Relative to peers, debt-EV fell 1.45 percentage points.

Access the detailed analysis for AFCON Holdings Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Elco Ltd. 55.9 1.22 2.49 13.36
Baran Group Ltd. 132.38 1.8 -3.6 -2.76
Electra Consumer Products Ltd. 27.83 1.15 3.29 42.54
AFCON Holdings Ltd 42.99 1.44 4.1 15.93
Peer Median 49.45 1.33 2.89 14.64
Best In Class 27.83 1.8 4.1 42.54

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Company Profile

AFCON Holdings Ltd. engages in carrying out infrastructure projects, electromechanical systems, communication, control and automation. Its products and services include building management, remote water metering, parking systems, security solutions, civil engineering and construction, natural gas engineering, electromechanical systems for public buildings, electrical panel manufacturing, control & instrumentation solutions and communication infrastructure. The company was founded in 1945 and is headquartered in Petah Tikva, Israel.

Disclaimer

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