Hadera Paper Ltd. : Overvalued relative to peers, but may deserve another look

Hadera Paper Ltd. relative valuation is now OVERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 25.

Our analysis is based on comparing Hadera Paper Ltd. with the following peers – Shaniv Paper Industry Ltd. and Sano-Brunos Enterprises Ltd. (SHAN-IL and SANO1-IL).

Relative Valuation

Hadera Paper Ltd.’s price of ILS 221.30 is greater than CapitalCube’s implied price of ILS 189.28. At this level, CapitalCube believes that Hadera Paper Ltd. is overvalued. Over the last 52 week period, the stock has fluctuated between ILS 111.10 and ILS 249.

Relative Valuation

Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It’s current Price/Book of 1.40 is about median in its peer group.
  • The market expects faster earnings growth from HAP-IL than from its peers and also a turnaround in its current ROE.
  • HAP-IL has relatively low profit margins and median asset efficiency.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • HAP-IL‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • While HAP-IL‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • HAP-IL seems too levered to raise additional debt.

Investment Outlook

Hadera Paper Ltd. has a fundamental score of 25 and has a relative valuation of OVERVALUED.

Hadera Paper Ltd. is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify Hadera Paper Ltd. as ‘Speculative’. In other words, not only is Hadera Paper Ltd.’s Fundamental Analysis Score low at 25, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 189.28.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

HAP-IL has a Turnaround profile relative to its peers.

The market expects HAP-IL to grow faster than the median of its chosen peers (P/E of 68.17 compared to peer median of 15.54) and to improve its current ROE of 2.08% which is below its peer median of 13.22%. Thus, the market seems to expect a turnaround in HAP-IL‘s current performance.

The company’s current Price/Book of 1.40 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

HAP-IL has maintained its Turnaround profile from the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Hadera Paper Ltd. engages in the production and sale of packaging paper. Its main fields of activity are the recycling of waste paper, cardboard and plastic, as well as the manufacture of products utilizing recycling technologies. The company’s products include a variety of printing and writing paper, packaging paper, corrugate board containers, packaging of consumer goods; as well as household consumer products including disposable paper products and diapers, hygiene products and additional disposable consumer products. It also engages in the marketing of office supplies to the institutional and business sectors. The company was founded in 1951, and is headquartered in Hadera, Israel.


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