Hamat Group Ltd. – Value Analysis (TEL AVIV:HAMAT) : December 28, 2017

Capitalcube gives Hamat Group Ltd. a score of 64.

Our analysis is based on comparing Hamat Group Ltd. with the following peers – Golan Plastic Ltd. and Ham-Let (Israel-Canada) Ltd. (GLPL-IL and HAML-IL).

Investment Outlook

Hamat Group Ltd. has a fundamental score of 64 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 3.00 is about median in its peer group.
  • HAMAT-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.
  • HAMAT-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.
  • Over the last five years, HAMAT-IL‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • HAMAT-IL‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • HAMAT-IL has additional debt capacity.

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Leverage & Liquidity

HAMAT-IL has additional debt capacity.

  • With debt at a reasonable 27.37% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 18.04%), and a well-cushioned interest coverage level of 15.71x, HAMAT-IL has the capacity to borrow some more.
  • All 2 peers for the company have an outstanding debt balance.

HAMAT-IL has moved to a relatively high liquidity from an Quick & Able profile at the recent year-end.

  • HAMAT-IL‘s interest coverage is its lowest relative to the last five years and compares to a high of 25.94x in 2014.
  • The decrease in its interest coverage to 15.71x from 23.94x (in 2016) was also accompanied by a decrease in its peer median during this period to 9.90x from 14.79x.
  • Interest coverage fell 3.34 points relative to peers.
  • HAMAT-IL‘s debt-EV has increased 8.10 percentage points from last year’s low and is now above its five-year average debt-EV of 23.96.
  • While its debt-EV increased to 27.37% from 19.27% (in 2016), its peer median decreased during this period to 18.04% from 19.27%.
  • Relative to peers, debt-EV rose 9.33 percentage points. Unlike the peer median, it is also above the 25% leverage benchmark.

Access the detailed analysis for Hamat Group Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Golan Plastic Ltd. 18.04 2.51 9.9 54.67
Ham-Let (Israel-Canada) Ltd. 11.79 1.82 6.67 53.42
Hamat Group Ltd. 27.37 0.92 15.71 29.48
Peer Median 18.04 1.82 9.9 53.42
Best In Class 11.79 2.51 15.71 54.67

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Company Profile

Hamat Group Ltd. engages in the manufacture and trade of bathroom and kitchen products. It operates through the following segments: Taps, Sanitary Tools, Sanitary Products, and Distribution. The Taps segment produces and markets metal valves, faucets, and fittings. The Sanitary Tools segment distributes ceramic products. The Sanitary Products segment manufactures and sells plumbing products, pipes, toilet seats, washbasins, sinks, showers, and bathtubs. The Distribution segment imports and markets irrigation accessories, sanitary products, and bathroom accessories. The company was founded on July 10, 1951 and is headquartered in Ashdod, Israel.

Disclaimer

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