Analyst published its second-quarter report. It is short and clear, and one line in it runs in the opposite direction to most of the accounts we read this week.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
The Quarter
| NIS millions | The quarter | Share of the top line |
|---|---|---|
| Top line | 171.6 | |
| Operating profit | 55.9 | 32.6% |
| Pre-tax profit | 60.9 | 35.5% |
| Net profit | 38.3 | 22.3% |
| Basic earnings per share | NIS 3.05 | |
| Balance sheet total | 657.5 | |
| Shareholders' equity | 504.6 |
The gross profit line does not appear in the structured filing, and is therefore not presented here.
The Line That Goes Up
NIS 55.9 million of operating profit, and NIS 60.9 million before tax. About five million was added.
And that is rare among the accounts we read this week, where the direction is mostly the reverse.
At Dalia Energy 63% of operating profit was taken out below the line. At Nofar, 122%. At Rani Zim, 68%.
Here it was added.
And the explanation is in the balance sheet: NIS 657.5 million of assets on equity of NIS 504.6 million - a leverage ratio of 1.3 to one, among the lowest of the 40 filers today.
A company with little debt and large equity relative to its size does not merely avoid paying meaningful interest - it receives it, on cash and on its own investment portfolio.
The practical meaning: in a high-rate environment, a structure like this is an advantage. The same interest that weighs on leveraged companies adds to profit here.
And the Tax: 37.1%
NIS 60.9 million before tax and NIS 38.3 million after - that is, tax of NIS 22.6 million, an effective rate of 37.1%.
That is about 14 percentage points above Israel's corporate rate of 23%.
And that gap is familiar at Israeli financial institutions, and we saw it today at IBI (32.9%) and this week at Clal Insurance (33.3%). It generally arises from profit tax, an additional levy on certain financial institutions.
But the structured filing does not detail the tax reconciliation, so I do not assert that this is the reason here.
What can be said: had the rate been 23%, net profit would have been about NIS 46.9 million rather than 38.3 - a gap of roughly NIS 8.6 million in the quarter.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is a relatively rare case where every ratio points the same way.
A 32.6% operating margin, leverage of 1.3 to one, net financing income rather than expense, and zero minority interests - meaning all the profit belongs to shareholders, with no layers and no partners.
And the point I hold is that in a structure like this, the only line that reduces profit is tax. From NIS 60.9 million to NIS 38.3 million.
And this is a case where the tax rate genuinely deserves attention - unlike companies I read today where an unusual tax rate came from a small base. Here the base is large, NIS 60.9 million, and so 37.1% is a meaningful figure rather than noise.
And what I would look for in the full accounts is the split between management fees and investment gains. At an investment house the first recur and the second depend on the market - and on one line they look identical.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action.)
