1. Isracard’s representative profit. We presented here a month ago the representative profit of
Isracard
-0.56%
Base:1,244
opening:1,240
High:1,240
low:1,231
change:356,406
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– NIS 260-300 million. It was traded at a value of about NIS 2 billion at a profit multiple of about 7-8. It’s low. This stems from a lack of trust and the market’s desire to see how the new CEO will really succeed in the reorganization plan against the background of the decrease in profits as a result of the agreement with Bank Hapoalim. Ran Oz, the new CEO just came in and was informed that over NIS 50 million of the profit was being taken from him because Bank Hapoalim changed the The rules of the game, rightly of course on the part of the bank – the profit function is the important goal. Without going into the blindness of the analysts, the investment managers and Israchart’s lack of understanding and transparency regarding the agreement with the workers, there is a crisis of confidence here.
The stock went down, it corrected and was still apparently trading cheap. This is also due to the fear of a slowdown, of credit losses due to uncontrolled loans, after all, Isracard is indeed a monster of credit cards, but about half of its profit in the last quarters (and even more) is from loans. Lending is a risky business, lending is a business that is easy to manipulate. So maybe this is the reason, maybe the reason is also the competition in the field of credit cards from the tech giants, although in the end both Apple Pay and bank apps only increase the use of credit cards. Whatever the reason, the loan and credit card giant with no “father” (controlling owner) was on the shelf.
Below is the graph of the Israchart share in the last year:
2. Dori Naoi has been lusting after Israchert for years. Even at the time of its first public offering 3.5 years ago. A few months ago Naoi purchased Israchart shares (at the time of the fall due to the “crisis of confidence” and the decrease in profits due to the change in the agreement with laborers) for NIS 100 million. BizPortal revealed the deal and it caused noise in the market. Dori Naoy, who controls Naoy Brothers, which is a large non-bank credit provider, purchased slightly less than 5% of Isracard’s shares and aimed for control. Naoi didn’t come to make a short detour. This put the insurance giants under pressure. Will Naoi steal this impressive growth engine from them? Then a whirlwind began – talks, conversations, meetings, Harel was the only one who made an offer – NIS 2.7 billion.
3. The Phoenix fell asleep. The Phoenix thought that its agreement with Isracard to jointly accelerate the lending sector was good enough and would consummate a purchase deal. Phoenix didn’t think about buying the cow, for the milk. Just before the report of Harel’s intention to purchase Israchart for NIS 2.7 billion, Phoenix and Israchart jointly reported a major agreement. Phoenix is now angry with Isracard, but it is their mistake. Management anger and blame is not a factor in business. Now the Phoenix is in the trap. Isracard may be suitable for acquisition, but the company is in the process of transferring control from the American funds to the giant fund of Abu Dhabi. In such a situation, you don’t make a deal that changes the face of the group. That doesn’t mean they can’t try, it just means it will be complex for them. But Phoenix is not the only one who can challenge Harel’s offer. Everyone you can think of among the major insurance companies, with the possible exception of a rule that tries to purchase Max is an option. And they are currently talking with the Isracard board of directors.
It works like this – Isracard’s board of directors received an offer from Harel and is managing the expected transaction in parallel layers – against Harel to try to maximize the price and against other alternatives. Not a bad chance that the offer from Harel or another body will exceed NIS 2.7 billion.
4. Israchart share price – If the Isracard board of directors decides that there is no deal and succeeds alone in raising profits for the shareholders, in the first stage the stock will go down. Yesterday it jumped following the report on the transaction, although it is still about 15% away from the transaction price. This means that the market believes that there are risks to such a deal and it may not materialize. On the other hand, the transaction gives a price tag, the price in the transaction is only the opening shot, there may also be opposition from shareholders (see Dori Navoi for example). And even if there won’t be a deal, I’ll hold you to the first comment. The representative profit is impressive, although it probably won’t arrive in a quarter or two.
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