YH Dimri leads Tel Aviv 35 Index race

The battle over the single ticket for the Tel Aviv 35 Index, the main index of the Tel Aviv Stock Exchange, has reached its peak. Until yesterday, insurance group Menora Miftachim was the leading candidate to join the index, but recent moves by YH Dimri Construction and Development (TASE: DIMRI), Israel’s largest residential real estate developer, have thrown everything up in the air, and it is now in the lead. . Race, according to figures from SmartBull, which predicts changes in the composition of indicators in real time.

In the past few days, YH Dimri has announced a number of moves that have boosted its market value, including a large stock offering. Tel Aviv investors have certainly lent their support to the company: YH Dimri’s share price has risen 63% in the past year, nearly double the rise in the Tel Aviv Construction Index, and close to three times the rise in the Tel Aviv 35 Index (23). %). The rise in its share price gives YH Dimri a market value of NIS 6.6 billion, the highest among Tel Aviv-listed construction companies, and also cements controlling shareholder Yigal Dimri’s position as Israel’s richest contractor. His 59% stake in the company is worth more than 3.8 billion shekels.

In the Tel Aviv Construction Index, the company with the second highest market capitalization after YH Dimri is Ashtrom Group (TASE: ASHG), but it is mainly active in infrastructure rather than residential real estate. In third place is Aura Investments (TASE: AURA), controlled by Yaakov Atrakshi, with a market capitalization of NIS 4.8 billion. Aura’s share price has risen 1,500% since the crisis that hit the company at the start of the Covid pandemic, thanks to its aggressive activity in the hot urban regeneration space.

YH Dimri’s most significant recent move came in July, when he agreed to buy a plot of land owned by collapsed developer Hanan Mor on the site of the vacated Sde Dov airport in northern Tel Aviv. The land is allocated to build 448 residential units. Hanan Mor bought it in the summer of 2021 from the Israel Lands Authority for NIS 1.5 billion, and borrowed NIS 1.3 billion to do so. When interest rates rose, the deal became too big for Hanan Moore to handle and led to the company’s collapse. YH Dimri bought the 7,600 square meters of land from Hanan Mor’s creditors for NIS 1.1 billion.

Last week, YH Dimri executed two transactions to enable it to complete this purchase. The main measure was a private offering of shares to a number of financial institutions worth NIS 350 million. Investors include Altshuler Shaham Netz (through the Altshuler Shaham Netz hedge fund); Harrell Insurance Investments and Financial Services; Provident Fund Management Yellin Lapidot; and hedge funds Noked Capital, VAR Optimum, Hazavim, Total Opportunity, Brosh and others.

At the same time, YH Dimri announced the sale of 7.9 dunams of land in Hadera, designated for the construction of 318 housing units, to a private developer, for NIS 181 million plus value-added tax, to be paid in installments. YH Dimri will realize a pre-tax profit of NIS 150 million from the sale in the first quarter of 2025.

The results for the first half of 2024 give an indication to what extent YH Dimri has become a leader in the local construction industry. In the period from January to June, the company sold 248 residential units, compared to 171 in the corresponding period of 2023. In second place after that in terms of sales volume, came Shikun & Binui, with 164 sales in the first half of this year. YH Dimri’s revenues in the first half rose by 27% to NIS 865 million, thanks to higher apartment sales in its projects and the rate of construction progress. Net profit more than doubled (up 118%) to NIS 267 million, compared to NIS 248 million for the whole of 2023.

Despite all this, Yigal Demri, who holds the position of CEO of the company, expressed his concern about the decline in the volume of construction due to the shortage of workers since the beginning of the war. Speaking to a panel of directors of listed real estate companies in May this year, Demri said: “The volume of construction is declining, and at the same time we hear stories about importing workers, but we are in distress. There will be fewer construction starts and as time goes by “The suffering will increase.”

Next Tuesday, the identity of the company that will replace Electra, which is expected to be demoted from the Tel Aviv 35 index in the semi-annual review of the index on November 7, will be determined. The first criterion for joining the index is public ownership in the company, which must exceed 30%. The specific date for this standard is the end of last month.

The next important criterion is the average market capitalization of the company in the nine trading sessions between October 1 and October 15. YH Dimri’s average market capitalization has risen thanks to the stock offering, although its share price has fallen by 3.5% since the beginning of September. . The third criterion is the liquidity of the stock, which will determine the weighting it receives in the index.

YH Dimri is in a good position to get into the index. Its average market capitalization in the specified period is NIS 6.7 billion, followed by Menorah Mivtashem with NIS 6.63 billion. The third candidate in the race, income-generating real estate company Aloni Heitz (TASE: ALHE) is back again, with an average market capitalization of NIS 6.35 billion.

Last week, Aloni Hitz announced that Aaron Frenkel had become a partner in the company through a stock allotment, sending its stock price soaring at the time, but it has since declined. The deal is unusual for controlling shareholder Nathan Hitz, who is known as someone who does not like to share control. It seems that Aloni Hitz’s chances of entering the Tel Aviv 35 Index have declined, even through the deal with Frenkel, which is scheduled to inject NIS 685 million into the company.

Published by Globes, Israel Business News – en.globes.co.il – on October 15, 2024.

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