The two latest IPOs on the Tel Aviv Stock Exchange took place five months ago - in one of them Ituran, which markets anti-theft and protection systems for vehicles, raised NIS 26.1 million. The value of Ituran in the May issue this year seemed at first glance exaggerated. The company intended to issue at a company value of NIS 142 million (after the money), and it was impossible to compute a p/e ratio for it, since it only switched from loss to profit in 1998’s Q1. Even so, the issue was a resounding success, the share price was significantly higher than the minimum price, and company value in the issue was set as NIS 162 million (after the money).
Since the issue the share price dropped by 18%, and the company also distributed a dividend, thus the company’s current market value is NIS 140 million.
The success of the issue stems from the fact that investors regarded the company as a growth company. And indeed, meanwhile Ituran does not let them down: net profit in 1998’s Q3 amounted to NIS 2.6 million, out of a revenue turnover of NIS 19.6 million. This compares to a net profit of NIS 2.2 million on a turnover of NIS 18 million in this year’s Q2. For the first nine months of 1998, net profit totals NIS 6.5 million. Estimates on the eve of the issue, according to which Ituran will complete ’98 with a net profit of NIS 9-10 million, seem now much less than before.
Ituran markets its main product, a system for tracing vehicles after they have been stolen, to insurance companies. They suffer greatly from the epidemic of vehicle theft in Israel, and therefore force those insured to constantly add, state of the art protection to vehicles. Ituran’s system is intended for more expensive vehicles.
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