Danya Cebus will issue at NIS 2 billion – two years ago it was valued at NIS 400 million; This is how it is to have “cheap” money – the capital market

Danya Cebus is a large company in the field of residential construction contracting, non-residential construction contracting, infrastructure contracting and initiating residential projects in Israel as well as in Romania. In addition, Danya Cebus owns 52% of Africa Residences, which she will part with shortly before the IPO by splitting and transferring the shares to the parent company. Until recently, Danya Cebus held 75% of Africa Residential shares, but as part of the overall debt settlement, it sold to institutional entities 18% of African Residential shares for NIS 200 million. It recently sold another 4% for NIS 70 million.

According to the prospectus, Danya Cebus will sell 12% of the shares of Africa Residential to Africa Israel, according to their price on the stock exchange and in exchange for an amount of NIS 220 million, which will be paid from the sale offer money. For the remaining shares – 40%, they will be distributed as an in-kind dividend to Africa Israel (a type of increase in holding) so that the two companies will return to being sister companies as it was in the past.

The results of Danya Cebus.
Danya Cebus has a large accumulation of about NIS 10 billion. In the first nine months of 2020, it earned about NIS 74 million, on revenues of NIS 2.66 billion.

The residential construction sector generated NIS 1.35 billion during this period and was central to the company’s operations. In fact, Danya Cebus is issued at a profit multiplier of about 20. This is a high profit multiplier for an infrastructure company. It is important to mention that infrastructure companies “live” on a particularly low gross margin of 5% -7% so that they are very sensitive to changes in costs. Many infrastructure companies rely on low profitability during tenders in the hope that they will be applied while in motion to improve margins – for example, to receive benefits, compensation and refunds from the state (as a customer). In the past, it was known that the final amount of the project was higher than the amount announced in the tender, in parallel with additional costs that are discovered while in motion. It’s less than the past, companies can no longer “build” on it, but it still exists.

In any case, Danya takes advantage of the hype in the field of infrastructure, the hype in IPOs and especially the “cheap” money. There is a lot of money looking for investments – because solid channels do not get a return and it seeps into the stock markets and flies the stocks. It can last even a long time, but it is clearly not a condition that can last for long. Meanwhile, many companies are taking advantage of the opportunity window and Danya is joining the trend with its big gainer being Lapidot Capital, which controls (in a chain) that is expected to report large accounting profit in parallel with significant economic profit.

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It has soared 3.5 times since the acquisition of Africa to a value of about NIS 1.9 billion.