MIRA
INFORM REPORT
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Report Date : |
13.11.2007 |
IDENTIFICATION
DETAILS
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Name : |
SCOPE METALS GROUP LTD. |
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Registered Office : |
P.O. Box 3, Re'em Industrial Zone, Bnei
Ayish 79845 |
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Country : |
Israel |
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Date of Incorporation : |
27.4.1980 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
International
trade, importers, exporters and marketers in the “white metal” area, including
stainless steel metals, aluminum, titanium and nickel alloys. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
name & address
SCOPE METALS GROUP
LTD.
P.O. Box 3
Re'em Industrial Zone
BNEI AYISH 79845 ISRAEL
Telephone 972 8 863 10 00
Fax 972 8 863 10 20
HISTORY
Originally
incorporated as a private limited company, registered as per file No.
51-084980-5 on the 27.4.1980.
Originally
registered under the name SCOPE TRADING & FOOD MARKETING LTD., which
changed to SCOPE METALS TRADING AND TECHNICAL SERVICES LTD. on the 5.4.1981,
which changed to the present name on the 21.8.2007.
Converted into a
public limited liability company, registered as per file No. 52-003742-5 on the
30.4.1992.
On the 8.4.1992
published a prospectus, offering shares to the public, raising a sum of US$ 2.5
million.
SHARE CAPITAL
Authorized share
capital NIS 30,000,000.00 divided into - 30,000,000 ordinary shares of NIS 1.00
each, of which shares amounting to NIS 10,893,872.00 were issued.
SHAREHOLDERS
1. Shmuel Shiloh, 35.7%,
2. PIMSCO HOLDINGS LTD., 27%,
controlled by the FIMI fund, controlled by Ishay Davidi,
3. MIGDAL HOLDINGS INSURANCE AND FINANCE
LTD., 5.5%,
4. Shares are also traded on the
Tel Aviv Stock Exchange.
In February 2006,
the FIMI fund signed a deal to acquire 2,935,000 shares in subject, for a sum
of NIS 157 million. The deal was finalized in April 2006.
DIRECTORS
1. Shmuel Shiloh,
Chairman and Managing Director,
2. Uri Lado,
3. Shalom Singer,
4. Shaul
Kobrinsky,
5. Yehuda Keren,
6. Mati Dov,
7. Yarom Oren,
8. Ishay Davidi,
CEO of the FIMI.
BUSINESS
International trade,
importers, exporters and marketers in the “white metal” area, including
stainless steel metals, aluminum, titanium and nickel alloys.
Subject’s products
include pipes, bolts and nuts, nets and cables, etc., which are used by
industrial plants and manufacturers in the chemical, pharmaceutical,
electronics, petrochemical, food, hi-tech and other industries.
Also importers and
marketers of engineering plastic and steel products and operate in the real
estate field.
Some 35% of sales
are for export. Exports are to India, Cyprus, Romania, Bulgaria, Moldova,
Russia, Greece, Kenya, Egypt, Turkey and the Ukraine.
Subject provides
also stock storage facilities, cutting and sawing services
("one-stop-shop" model).
Among subject’s
clientele are: ISRAEL AIRCRAFT INDUSTRIES, SOLEL SOLAR SYSTEMS, RAFAEL ARMAMENT
DEVELP., INCOMAC, GOLD BAR, M.G.T. ISRAEL TASIYOT- MIFALEI TRIFMAN,
ENERGETICA GENERAL ENGINEERING AND HEAT SYSTEMS, BERMAD, A.Z. INDUSTRIES,
etc.
Among local suppliers: BETH EL ZIKHRON YAAQOV INDUSTRIES
Sole local agents of:
COLOMBUS STAINLESS
(PTY) LTD., ALMAC STAINLESS TUBE (PTY) LTD.,
ANDREW MENTIS
(PTY) LTD., all of South Africa,
ROLDAN S.A., of
Spain,
STAR STAINLESS
SCREW CO., of the U.S.A.,
REDAELLI TECNA
SPA, of Italy.
Operating from
owned premises on an area of 50,000 sq. meters, in the Re'em Industrial Zone,
Bnei Ayish, and from branches in the USA, China, Romania, Poland and the Czech
Republic.
Having some 700
employees (of which some 520 in subject itself), serving the whole SCOPE Group
(were 539 employees at the end of 2005 and 640 in the end of 2006).
MEANS
Consolidated B/S
shows:
NIS
(thousands)
31.12.2006 30.06.2007
ASSETS
Current Assets
Cash
& cash equivalents 34,056 33,428
Negotiable
securities 210,750 145,124
Customers 352,656 396,815
Other debtors 29,518 44,008
Stock _583,421 _781,792
1,210,401 1,401,167
Investments, loans and long term debit 670 634
Fixed assets (net) 197,946 234,687
Other assets (net) __24,577 __24,593
1,433,594 1,661,081
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LIABILITIES
Current
liabilities 363,228 366,186
Long term
liabilities 494,660 684,473
Equity _575,706 _610,422
1,433,594 1,661,081
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Current market
value US$ 268.7 million.
In 2006 subject's
market value were US$ 83 million in January and US$ 145 million in September,
which led to its inclusion in the Tel Aviv Stock Exchange's 2nd
important index – "The Tel Aviv 100".
In April 2005,
subject raised NIS 40 million by issuing shares to institutional investors.
In March 2007,
subject completed a raise of NIS 150 million by issuing bonds to institutional
investors. Bonds rated +A.
Subject is in
process to offer some 26% of its shares through the New York Stock Exchange,
and already submitted draft prospectus to the American SEC. Subject intends to
raise US $100 million, according to company value of US$ 350 million.
On 2.11.2007
subject announced it is postponing the public offering due to unfavorable market
condition and awaits the suitable market conditions to proceed with the
offering.
There are no
charges registered on the company's assets.
ANNUAL SALES
Consolidated
Statements of Income
NIS (thousands)
Year ended December 31st
2004 2005 2006
Revenues 501,186 603,846 1,041,951
Gross profit 174,557 177,915 321,908
Operating income 108,692 88,241 170,677
Profits before
taxes on income 91,350 58,272 136,560
Net income 57,790 42,010 95,601
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Consolidated first
half of 2007 sales were NIS 613,183,000 (a 30% increase comparing to the
parallel period in 2006), making a gross profit of NIS 187,495,000, an
operating income of NIS 97,864,000, and a net income of NIS 54,972,000.
According to
subject's draft prospectus submitted in October 2007, subject forecasts a sharp
decrease in operating profit for the 3rd quarter 2007 comparing to
the previous quarter and the parallel period in 2006. Subject explains the
decrease in operating profit (as sales keep rising by some 20%) in the
marketing efforts and investments in penetrating into new markets and
introducing new products.
OTHER COMPANIES
ADIT INDUSTRY
BUILDINGS LTD., 100%,
ILERLI TIN
PROCESSING LTD., 100%,
EL-ZON HOLDINGS
LTD., 100%, non active,
RAAS METALS, 100%,
non active,
GILINOX S.R.L.,
100%, Romania, non active,
PRIMAPOL METAL
SPOT S.R.O., 100%, Czech Republic, owns PRIMASPOT DEUTSCHLAND GmbH, marketing
company in Germany.
DALIAN BEST METALS
CO. LTD., 100%,
SHINTU INC., 90%, USA,
fully owns the 2 u/m U.S. subsidiaries:
MATERIALS
TECHNOLOGY SOLUTIONS INC. (M.T.S.),
HADCO.
BANKERS
Mercantile
Discount Bank Ltd., Beit Maiya Branch (No. 656), Tel Aviv, account No. 56782.
A check with the Central Banks' data base
did not reveal negative information regarding subject’s a/m account.
Bank Leumi
LeIsrael Ltd., Hahashmonaim Business Branch (No. 817), Tel Aviv.
Bank Leumi
LeIsrael Ltd., Central Branch (No. 800), Tel Aviv.
Bank Hapoalim
Ltd., Central Branch (No. 600), Tel Aviv.
CHARACTER AND REPUTATION
In August 2007 The
ISRAEL ELECTRIC CORP. filed a lawsuit to the Tel Aviv District Court against
subject on NIS 2.5 million for goods that were not delivered in 2003.
Apart from that,
nothing unfavorable learned.
Subject is ISO 9002
certified.
Subject is
considered a local leading company in the "white metals" sector.
In March 2002,
subject signed a deal to acquire all the activities (including goodwill, stock,
machinery and equipment) of 2 sister companies FEINGOLD STEEL INDUSTRIES LTD.
and FEINGOLD STEELS (1960) LTD., for a sum of US$ 3.6 million. Both companies
operate in the steel field.
The 2 companies’
annual income on average for the previous 3 years was NIS 23 million
(together).
During 2002 and
2003 there were negotiations with couple of local companies in the metal fields
to acquire their activities, which did not materialize.
In June 2004, it
was reported that subject acquired all stock of GLOBAL METALS, a local metal
company which went into receivership.
In July 2004, it
was reported that subject won a NIS 30 million deal to provide metal to the
ISRAEL AIRCRAFT INDUSTRIES. In September 2005, the deal was extended by further
NIS 85 – 100 million.
Also In July 2004,
it was reported that subject signed a deal to acquire 51% of an American metal
trading company, for a sum of US$ 500,000.
In October 2004,
subject established a new subsidiary in the Czech Republic.
In March 2005,
subject signed a deal to acquire the activities of a metal trading Czech
company, for a sum of € 895,000.
In February 2006,
subject completed a deal acquiring an American metal trading firm through
HADCO, a subsidiary established for this purpose in the USA, for a sum of US$
11 million (US$ 3 million for the company and US$ 8 million for the stock).
In May 2006,
subject opened a branch in China.
In June 2006,
subject acquired a 10,000 sq. meters plot in Romania, for a sum of € 600,000.
In December 2006
subject reported it has signed an agreement to purchase aluminum products in volume
of US$ 40-44 million from a European plant. This is in the framework of
subject's international expansion plans. Products will be marketed worldwide,
as well as in Israel.
In January 2007
subject's Board decided to pay cash dividends in total of NIS 25 million.
FIMI, one of
subject's shareholders, is a leading local investment fund. Founded in 1997,
FIMI is Israel's first dedicated mezzanine and buy-out fund. FIMI, managed by
entrepreneur Ishay Davidi, has over 36 major transactions valued at more than
US$ 400 million. Its investors list includes institutional and private
investors from the United States and Israel.
Metal prices in
Israel increased significantly in the last couple of years as part of the
global trend, which affected the sales figures of companies operating in these
related areas. In 2006 steel prices rose by 25% to 35% relative to 2005 prices.
According to the
Chairman of the Metal and Electricity sectors at the Manufacturers’
Association, overall sales of the various metal related sectors in 2005
increased by 13% in real terms comparing to 2004, reaching NIS 57 billion.
Sales to the local market increased by 16% form 2004, summing up to NIS 34.7
billion. The metal products branch in particular noted an impressive 21.8%
increase up to NIS 21.5 billion, comparing to NIS 17.6 billion in 2004. Basic
metal sales amounted to NIS 4.2 billion, a 17.8% increase.
Total sales
(export and to the local market) grew futher in 2006. Industrial exports in
2006 totaled over US$ 5 billion (metal sector accounted for US$ 1.75 billion).
Investment in
machinery and equipment rose by 15% comparing to 2005.
The Metal and
Electricity sectors forecasted sales in 2007 are NIS 75 billion, representing a
growing trend the 4th year in a raw.
The recovery contributed to the growth in the manufacturing activity and
the number of employees in those sectors after several years of downsizing.
After the increase in 2004, 2,100 new employees were added to the branches in
2006, bringing the total number of employees in these industries to over
100,000.
SUMMARY
Good for trade engagements.
RATING
EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)