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Report Date : |
04.03.2014 |
IDENTIFICATION DETAILS
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Name : |
R.H. ELECTRONICS LTD. |
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Registered Office : |
P.O. Box 740, Nazareth Illit (1710602), 5 Hatzoref Street,
Building No. 1, Har-Yona Industrial Zone, Nazareth Illit 1788028 |
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Country : |
Israel |
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Financials (as on) : |
30.09.2013 |
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Date of Incorporation : |
17.03.1986 |
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Com. Reg. No.: |
51-111027-2 |
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Legal Form : |
Private Limited
Company |
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Line of Business : |
Designers,
manufacturers, assemblers and marketers of electronic components and systems
and printed circuits for the electronics, high tech and medical aesthetics
industries. Subject mainly
operates as a prime sub-contractor of Electronic Manufacturing Service (EMS)
to other electronics companies and Hi-Tech companies (Original equipment
manufacturers (OEM). Subject also
specializes in Surface Mounted (SMD) Assembly and all types of manufacturing,
testing, and assembly technologies. |
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No. of Employees |
Having some 800 employees (had 822 employees
serving R.H. Group in Israel and the U.S.A as of end of 2012, had 896
employees in the end of 2011). |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – december 01, 2013
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Country Name |
Previous Rating (30.09.2013) |
Current Rating (01.12.2013) |
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Israel |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
israEl ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. Its major imports
include crude oil, grains, raw materials, and military equipment. Cut diamonds,
high-technology equipment, and pharmaceuticals are among the leading exports.
Israel usually posts sizable trade deficits, which are covered by tourism and
other service exports, as well as significant foreign investment inflows. The
global financial crisis of 2008-09 spurred a brief recession in Israel, but the
country entered the crisis with solid fundamentals - following years of prudent
fiscal policy and a resilient banking sector. The economy has recovered better
than most advanced, comparably sized economies. In 2010, Israel formally
acceded to the OECD. Israel's economy also has weathered the Arab Spring
because strong trade ties outside the Middle East have insulated the economy
from spillover effects. Natural gasfields discovered off Israel's coast during
the past two years have brightened Israel''s energy security outlook. The
Leviathan field was one of the world''s largest offshore natural gas finds this
past decade, and production from the Tama field is expected to meet all of Israel''s
natural gas demand beginning mid-2013. In mid-2011, public protests arose
around income inequality and rising housing and commodity prices. The
government formed committees to address some of the grievances but has
maintained that it will not engage in deficit spending to satisfy populist
demands.
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Source : CIA |
R.H. ELECTRONICS LTD.
Telephone 972 4 608 90 00
Fax
972 4 655 49 98; 608 89 30
P.O. Box 740,
NAZARETH ILLIT (1710602)
5 Hatzoref Street
Building No. 1
Har-Yona Industrial
Zone
NAZARETH ILLIT 1788028 ISRAEL
A private limited
company, incorporated as per file No. 51-111027-2 on the 17.03.1986, assuming
all business activities of a partnership established in 1983.
Authorized share
capital NIS 40,000,000.00, divided into -
39,999,900 ordinary shares (33,659,222
shares issued),
100 management shares (issued), all of
NIS 1.00 each,
of which shares
amounting to NIS 33,659,322.00 were issued.
Subject is a fully
owned subsidiary of R.H. TECHNOLOGIES LTD, a public limited liability whose
shares are traded on the Tel Aviv Stock Exchange, controlled by Jacob Rosenberg
(38.7%) and Gdalia Hamerman (34.50%).
Note: Subject
itself holds directly 3.24% of R.H. TECHNOLOGIES issued shares.
1. Jacob Rosenberg, Chairman of
the R. H. TECHNOLOGIES Group,
2. Gdalia Hamerman, General Manager of the R. H.
TECHNOLOGIES Group.
Rotem Haimzon
(since beginning of 2014).
Designers,
manufacturers, assemblers and marketers of electronic components and systems
and printed circuits for the electronics, high tech and medical aesthetics
industries.
Most sales are
local (90% in 2012, 88% in 2011, 85% in 2010), the rest are to USA.
In 2007 assumed the
activities of sister company A TO Z ELECTRONICS LTD., manufacturers and
assemblers of electronic components and printed circuits for small clients (see
more in CHARACTER).
Subject mainly
operates as a prime sub-contractor of Electronic Manufacturing Service (EMS) to
other electronics companies and Hi-Tech companies (Original equipment
manufacturers (OEM).
Also specializes
in Surface Mounted (SMD) Assembly and all types of manufacturing, testing, and
assembly technologies.
Subject’s
clientele includes leading software companies such as: COMVERSE, APPLIED
MATERIALS ISRAEL, INDIGO-HP, HARMONIC VIDEO NETWORKS, ESSENCE SECURITY, KLA
TENCOR ISRAL, CADENT, XENLIGHT, GAMATRONIC ELECTRONIC INDUSTRIES, APM, etc.
Among local
suppliers: AVIV P.C.B & TECH, RAM N.S TECHNOLOGIES, H.Y. ELECTRONICS AND
COMPONENTS, TRUST ELECTRONICS, B.T.I. QUALITY METAL CENTER, ARROW/RAPAC,
PHOENIX TECHNOLOGIES, TRANS ELECTRIC I.A.
Operating
from Group's partly owned by sister company, partly rented premises (offices
and plants), which is divided into 3 buildings: 2 buildings in 5
Hatzoref Street (where R.H. Group management is situated on a total area of
23,500 sq. meters a) and additional building in 2 Hamaayan Street, in Har-Yona
Industrial Zone, Nazareth Illit (Upper Nazareth), on an area of 7,500 sq.
meters (long term lease from state). R.H. Group is also operating from a plant
in the USA.
Having some 800
employees (had 822 employees serving R.H. Group in Israel and the U.S.A as of
end of 2012, had 896 employees in the end of 2011). The decrease is due to
decrease in business activity.
Parent R.H.
TECHNOLOGIES current market value US$ 29.7 million.
In 2004, subject’s
parent completed a NIS 45 million raise by issuing options and bonds on the Tel
Aviv Stock Exchange.
Subject is an
“Approved Enterprise” and as such enjoys government financial aid.
In 1997, 1999 and
2001, the Israeli Investment Center (IIC) approved US$ 1 million, US$ 4.2
million and US$ 9.1 million investment plans, respectively, in the expansion of
subject’s plant in Nazareth.
R.H. TECHNOLOGIES
consolidated accrued orders as of 06.03.2013 were
US$ 33,564,000.
Financial data is
included in the consolidated B/S of parent company, R.H. TECHNOLOGIES LTD.,
which shows (Note: subject carries most of the Group's activities, being the
main subsidiary):
US$
(thousands)
31.12.2012 30.09.2013
ASSETS
Current assets
Cash and
cash equivalents 3,976 2,122
Other financial assets 17,756 13,723
Customers 40,082 37,197
Other debtors 1,656 1,890
Other assets 446 552
Stock 32,346 32,369
96,262 87,853
Non-current assets
Fixed
assets, net 9,894 10,091
Intangible
assets and goodwill 1,552 1,231
Other
non-current assets 1,311 794
12,757 12,116
109,019 99,969
======= =======
LIABILITIES
Current liabilities 71,170 66,783
Non-current
liabilities 1,840 1,943
Equity 36,009 31,243
109,019 99,969
======= =======
In R.H.
TECHNOLOGIES's 2013 Q3 financial report it reported that ALVARION, which was
among Group's clients, entered receivership, and remains with a debt to Group
of US$ 3.4 million. R.H. made a deduction of US$ 2.4 million in its financial
statements.
There are 19
charges for unlimited amounts, as well as a charge on the sum of NIS
1,274,000.00 registered on company’s assets (financial assets, fixed assets,
equipment and vehicles), in favor of the State of Israel, Bank Leumi Le'Israel
Ltd. and The First International Bank of Israel Ltd.
Subject ended 2009
with a net loss of US$ 1,597,000.
Subject ended 2010
with a net profit of US$ 3,239,000.
Subject ended 2011
with a net loss of US$ 1,800,000.
Subject ended 2012
with a net loss of US$ 2,076,000.
R.
H. TECHNOLOGIES LTD.
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31.12
2010 2011 2012
Sales 155,181 154,501 128,345
Gross profit 13,131 6,814 3,824
Operating (loss) income 6,449 128 (3,755)
Profit (loss) before tax on income 3,995 (5,236) (4,568)
Net income (loss) 3,701 (4,422) (4,603)
======= ======= =======
R.H. TECHNOLOGIES
consolidated sales for the first 9 months of 2013 were
US$ 79,292,000 (21% decrease comparing to the parallel period in 2012), making
a gross profit of US$ 1,446,000, an operating loss of US$ 5,010,000,
making a net loss of US$ 5,956,000.
R. CLOTH
TECHNOLOGIES LTD., 100%.
R. METAL KITS
LTD., 100%, electronics equipping.
S.L.P. (PROJECT
MANUFACTURING AND MARKETING) LTD., 100%, precise CNC works.
R.H. TECHNOLOGIES
LTD., parent company, a holding company. Also controls:
R.H. USA INC.,
100%, a plant in the U.S.A.
Bank Leumi
Le'Israel Ltd., Haifa Main Branch (No. 876), Haifa, account No. 200400/69.
A check with the
Central Banks' database did not reveal anything detrimental regarding subject’s
a/m account.
Nothing
unfavorable learned in the legal aspect (please
refer to NOTE below).
Businesswise,
subject has been suffering, like other companies in its branch, from the
continuing decrease in demand of its products due to global economic climate,
directly on subject's export and to local electronics manufacturers. The
ongoing appreciation of the local currency makes the situation more difficult.
In mid 2013 parent
company and subject signed a subordination letter to its bankers, where they
are committed that subject would not pay dividends or other payments (owners'
loans, and such) to parent company or its owners without the bank's consent.
Subject has been
taking streamlining measures, and in parallel launching strategic plan for
growth aiming at entering new projects and new products for new clients. In
that aspect also note new General Manager appointment.
Subject is considered one of the largest independent
manufacturing contractors in their field in Israel. Subject is certified for
ISO-9001:2000, ISO-13458 (2003) and meeting other international quality
standards.
In August 2000
subject’s former sole shareholders, Gdalia Hamerman and Jacob Rosenberg,
transferred all their shares in subject (50% each) to a new holding company
they incorporated, R.H. TECHNOLOGIES LTD., in view of a public issuance
(listing in September 2000 raising NIS 38 million in consideration of 16% of
the shares).
In November 2007
R.H. TECHNOLOGIES signed an agreement with a local leading investment fund FIMI
to establish a joint company (R.H. RGT) that will deal in purchasing and
erection of companies in the field of electronic systems manufacturing
overseas. In May 2008 R.H. RGT purchased 62% of ADEPTRON TECHNOLOGIES
CORPORATION, a public limited liability company whose shares are traded on the
Toronto Stock Exchange, for a sum of CAD$ 6 million. Following financial
difficulties of ADEPTRON, it was merged into ARTAFLEX INC., and Group's
holdings diluted to 7.5%. That affair harmed R.H. 2011 financial results.
In April 2013 R.H.
TECHNOLOGIES sold its holdings in ARTAFLEX for CAD$ 45,000.
In October 2007
subject's Board approved, as part of the Group's re-organization scheme, the
merger of the activities of A TO Z ELECTRONICS LTD., sister company (purchased
in 1997), into subject. Activities and assets were assumed in September 2010,
and the final merger is pending Authorities approval.
In September 2009
won a tender by ISRAEL AEROSPACE INDUSTRIES (IAI), Israel leading military and
civil aerospace industrial company, for production of electronic assemblies,
where subject will act as the main sub-contractors for 3 years (with option for
extension up to 7 years). Scope of the tender is pending on number and volume
of orders to IAI.
In February 2011
subject acquired S.L.P. (PROJECT MANUFACTURING AND MARKETING), for stock face
value, providing an additional owners loan of NIS 1 million. S.L.P. will
provide the Group with precise C.N.C works.
In May 2012 R.H.
TECHNOLOGIES reported that it signed a strategic agreement for 5 years with
JABIL CIRCUIT INC. (3rd largest company in its field), to serve as
JABIL's manufacturing arm in Israel. In June 2012 it was reported that JABIL is
assisting R.H. to open a substitute production line in Hungary in case of a
severe deterioration in the local security situation.
In June 2012 R.H.
TECHNOLOGIES reported that TELEDATA, which is among Group's large clients, is
in grave financial situation, and holds a debt to R.H. of US$ 5 million. The
collapse of TELEDATA harmed R.H. 1st half results. In November 2012
TELEDATA Receiver informed that R.H. TECHNOLOGIES will receive a total of US$
1.6 million from TELEDATA's dismantling.
During 2012 Group
completed the contract with a client which comprised of some 11% of 2011 sales,
causing a decrease in 2012 sales.
According
to the Israel Association of Electronics & Software, hi-tech industries
sales in 2012 summed up to US$ 25.6 billion, just over 3% rise from 2011 (then
sales were US$ 24.825 billion, up from US$ 23.5 billion in 2010 and US$ 22.85
billion in 2009). 2012 sales divided into export of US$ 21.5 billion (US$ 20.97
billion, US$19.9 billion & US$ 19.45 billion in 2011, 2010 & 2009,
respectively) and US$ 4.1 billion of sales to the local market (US$ 3.855
billion, US$ 3.6 billion & US$ 3.4 billion in 2011, 2010 & 2009,
respectively).
Breakdown
of export in 2011 showed 3.4% increase in Electronic Components &
Computers, and 3.9% increase in Communications, Medical & Scientific
Equipment.
The division of companies by production within the
branches in 2011 was: 23% Civilian Communications & Telecommunications, 22%
Software, 18% Industrial Equipment, 16% Defense Systems, 14% Components and 7%
Medical Systems.
Division
of export: 30% to North America, 29% to Asia, 27% - Europe, 13% to the rest of
the world.
From
the Central Bureau of Statistics (CBS) data, the sales for export by the
Hi-Tech sector for 2012: US$ 7,715 million, almost 3% down from 2011. The
negative trend, which started in the last quarter of 2011, has been continuing
into 2013, with 8% drop in export in the first half of 2013 (comparing to 1stH
2012).
According
to CBS, import of raw materials for the local Machine and
Electronics Manufacturing in 2013 fell by 1.3% from 2012, reaching US$ 9,842
million (fall was deeper in local NIS currency – by 7.7%). This happens after a
growth trend over the last 3 years: by 8.5%, 12% and 20% rise 2012, 2011 and
2010 (in US$ terms), respectively.
Investments
(capital formation) by the hi-tech industries in machinery and equipment
(M&E) from import in 2012 fell by 28.6% from 2011, reaching NIS 6,294.2
million, which is after a 234% increase in 2011 (the remarkable increase in
2011 was attributed to the sharp jump in the Electronic Components segment of
942% on the background of the massive investment by INTEL ISRAEL in upgrade of their
M&E), an increase of 12% in 2010, but a 61% plunge in 2009.
A breakdown into
segments in 2012 in investment in M&E from import: Manufacture of
Electronic Components decreased 40.5% to NIS 3,918.7 million; Equipment for
Control rose 7.9% to NIS 1,799.3 million (10.7% in 2011); Office &
Computing Equipment rose 3% to NIS 63.7 million (4.1% in 2011); Electronic
Communications Equipment rose 3.7% to NIS 512.6 million (6% in 2011).
Notwithstanding
the losses, considered good for trade engagements.
NOTE:
1.
According to the Registrar of Companies subject has
a "Law Violating Company" Status.
As part of the Registrar efforts in the last period to collect fees and
supervision on meeting all duties by Companies’ law, such status notes have
been added to the registry. Registration as a "Law Violating
Company" is done due certain violation by the subject company for not
meeting the Registrar of Companies regulations promptly, mainly for not
paying Registrar fees, and/or not submitting annual reports on time. The
sanctions and penalties against the company in such case include fines up to
NIS 250,000, not allowing the company to register new charges on its favor, not
allow registration a charge on its assets (which may deprive the company from
taking new loans at their banks), cannot make changes in the Registrar, and
more.
It should be noted
that this may not necessarily be connected to the company's business activities
and financial standing (although in many cases there is a connection, we
believe it is not so in subject's case; It is
also possible that
there is a technical or administrative problem, as such things also happen).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.86 |
|
UK Pound |
1 |
Rs.103.52 |
|
Euro |
1 |
Rs.85.31 |
INFORMATION DETAILS
|
Report Prepared
by : |
MNL |
RATING EXPLANATIONS
|
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 |
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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-- |
NB |
New Business |
-- |
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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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.