Israeli broker IBI has started coverage of payment systems company Lipman Electronic Engineering with a “Buy” rating and price target of NIS 87, or 28% above market.
“In view of Lipman’s stable but growing market, we believe Lipman is trading cheaply”, analyst David Gubbay said. The analyst said Lipman was trading at a P/E multiple of 10.6 for expected earnings in 2002 and a P/E of 10 for 2003,levels which were relatively low when compared with the company’s peers.
“Lipman enjoys strong operating cash flows - NIS 75 million in 2001, and has NIS125 million cash on the balance sheet and virtually no debt. Lipman can easily leverage in order to finance growth abroad,” Gubbay added.
IBI believes that the shekel’s sharp depreciation will work in Lipman’s favor. According to Gubbay, 90% of Lipman’s revenues from exports are denominated in US dollars, while financial results are reported in shekels. The shekel’s weakness will continue to positively impact revenues in the second quarter of 2002, Gubbay says.
For year 2002, IBI forecasts that revenue will reach NIS 323 million, a 20% increase from year 2001 levels. The brokerage forecasts that net profit will reach NIS 70 million in 2002, a 38% increase from the prior year.
Published by Globes [online] - www.globes.co.il - on 8 July, 2002