FIMI Opportunity Funds reported today that it had sold 18% of the shares in Ham-Let (Israel-Canada) Ltd. (TASE: HAML) for NIS 150 million ($43 million) in off-floor transactions. FIMI still owns 42% of Ham-Let's shares, with a market value of NIS 366 million ($104 million).
FIMI acquired control of Ham-Let from Discount Investment Corporation in June 2012 with a $58 million investment. FIMI has since withdrawn $28 million in dividends from Ham-Let. Its current sale thus brings it proceeds from Ham-Let up to $71 million, 1.2 times its investment. FIMI will now continue slowly and gradually disposing of its holdings in the company, which is likely to give it a three or four-fold return on its investment in Ham-Let.
Ham-Let develops, produces, and markets fittings, faucets, and valves for industrial command and control systems, and systems for transporting ultra-pure gases in microelectronic industries. The company also develops and manufactures process valves and control valves for transportation of liquids and gases combined in flowing systems. Since FIMI acquired control of Ham-Let, it conducted a series of measures at the company, including strategic change, replacement of managers, and entry into new sectors through acquisitions of companies all over the world.
Ham-Let's current market cap is NIS 870 million, following a 38% drop in its share price in the past year. At the same time, the company's share has had an adjected 55% return for the past three years. A market sources said that FIMI had not sought to sell its holdings in Ham-Let because it anticipated continued growth in the company, but had decided to accede to current requests by investment concerns to sell them part of its holdings in Ham-Let (less than the demand from the concerns).
Ham-Let finished the first half of 2019 with $88.5 million in revenue, 1% less than in the corresponding period last year. Ham-Let said that sales of ultra clean products and products for process industries had fallen by 17% and 19%, respectively.
The company nevertheless said that its management believed that the decline in demand in North America and Europe for its products was only temporary. Sales of flow control products, on the other hand, grew 547% in the first half of 2019, after the activity of Ham-Let's South Korean subsidiary, acquired in August 2018, was consolidated.
Gross profit in the first half of 2019 was down 20% to $25.3 million, and fell from 36% of total sales in the first half of 2018 to 29% in the first half of 2019. Ham-Let attributed the fall in its profit margin to the consolidation of the South Korean subsidiary's results and a decline in sales. As a result of these figures, Ham-Let poste a $491,000 loss in the first half of the year, compared with an $89 million net profit in the first half of last year.
Published by Globes, Israel business news - en.globes.co.il - on September 26, 2019
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