Israeli supermarket chain Yochananof has filed for an IPO on the Tel Aviv Stock Exchange (TASE) in the coming weeks. This will make it the sixth retail food chain listed on the TASE, after Shufersal, Rami Levy Hashikma Marketing, Victory Supermarket Chain, Tiv Ta'am, and Fresh Market (the latter was first listed on the TASE earlier this year). Yochananoff plans to raise NIS 400 at a NIS 1.8-2 billion valuation, before money, although whether the market will accept this valuation is questionable. Orion Underwriting and Issuances is leading the offering.
The draft prospectus published by Yochananof today reveals that its expansion in recent years helped the chain boost its revenue turnover considerably, and also added to its profits. Yochananof's revenue grew 26% to NIS 1.4 billion in the first half of 2019, following a 41% rise to NIS 2.4 billion in 2018, mainly due to the opening of new branches.
Gross and operating profit also improved, but Yochananof reported a steep rise in financing expenses in the first half of 2019 as a result of the new accounting standard for leasing (IFRS16), which kept the chain's net profit for the first half of the unchanged at NIS 42 million. Yochananof's net profit climbed 35% to NIS 89 million in 2018. Based on its policy of distributing 30% of its annual profit as a dividend in the past three years (starting in 2017), the company distributed NIS 67 million. Yochananaof also plans on distributing some of the proceeds from its IPO as a dividend.
Yochananof's gross profit ratio slipped to less than 24% in the first half of the year, lower than those of the local discount chains. Yochananof attributes the fall in its gross profit ratio to "discounts received by the company from its suppliers in 2018 for opening new stores that year and the preceding year, and the company's policy in response to the price competition prevailing in the market in which it operates."
"Globes" recently revealed a business dispute between food manufacturer Tara and Yochananof, in which Yochananof removed Tara products from its shelves because of a dispute over trade terms, a situation made possible by the strengthening of Yochananof, among other things.
Yochananof, which conducts marketing and retail trade in food and household products, was founded in 1988. Its controlling shareholders are chairman Mordechai Yochananoff and three of his children: CEO Eitan Yochananof, Sarit, and Heli. Older brother Giora Yochananof, who is the chain's vegetables trade and procurement manager, holds no shares in the company. On the eve of the IPO, Mordechai Yochananof holds 38% of the company's shares, Eitan 4%, and Sarit and Heli 19% each.
Published by Globes, Israel business news - en.globes.co.il - on October 23, 2019
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