This is a project to establish the Kiryat HaModi’in base in the Likit area of the Negev, in which Shuv, as the tender franchisee, will be entitled to “payment and water in the amount of NIS 11 billion,” and Excellence estimates that thanks to this, A total of about NIS 830 million.
Excellence also notes that winning the current tender “is in addition to the recent victory of Shuv at the Ramat Hovav station about a month ago, which indicates a significant improvement in the level of pricing and bidding in large tenders.”
According to estimates by the Investment House, the implementation of the Kiryat HaModiin project, which is scheduled to begin in 2022, “is expected to yield annual revenues of about NIS 1 billion from 2022 to 2026 for Solel Boneh,” and a combined amount of nearly NIS 5 billion.
Excellence “estimates a high operating profitability rate of about 8%, given the complexity of the integration of the project, which includes the establishment of a base for about 15,000 soldiers,” and raises the value of Solel Boneh, in which Shuv holds a full NIS 260 million each. NIS 1.3 billion, “to reflect added value from the execution of the project.”
In addition to the profit from the project, Shuv is expected to benefit from the franchise and operation of the project for 21 years. At the franchise level, Excellence expects a “return of about 12.5% on an investment of NIS 500 million in equity”, and raises the value of Shuv’s franchise activity To NIS 2.2 billion, “which will reflect added value for the franchisee and operator in the project.”
Looking ahead to the field of tenders, analyst David Gabay estimates in the review that Shuv “together with the other bidders, will benefit from the acceleration of infrastructure projects in the field of roads and trains by the state, and without disruptions in the execution of works in the shadow of the corona.” Significant NIS 18 billion in BOT projects (construction, operation and delivery, etc.) “.
Equity financing and credit
As part of its announcement of winning the Kiryat HaModiin project, Shuv, which is controlled by Nati Saidoff, updated that it intends to finance the construction and operation of the project from equity and credit, and that under the terms of the tender it is obligated to complete the financial closure procedure within one year of signing the agreement.
Shuv also undertook, among other things, to provide the Ministry of Defense with guarantees totaling up to NIS 500 million. Shuv submitted its bid in the tender through a designated corporation in which it fully owns. Shuv’s share has weakened by about 8% since the beginning of the year and reflects the company’s current value approaching NIS 6 billion.