Isranomics

Edible oils to real estate: Shemen Industries’ transformation leads to 350% share price gains

by | Mar 8, 2023 | Company Reporting | 0 comments

Shemen Industries (TLV: SMNIN), a company that has been in operation for over 100 years, recently changed its business focus. The company, which was previously known for producing edible oils under the brands “Olive Tree” and “Milomor,” has now turned its attention to logistics, industry, and storage real estate development. This shift in emphasis has resulted in a significant increase in the company’s market value, jumping by 350% since the slump in the stock at the beginning of 2020.

The company’s history dates back to 1924 when the British High Commissioner started an oil factory in Haifa. In 1961, Shemen Industries raised capital from the public for the first time and operated as part of the Koor concern for about three decades. In 1997, the company came under the control of the Fink family, and about a decade ago, it completed a debt settlement with the financing banks amounting to nearly NIS 300 million.

Shemen Industries’ share price performance during the last 3 years (Source: Market Watch)

Recently, Shemen Industries sold nearly all of its operational activities to Suget Industries for NIS 142 million plus an additional NIS 20 to 30 million for the inventory. With the completion of the sale in June 2021, the company began concentrating on properties it owns – private land with an area of approximately 21 acres adjacent to the old Haifa port, at the same time working to develop the property in the field of logistics real estate

Few days ago, the company announced a deal signed with the JTLV real estate fund and businessman Zvika Ben Zvi, under which the joint logistics activity of the JTLV fund and Ben Zvi’s Orsher company will be merged into Shemen Industries, against allotment of shares. After the approval of the merger, Shemen Real Estate (under its new name) will become the yielding real estate arm of all entities, and it will be held under joint control by Fink, JTLV, and Ben Zvi.

The partnership with JTLV and Ben Zvi is expected to create a significant and developing public company, which will benefit from a strong financial position and the absence of leverage. This, according to Chairman Haim Fink, will allow the company significant development and growth potential, “especially in this period and in today’s market situation.”

The existing partnership of JTLV currently owns land in an area of approximately 6 acres in the northern industrial zone of Ashdod, where Orsher’s logistics center currently operates and will eventually be expanded to approximately 32,000 square meters. Furthermore, the partnership owns two additional land lots for the development of logistics centers adjacent to commercial areas.

Shemen Industries has, without a doubt, undergone a substantial shift in its business focus, shifting from the production of edible oils to real estate development in the fields of logistics, industry, and storage, while delivering an enormous increase in shareholder value. The company’s recent agreement with JTLV and Ben Zvi is anticipated to contribute to the formation of a major public company with substantial growth potential.

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