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Analyst: Delek Group is trading at a deep discount By Michael Rochvarger Tags: Delek "Considering the dismal state of shares in Delek US Holdings and Delek Real Estate, the stock market pricing of these shares is presumably not ignoring the bad news and the negative sentiments prevalent in their business sectors," states a report on Yitzhak Tshuva's Delek Group, prepared by the sell-side research department at Leader Capital Markets. "After surveying the rest of Delek Group's traded assets, it is difficult to say that the market is pricing any of them at a premium. Rather the opposite seems to be the case, with respect to Delek, the Israel Fuel Corp, Israel Phoenix Insurance, Hot Cable Media Systems and others." "Based on their pricing," says Yoav Burgan, Leader's chemical, pharmaceutical and energy analyst, "Delek US and Delek Real Estate together account for just 15.3% of our net asset value model, compared to the group's leading company, Delek Automotive Systems, which constitutes about 20% of our NAV model." The report for June car deliveries, published by the Israeli Car Importers Association, indicates a slight decline, to 19,574 new cars, or 4% fewer in June 2008, compared to 2007. This figure prompted suggestions of a slowdown in the new car market, against the backdrop of a feared recession that would halt the car industry's current prosperity. Advertisement "We feel the need to express reservations to such fears, both on the macro-economic level and with respect to Delek Automotive," states Leader's report. Unjustified discount Delek Automotive, under CEO Gil Agmon, continues to lead sales in the new car market, with 4,200 cars sold in June, for 22% of the total market. In the past quarter, Delek Automotive's sales grew by 12% over the parallel quarter in 2007, to 12,200 vehicles. Burgan notes that the recent launching of new models, such as the Mazda 2 and the Mazda 6, the Ford Mondeo and the S-Max and Galaxy minivans have sparked considerable optimism for Delek Automotive's sales for the whole of 2008. Burgan is similarly pleased with the fact that despite the lack of a declared dividend policy, the company has distributed all its profits as a dividend for the past four quarters, providing investors with an attractive average dividend of 12%. Still, Delek Group operations are facing a number of risk factors: regulatory changes concerning fuel, gas and the environment; changes in foreign exchange rates will affect loans taken in foreign currency; interest rate changes will affect loans with variable interest; and developments in the global capital market will affect the share prices of the group's subsidiaries. Bookmark to del.icio.us   Brown's ultimatum British PM to Knesset: Iran must suspend nuclear bid or face global isolation. One giant leap VIDEO: Israeli-developed device allows paraplegics to walk again.

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