The run of financing rounds by small companies has attracted much criticism in the capital market. Experts have even cautioned that some of these are very risky stock issues that could ultimately harm investors. When news of a planned IPO by dry goods importer Hamama Meir Trading began to circulate, the warnings grew even stronger.

"From the Carmel Market to the capital market," and "Looking for real seed capital," were some of the comments.

Hamama's executives were unfazed. The company recently completed a NIS 90 million negotiable bond issue, and even after it was over, prominent institutional investors continued to buy. Psagot Ofek Investment House has become a substantial shareholder, with a 9-percent stake in the company, and Excellence Investments purchased 6 percent. These institutions sent in buy orders mainly because Hamama's image at the bourse was slightly erroneous. Hamama is essentially a large trading company that imports, markets and distributes dry foodstuffs, such as rice, sesame seeds, legumes, coffee, grains, nuts and dried fruits. The company sells to large stores, local marketers and also dried fruits and nuts stands. These natural snack foods, incidentally, account for just 5 percent of Hamama's imports, but are what the public sees most. Kliyat Hamama, a well-known natural snack food store, is owned by a distant family relative. "He's a good customer of ours, but our main operations are completely different," says Ido Hamama, vice president of business development and the son of co-controlling shareholder Eli Hamama.

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"Hamama is an excellent opportunity for a defensive investment," Hamama told TheMarker. "No matter what happens, people do not stop eating. The fact that the company has been profitable from the day it was founded, over 10 years ago, reflects that whatever we are doing, we are doing it well."

After so many years, what made you decide to enter the bourse?

"It was by no means our natural path," explains Hamama. "We love to feel the goods, and the bourse is virtual, which does not mesh with our conceptions. We are a quiet family business that has not advertised much. Only people who needed to know us knew us."

So what prompted the decision to go public?

"We realized that if we wanted to advance, we had to achieve the next level of credit. In 2003, we received NIS 25 million in credit. With that sum, the company progressed considerably, as evinced by the growth in revenues in the following years. "Our company is a 'revolving capital' business - the money is either owed to us by clients or invested in merchandise. Imported products are held for an average of six months - three months in our warehouses and three months at the client's facilities, until we receive payment. This means that in order to grow, we need more capital."

What does it take to succeed in this industry? "An understanding of the market and an ability to identify trends and act accordingly." For example?

"The rapid economic growth in developing countries has led to the adoption of Western customs by the local population. If the Chinese start drinking coffee, the coffee markets worldwide will look different. We add new products to our inventory when we see potential in their price. In the food business, price peaks and dips are cyclical. One has to read the situation properly in order to create profit opportunities. Sugar, for example, is now at a low, after peaking in 2005. We saw an opportunity in this, and now have sugar in ships on their way to Israel."

Sugar has a low profit margin. Stock market investors are looking for higher profit margins.

"The consumer culture is an important factor in our work, and things can change very quickly. If the chef on a popular Israeli cooking show throws a handful of pine nuts into a dish, I will order more pine nuts. Quinoa is an example of a product that gained popularity very fast. Today's consumers are looking for new products and variety, and look more at products than at prices. This allows us to import special products with higher profit margins."

What changes have you seen in consumer tastes?

"Fifteen years ago there were two types of bread: white and dark. Today the bread market is flourishing. The boutique bakeries and even the commercial bakeries offer a wide variety of breads. On Friday mornings the stores are packed and people 'fight' over a loaf of bread that costs NIS 18. This is a fundamental change, as consumers are no longer seeking basic products, but rather specialty products."

Are people more aware of health foods?

"Six years ago, all dried fruits had added sugar. Today there is a high market penetration rate for dried fruits without sugar, and these already account for 15 percent of the market."

How does the proliferation of health food stores affect you?

"It's good for us. The success of these stores shows that the market is ready for higher prices. In the past our products were purchased mainly in the open markets and supermarket chains. Now we are working with stores that sell premium products. This is still a very small share of our revenues, but profit margins at such stores are high, and the most important thing to us is their growth potential."

Who are your main competitors?

"We are currently the main player in the market. The other prominent player is Sons of George Shukha, whose operations are similar to ours. I wish there were more like them." Why would you want more competition?

"He is a good competitor. He doesn't mess around with the prices and doesn't act without thinking things through. One competitor who doesn't know what he's doing is enough to bring down our whole market." Are revenues in your type of business cyclical?

"During the holiday seasons our revenues climb up signficantly. People tend to buy more products that are going to be cooked, such as legumes. The demand for legumes in general is much higher in the winter season than in other seasons of the year. The demanded is less noticeable in the summer time. When I wake up on a rainy winter morning, I smile. All the restaurants will be serving soups made with peas, beans or lentils. The strongest period for dried fruits, of course, is around Tu B'Shvat [Jewish Arbor Day - S.M.], and there is a surge in demand around the Arab holidays, too. When sports championship games are coming up, there is higher demand for raw materials for the natural snack foods - sunflower and pumpkin seeds and all the nuts."