Big Mac Index Finds Shekel Highly Overpriced

Business Briefs: Mapi Pharma slims down, delays IPO; Matrix over-reported NIS 26m in revenue; IAI raises 450 million shekels in bonds; TASE ends down on first day in its new home.

Bloomberg

Big Mac index finds shekel highly overpriced
The Economist’s latest Big Mac index ranks the shekel as the world’s eighth most overvalued currency. The index, which is built on the assumption that a standardized product like McDonald’s flagship hamburger should cost around the same anywhere in the world, shows the shekel to be overvalued by 6.9%. The burger sells for 17.50 shekels in Israel, which at an exchange rate of 3.41 shekels to the dollar works out to $5.13. Still, the shekel isn’t as overvalued as the Norwegian kroner, which the index says is overvalued by 61.8%, or the Swiss franc, which is overvalued by 42.4%. The shekel should be worth 3.65 to the dollar, according to The Economist’s reckoning, if the exchange rate reflected true purchasing power parity. In fact, the dollar’s Bank of Israel rate on Friday was 3.4260 after strengthening more than 0.7% for the day. (TheMarker)

Mapi Pharma slims down, delays IPO
Mapi Pharma, which develops complex generic drugs with high barriers to entry, has slashed the size of its initial public offering and delayed it to this week. Under the revised prospectus, the Nes Tziona-based company will raise $18 million at $8 a share, compared with the $35 million to $40 million it had originally planned to raise at somewhere between $13 and $15 a share. It is also reducing the number of shares being sold by 400,000, to 2.25 million. The final figure could grow to $20.7 million if underwriters exercise their overallotment options. The revised IPO values the company at $100 million, a figure Mapi was prepared to accept because it badly needs to raise the money. Operation Protective Edge in Gaza as well European approval of Biogen’s Pelgridy multiple sclerosis drug, a rival for a treatment Mapi is developing, have hurt its valuation. (Yoram Gabison)

Matrix over-reported NIS 26m in revenue
Matrix IT recently told the Tel Aviv Stock Exchange it had erroneously reported some 26.2 million shekels ($7.7 million) in revenues it never earned over the five years through 2013. The errors occurred in the company’s John Bryce division, which accounts for only about 7% of total operating profit, so the revisions don’t have any material effect on its financial condition, cash flow or liquidity, Matrix said. Nevertheless, the corrected report comes a month after Eran Lasser, the division’s long-serving CEO, stepped down, raising speculation that he had inflated the figures to increase his bonus. Matrix Chief Financial Officer Moshe Atias said Lasser was repaying bonuses he earned due to the misreporting. Matrix shares finished down 0.8% at 19.81 shekels. (Shelly Appelberg)

IAI raises 450 million shekels in bonds
Israel Aerospace Industries, the state-owned defense company that manufactures part of the Iron Dome system protecting Israel from Hamas rockets, said on Sunday it raised 450 million shekels ($131.5 million) in a sale of bonds. The issue, which was available to institutional investors only, met with orders of 1.58 billion shekels. A public offering is due to follow that will set the final interest rate on the debt, which in any case will not exceed the Bank of Israel rate by more than 95 basis points. The bonds were rated AA by S&P Maalot. Israel Natural Gas Lines, which is developing a domestic pipeline network to deliver natural gas domestically, will go ahead with a 400 million-shekel bond sale this week. (Ora Coren)

TASE ends down on first day in its new home
The first day of trading at the Tel Aviv Stock Exchange’s new home, on Ahuzat Bayit Street, on Sunday was hardly auspicious. Just 303 million shekels ($88.5 million) in shares changed hands and the benchmark TA-25 index finished down 0.2%, at 1,395.45 points. The broader TA-100 index was off 0.3%, at 1,252.53. It wasn’t the fighting in Gaza that depressed the market, rather a drop on Wall Street over the weekend after Visa and Amazon, a pair of closely watched bellwether names, reported disappointing results. As a result dual-listed shares were down sharply in Tel Aviv, led by a 3.6% decline for EZchip, to 82.27 shekels. (Dror Reich)