Roundup / Samsung Smuggler Nabbed at Ben Gurion

Super-Sol on a bond rate diet; Kardan win overturned; revaluation gains to get mightily taxed; betting on Tel Aviv large caps.

Super-Sol downgraded: Right after downgrading its parent company, S&P Maalot downgraded Israel's biggest retail chain, Super-Sol on Thursday night. Super-Sol's bond rating was cut one level from AA-minus to A+, with a negative outlook, portending another rate cut. Maalot's main beef with Super-Sol, which belongs to Nochi Dankner's IDB group, is the deterioration of the company's debt coverage ratios because its parent company has been milking it of dividends, coupled with aggressive investment policy. Maalot estimates Super-Sol's liquid sources through year-end 2013 at NIS 1.58 billion, and its liabilities and uses at NIS 1.48 billion by that time. 

Tomato wholesale price dives 30%: Snigger not, dear reader, when the price of greenhouse tomatoes moves - the sub-index tracking fresh produce have been known to sway the consumer price index. On the eve of Rosh Hashana the wholesale price of the fruit swan-dived from NIS 9 per kilo to NIS 6.20, but the news seems not to have reached the big retail chains, where prices to consumers stayed steady at anywhere from NIS 10 to NIS 13 per kilogram. While on the topic, the wholesale price of zucchini halved to NIS 5 per kilo, yet again the stores seem not to have noticed.

Court voids huge contract win for Kardan: The Tel Aviv Administrative Court has voided an NIS 180 million tender won by Kardan group company Remet to build a segment of Route 531. Works were to have taken 3.5 years. The court found for Linom, a rival company that claimed Remet didn't actually meet the terms of the tender. 

Holding companies to owe more tax: A company that received dividends originating from revaluation gains – meaning profit generated merely by jacking up the book value of assets – will owe 25% dividend tax, the Supreme Court has ruled. Right now no tax is owed on such gains by companies, only by individuals. Ergo, the Tax Authority will probably be hitting Israel's holding companies with big tax bills in the future. Worst hit will be the real estate pyramid groups, where income is based largely on revaluation gains. Say a company bought a lot of land for a million shekels back in the day, and now the land is worth NIS 100 million. Its revaluation gain in the books is NIS 99 million. It hasn't sold the land and locked in the profit. Today that gain wouldn't be taxed even if distributed in full as dividends; after the ruling, 25% goes to Daddy.

Investors betting Tel Aviv large-caps will rise: As the week rolled to a close, open shorts on all Israeli stocks were up 1.5% from the week before, to NIS 13 billion. But open shorts on the heaviest companies, in the benchmark TA-25 index, were down 7.5% to NIS 1.22 billion. When investors short a company or index, they're betting it will fall, and vice versa. The companies with the biggest short positions are holding company The Israel Corporation (NIS 253 million, down 1% from last week) and Israel Chemicals (NIS 156 million, down 2% from last week). Investors smiled on electronic warfare systems maker Elbit Systems, where open short positions decreased by more than 50%, and technology company Mellanox, where open shorts decreased by 27%. They're betting against EZchip, food company Strauss Group and malls builder Azrieli.

Traveler caught smuggling Samsung phones: An Austrian citizen was caught at Ben Gurion International Airport last week, trying to smuggle 48 Samsung Galaxy 3 phones into Israel. On Thursday the Tel Aviv Magistrates Court released the suspect on bail. The phones had been well hidden in his luggage, it seems. The tourist tried to sail through the nothing-to-declare Customs aisle but the devices showed up on X-ray. He'd paid 410 euros per phone in Vienna, or NIS 2,082: in Israel they sell for as much as NIS 3,500 a pop.

With reporting by Oren Freund, Dror Raich, Vadim Sviderski