Wednesday, August 17, 2011

Bethel Finances: Israel Chemicals beats analysts

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Israel Chemicals Ltd. (TASE: ICL) today reported double-digit revenue and profit growth for the second quarter of 2011, beating the analysts' forecasts. Revenue rose 29% to $1.93 billion from $1.49 billion for the corresponding quarter of 2010, beating the analysts' consensus of $1.78 billion.

Net profit rose 44% to $426.2 million for the second quarter from $295.9 million for the corresponding quarter, beating the analysts' consensus of $327 million.

Sales rose in all markets: domestic sales rose to $95.5 million (5% of total sales) in the second quarter from $85.7 million in corresponding quarter; North American sales rose to $415.8 million (22%) from $283.1 million; South American sales rose 10% to $226 million (17%) from $207.7 million; European sales rose by a third to $666.9 million (35%) from $442.3 million; and Asian sales, principally to India and China, rose to $471.1 million (24%) from $457.1 million.

Fertilizers - potash - sales rose by a quarter to $1.1 billion (54% of total sales) for the second quarter from $826 million for the corresponding quarter; industrial products sales, including bromine flame retardants, rose to $424.4 million (21% of total sales) from $358.9 million); and sales of phosphoric acid-based performance products for the food industry and wildfire fighting, rose to $408.2 million (20%) from $341.8 million.

Israel Chemicals, headed by president and CEO Akiva Mozes, will distribute a $298 million dividend.

Israel Chemicals' share price rose 0.7% in morning trading to NIS 50.30, giving a market cap of NIS 63.5 billion.


Monday, August 8, 2011

Bethel Finances: Meitav: Home prices set to fall

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Meitav Investment House Ltd. chief economist and strategist Ron Eichel believes, "The potential to curb real estate prices over the next few months is rising, especially for house prices (and not apartment rentals)." Eichel also wrote in a survey entitled, "The housing market is going into hibernation" that "If the government fulfills its promises, housing prices are expected to go into hibernation for years."

Eichel's survey followed the publication of data on the level of demand for new apartments in June, which showed that the trend that began last month is strengthening: the demand for apartments is falling.

The survey found that in June alone, demand for apartments plummeted 18% compared with the previous month. The number of apartments sold in the second quarter was 21% lower than in the first quarter.

On the supply side, the Yad2 sales website shows that the number of apartments offered for sale rose significantly over the last few months. The number of advertisements for apartment sales was 14% higher in July than at the beginning of the year. It can definitely be seen that these two indicators are encouraging stability in real estate market prices, Eichel observed.

According to Eichel, another indicator that points towards a slight calming in the housing market is the "number of months' supply" - a statistic that represents the number of months required to sell the entire inventory of apartments currently on the market, assuming that new apartments would be not be added. According to seasonally adjusted data, the number of months' supply in June was 8.8. This is the highest number since the beginning of 2009, which means that the level of apartment sales relative to market supply is the lowest it's been since January 2009.

"Moreover, apartment prices are inversely proportional to the monthly trend of supply. This definitely indicates a change in the monthly trend of supply. Therefore, we definitely expect a curbing in apartment prices in the next few months," Eichel noted.


Bethel Finances: Albar to market electric cars for Better Place

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Better Place LLC has signed an agreement with Israeli car leasing company Albar Ltd. to market hundreds of Renault Fluence ZE electric cars to its leasing customers in 2012. The customers will sign road service contracts with Better Place.

Albar will begin marketing the Fluence ZE to business and private leasing customers in the coming months, ahead of the car's arrival in Israel. Customers can opt for a lease operating services contract with Albar and sign a separate contact with Better Place for its services package.

A Better Place subscription includes an annual quota of kilometers at a fixed monthly rate, a home recharging point, free and unlimited access to public recharging points, unlimited battery replacement, an online driver support system, and 24-hour customer call service.

Albar CEO Yanun Amit said that Albar was the first leasing company to sign up with Better Place in Israel.

Better Place CEO Moshe Kaplinski said that the agreement with Albar enables private customers to lease electric cars. "I expect strong demand from the companies that have already signed agreements with us, and which have expressed a wish to switch to electric cars. I am pleased that Albar was the first company to spot the opportunity."


Bethel Finances: Electricity rates rise 10% today

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Electricity rates will rise 10% today. The Israel Electric Corporation (IEC) (TASE: ELEC.B22) last night received permission from the Ministry of Environmental Protection, after a request from the Ministry of Finance, to operate two out of its six units using fuel oil.

The Public Utilities Authority (Electricity) had originally called for a 20% hike in electricity rates today due to disruptions in the supply of Egyptian natural gas, and the rise of fuel prices on global markets. However, the rise was cut by 8% after Minister of Finance Yuval Steinitz lowered excise and purchase tax on diesel last night. Now the hike has been cut by a further 2%.

The Ministry of Environmental Protection has banned use of fuel oil for electricity production because of the high level of air pollution that it causes. In March, Minister of Environmental Protection Gilad Erdan allowed the IEC to use fuel oil for 12 hours after a breakdown in the natural gas pipeline from the Yam Tethys field. At the time Erdan said, "There will be no more open checks to pollute the environment just because it is a cheaper way to produce electricity."


Bethel Finances: NasVax receives Polish go-ahead for hepatitis vaccine trial

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NasVax Ltd. (TASE: NSVX) has obtained Polish Ministry of Health approval for a Phase IIa clinical trial of its Type C hepatitis vaccine at the Bydgoszcz military hospital. The trial will evaluate the efficacy and safety of the anti-CD3 oral vaccine.

Trial will include a group that will receive a placebo. The trial will evaluate various dosages of the vaccine on various immunology measurements. In March, NasVax reported successful results of the vaccine in a Phase IIa clinical trial trial in Israel on patients with non- Alcoholic Steatohepatitis (NASH) liver disease.


Bethel Finances: Wikipedia founder Jimmy Wales visits Rothschild protest tents

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Wikipedia co-founder Jimmy Wales today visited the Rothschild Boulevard protest tents in Tel Aviv, where equality is not seen on the horizon, but where the voice of the masses, just like his free online encyclopedia, is heard far away.

Wales is visiting Israel for the first annual meeting of the country's Wikipedia supporters as part of a series of Wikipedia events. "The main connection between Wikipedia and the protest in Israel is the right of people to express themselves and be heard in public," he said.

Israeli protests are nothing new to Wales. Six weeks ago, he attended the President's Conference in Jerusalem, during the height of the cottage cheese protest. "On my last visit here, Israelis were protesting against the price of cottage cheese, and some people laughed. That protest was apparently a warm-up for this one," he said, during his walk among the dozens of tents while receiving simultaneous translations of the protest signs against housing prices and the high cost of living. "People told me themselves, 'Why only protest against the price of cheese? Let's protest against more serious things, such as rent and the price of housing.'"

Amid the drops of sweat on Wales' face caused by the humidity, it was possible to see the enthusiasm that launched the free knowledge revolution. "This is an amazing time for Israel, with all the protests around," he said. "Many people around the world are watching what's happening here. This is different from what we saw in the revolutions in the Arab world - here there are no tanks surrounding us, only people using their basic right to go out and demonstrate. Yesterday, I couldn’t make it to the demonstration because of the conference, and I regret that. This is amazing."

The Israeli protests became mass protests because they went viral online. "The Internet helps people organize without large organizations. Things happen faster than in the past. There used to be mass demonstrations, but they were organized by large organizations. Today, it's much more spontaneous and faster - and that's the amazing thing," said Wales.

While the people in Israel are protesting, people in the US are mostly dealing with the unprecedented credit downgrade. Wales believes that this could bring Americans onto the streets. "Although it's a bit abstract to demonstrate over something like the credit downgrade of the US, but when it becomes necessary to balance the budget and the debt, there will be cuts. And when Americans see that the changes are unfair, we may see them hit the streets," he says.

Asked if he would set up a tent to protest the US government, Wales said, "I use my tent to go camping in the woods, so I doubt I'll set up a tent on Capitol Hill."

There are also many differences between Wikipedia and the tent protest. "At a time when we're tying to keep Wikipedia neutral, a protest cannot stay that way. When demands are made for changes in the society in which we live, it's very hard to stay outside politics and conflicts between opinions and positions," Wales said.

Before departing back to the US, Wales will attend the Israel Internet Association event, where he will discuss open Internet access. "To make the Internet accessible to everyone, it is necessary to remove market barriers and make it much more competitive," he says. "The moment there isn't one or two players making huge profits from control of the local Internet market, it will be possible to provide access to more people at a minimal price."


Bethel Finances:Tel Aviv Municipality removes caravan from tent protest

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As Tel Aviv's Rothschild Boulevard filled with tents, some protesters decided to set up something a bit more permanent and brought a caravan to the site. Students said that the government's procrastination prompted them to conclude that they would have to live their lives at the protest site for a long time, and that they would therefore need a more permanent place. The Tel Aviv Municipality was not amused and immediately removed the caravan.

Within hours, the municipality placed an eviction order on the caravan, located at the corner of Rothschild Boulevard and Sheinkin Street, giving the tenants 48 hours to remove it.

Tel Aviv University student union leader Gilad Arditi said, "The government's confused conduct, appointing an extraordinarily large team, gives an impression that the struggle will be a long one. That is why we're prepared to spend a long time in our tents and why we decided to upgrade the infrastructure."

National Union of Students in Israel vice chairman Ofri Raviv said that the caravan was intended to send a message to Prime Minister Benjamin Netanyahu. "The struggle isn't over. We're protesting against the committee, which was set up in order to drag things out. We brought the caravan here to make it clear that we're not going anywhere."

The Tel Aviv Municipality said in response, "The Tel Aviv Municipality supports the local protesters across the city and has allowed them to squat for almost four weeks, while keeping public order and reducing disruptions to local residents from whom we have received many serious complaints. However, the municipality will not allow the placement of permanent structures, such as caravans and illegal solid structures on the city's boulevards."


Bethel Finances: AMG: New mortgage demand down 25%

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Demand for new mortgages fell 25% in July 2011 compared with June, says AMG Financial Models Ltd. AMG CEO Amit Kaminsky attributes the drop to the "tent and other protests, and expectations that the prime minister will take measures that will lower prices in the real estate market."

Kaminsky said that these expectations were unrealistic because home prices will not fall in the foreseeable future. "Even if all of the government's measures succeed, the severe and real housing shortage will take years to fix, and only then will we see home prices fall," he said.

AMG says that there is a real hesitancy in taking new mortgages for buying an apartment, especially among young couples buying their first home. Kaminsky says that mortgage banks are focusing on handling buyers who need financing for homes bought in the past few months.

Kaminsky says that the wave of demand for homes, which reached a peak in recent months, caused mortgage banks to adjust accordingly, and they increased the number of personnel handling mortgage applications. "The banks want to maintain the turnover we saw before the wave of protests," he says. "Due to the slowdown in mortgage activity, the banks will now sit on the fence in the short term. This is actually a good time for mortgage holders to refinance to adjust to a rising interest rate environment and the resulting higher monthly payment. It is now possible to obtain better terms, easier payments, and a substantial saving in mortgage costs."


Bethel Finances: Netanyahu names members of "socioeconomic change team"

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Prime Minister Benjamin Netanyahu's team for socioeconomic change, chaired by former National Economic Council chairman Prof. Manuel Trajtenberg will have at least 22 members. Trajtenberg declared, "We will change the face of Israeli society."

The team for socioeconomic change is due to meet the tent protest leaders, headed by Dafni Leef, and submit its recommendations to the government by the end of September. "The team comprises people with expertise and social sensitivity, public experience, and young people who can understand the contemporary public mood," Trajtenberg told Netanyahu today.

In addition to Trajtenberg, team members will include Prime Minister's Office director general Eyal Gabai, current National Economic Council chairman Eugene Kandel, Ministry of Finance Budget Director Gal Hershkowitz, Accountant General Michal Abadi-Boiangiu, Bank of Israel deputy governor Dr. Karnit Flug, Interdisciplinary Center Herzliya VP Prof. Rafi Melnick, National Insurance Institute director general Esther Dominici, and Finance Minister's Economics Advisory Committee chairman Dr. Avi Simhon, Antitrust Authority chief economist Dr. Shlomi Frizet social entrepreneur and NOVA (Management and Academia for the Community) academic director Shahar Cohen, Hebrew University Maurice Falk Institute for Economic Research in Israel Dr. Yoram Gabbay, Israel Prize Laureate Prof. Pnina Klein of Bar Ilan University School of Education, Dr. Tali Regev of the Taub Center.


Bethel Finances: "Electricity rate hike to ignite higher prices across the economy"

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"The 10% hike in the electricity rate hike will not only affect electricity bills, but will also result in higher prices for consumer goods and water, which will further raise prices for goods," said Manufacturers Association president Shraga Brosh today. "This is the opposite of the policy that the government is trying to do, and should do."

Brosh proposed an alternative to the electricity rate hike: allow Israel Electric Corporation (IEC) (TASE: ELEC.B22) to use its cash reserves from overpayments by the public, which total NIS 2 billion. This money is slated for investment infrastructures, and Brosh says IEC should use it to absorb the rate hike.

Brosh says that IEC should raise capital for investing in infrastructure through a government-backed bond issue. "Since continued investment is critical for development of the electricity grid and IEC's financial position prevents it from raising capital at a reasonable price, the government should provide guarantees for the company. This would solve the problem of raising capital, while leaving electricity rates unchanged on one hand, while implementing the investment plan that is critical for development of the electricity grid on the other."

Bethel Finances: Tent protesters publish their demands

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"A vision for social justice" is the title of the document published by the tent protest leaders today outlining their demands from the government. The document is worded in general terms and full of superlatives, such as "Renew the alliance between Israel's citizens and the state".

Some of the main demands are as follows:

  • Narrow social, economic, communal, and national gaps and create the national cohesion needed for the country's existence.
  • Change the economic system to properly and sufficiently fund citizens' basic needs.
  • Lower the cost of living, achieve full and fair employment and put price controls on basic goods.
  • Set clear priorities to Israel's social and geographical periphery through investment and government attention in the allocation of resources and infrastructures.
  • Handle citizens' essential needs in education, health and personal security and provide genuine solutions to basic needs in housing, transportation, public infrastructures through government intervention.

Signatories of the document include tent protest speaker Roy Neuman. The protest leaders emphasize that demands were jointly formulated with student leaders and social organizations. A tent protest leader said, "The document presents an image of a more just and more humane State of Israel, a country that takes care of its citizens."

Although the document does not set out specific demands, it includes criticism of the government and quotes from Israel's Declaration of Independence. The criticism of the government's economic policy says, "Enriches the few amongst us from the sick, the needy, and our children, whose pockets are being emptied. Did this country, which we love, whose borders we defend, whose economy flourishes with our sweat and the sweat of our parents, whose existence we are responsible for, and whose future we guarantee through our enterprise abandon us? No! Its government and rulers abandoned us?

The document concludes by calling on Israel's citizens to gird for a "long and just struggle to fix socioeconomic policy."


Bethel Finances: Natural Resource buys Nevada gold mine

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Natural Resource Holdings Ltd. (TASE: NRH) has bought a gold mine in Lander County, Nevada, US, for an "insubstantial amount".

The company said that the mine produced 105,450 ounces of gold in 1982-86, and a 78,000 ounces of gold and 88,207 ounces of silver in 1987-89, when production was stopped due to low prices for precious metals. The mine was bought buy a Canadian company in 1992, which conducted a survey that found proven/probable reserves of 120,960 ounces of gold, and possible reserves of 46,745 ounces of gold.

The price of gold is currently at $1,703.70 per ounce.

Natural Resource is controlled by founder and CEO Roy Sebag. The company owns gold deposits in California, Montana, and Oregon, and iron deposits in northern Ontario.

Natural Resource's share price rose 4.4% to NIS 0.408, giving a market cap of NIS 37 million.


Bethel Finances: Discount Bank NY Q2 profit up 7%

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Israel Discount Bank (TASE: DSCT) subsidiary Israel Discount Bank of New York posted a net profit of $14 million for the second quarter of 2011, up 7% on the corresponding quarter of 2010. First half net profit rose 2% to $28.3 million over the first half of last year.

However, Discount New York's return on equity fell to 7.4% in the half from 7.8% in the corresponding half. Its shareholders' equity totaled $795 million at the end of June, a quarter of the shareholders' equity of Discount Bank as a whole.

Discount New York did not distribute a dividend, due to tax problems, so its capital adequacy ratio was especially high, but its return on equity was reduced.

The Federal Deposit Insurance Corporation (FDIC) categorizes Discount New York as "well capitalized", with a capital adequacy ratio of 16.1%, up from 14.6% at the end of 2010.

Despite Friday's downgrade of the US credit rating by S&P, the Federal Reserve yesterday notified Discount New York that there was no need to set aside addition capital for the T-bills held by the bank.

Discount New York's credit portfolio fell by 2.7% in the first half to $3.8 billion at the end of June. Its net credit portfolio amounted to 40% of its total assets. Deposits rose by 5% to $6.4 billion at the end of June. 60% of the deposits are by Latin American Jews.


Bethel Finances: NIS 1.4b withdrawn from mutual funds on Sunday

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The public withdrew NIS 1.4 billion from mutual funds yesterday, according to Meitav Investment House Ltd., as the Tel Aviv Stock Exchange's (TASE) Tel Aviv 25 Index fell 7%. Yesterday was the worst day for the mutual funds sector since the collapse of Lehman Brothers in September 2008.

NIS 900 million was withdrawn from fixed income and general mutual funds, and NIS 140 million was withdrawn from equity mutual funds. However, NIS 280 million was deposited in money market funds as investors sought safer investment instruments.

Yesterday's withdrawals were the worst day for the mutual funds sector since NIS 1.8 billion was withdrawn on September 18, following the collapse of Lehman Brothers.

NIS 2.4 billion was withdrawn from mutual funds in the first week of August, and NIS 18 billion has been withdrawn since March.


Bethel Finances: Turmoil weakens shekel

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Turmoil on global markets following S&P's decision to downgrade the US credit rating, and sharp falls on the TASE, all weighed heavily on the shekel in inter-bank trading this morning. The shekel was down 0.62% against the US currency to NIS 3.542/$, and plunged 2.22% against the euro to NIS 5.089/€.

As G-7 leaders pledge to restore stability to global markets Bank of Bank of Jerusalem (TASE: JBNK) believes that the dollar's potential to continue strengthening against the shekel is limited, and is influenced by the political and economic uncertainty and fear about growth on global markets.

The Bank of Jerusalem believes that while the dollar may continue to strengthen in the coming days, it is only a temporary strengthening that will end when calm and optimism return to the markets. Bank of Jerusalem wrote in its daily survey, "The dollar will reach a stronger resistance threshold at NIS 3.55/$ and crossing it will be a serious obstacle, but we do not rule out this happening."

Bethel Finances: Makhteshim triples net profit to $45.4m

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Agrochemicals maker Makhteshim Agan Industries Ltd. (TASE: MAIN) more than tripled its net profit on higher revenue for the second quarter of 2011. Revenue rose 20% to $723.1 million for the second quarter from $600.9 million for the corresponding quarter of 2010, and net profit rose 266% to $45.4 million from $12.4 million.

Makhteshim chairman Ami Erel attributed the results to "the effective measures the company has taken during the last 18 months, which have culminated in significantly improved profitability and record sales."

Makhteshim's growth was driven by a 15% increase in sales volume, combined with the consolidation of the company's acquisitions: JK Inc. in South Korea and Ingenieria Industrial SA de CV (BravoAg) in Mexico. The weak dollar increased the value of the company's European and Australian sales in US dollar terms.

Makhteshim's revenue growth was driven by higher sales in most regions. Asia-Pacific sales rose 33% to $114 million for the second quarter from $85 million for the corresponding quarter, European sales rose 20% to $316 million from $216 million, and North American sales rose 19.5% to $151 million from $126 million. Latin American sales lagged with 9% growth to $114 million for the second quarter from $105 million for the corresponding quarter. Israeli sales rose 20% to $27.5 million from $22.9 million.

Cash flow from operations was $268.9 million for the second quarter, barely changed from the corresponding quarter.

Yesterday, Makhteshim's shareholders unanimously approved its takeover by the sale of the company to China National Chemical Corporation (ChemChina). When the deal is closed in October, IDB Holding Corp. Ltd. (TASE:IDBH) unit Koor Industries Ltd. (TASE:KOR) will own 40% of Makhteshim and ChemChina will own 60%.

Makhteshim's share price rose 0.9% by mid-afternoon today to NIS 18.73, giving a market cap of NIS 8.08 billion.


Bethel Finances: Regulatory changes cut Cellcom profit

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IDB Holding Corp. Ltd. (TASE:IDBH) mobile carrier unit Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) posted sharply lower profit and reduced revenue for the second quarter of 2011. Revenue fell 6% to NIS 1.59 billion ($465 million) from NIS 1.69 billion for the corresponding quarter of 2010, and net profit fell 25.2% to NIS 244 million ($71 million) or (NIS 2.45 or $0.72 per share), from NIS 326 million.

The company attributed the drop in revenue to a 24.5% reduction in service revenue, due to regulatory changes, from NIS 1.13 billion in the second quarter from NIS 1.5 billion in the corresponding quarter, which was partly offset by a 137% increase in equipment revenue to NIS 458 million from NIS 193 million, thanks to increased sales of smartphones and 3G mobile phones. Content and value added services revenue rose 5.2% to NIS 283 million, a quarter of all service revenue in the second quarter.

Free cash flow fell to NIS 174 million ($51 million) for the second quarter from NIS 323 million for the corresponding quarter.

Cellcom added 32,000 net new 3G subscribers in the second quarter to 1.22 million, 36.2% of all 3/37 million subscribers at the end of June. The proportion of 3G subscribers rose from 32.2% of all subscribers a year earlier.

Cellcom's average revenue per user (ARPU) fell 26% to NIS 108.20 per month in the second quarter from NIS 146.60 in the corresponding quarter, due to lower interconnect fees and other regulatory changes. However, minutes of use (MOU) rose 1.2% to 342 minutes per month per user in second quarter from 338 minutes in the corresponding quarter.

Cellcom CEO Amos Shapira said that the company was strongly affected by he regulatory changes that came into effect at the beginning of the year.

"In the '2011 Brands Index', which ranks the top 100 brands in Israel, Cellcom was ranked as the leading brand among all the Israeli brands, and specifically among all communications and cellular brands in Israel. Overall, Cellcom Israel was ranked number four in Israel, after three prestigious global brands. The Brands Index of Globes, the important Israeli financial newspaper, is considered the most prestigious index in Israel, and is based on professional analysis by leading research companies, combining market surveys and financial data," said Shapira, adding that the Public Trust report for the first half of the year and the Israeli Consumer Council both noted that although Cellcom has the largest subscriber base among the cellular companies in Israel, it receives the lowest number of customer complaints

Shapira concluded by noting Cellcom's merger with sister company, ISP, international calls and telephony provider NetVision Ltd. (TASE: NTSN) for NIS 1.6 billion to create "potential synergies and to create better capabilities to cope with the changing communications market."

Cellcom will distribute a dividend of NIS 232 million, 95% of its second quarter net profit.

Cellcom's share price closed at $23.90 in New York on Friday, giving a market cap of NIS 2.37 billion, and rose 0.5% in morning trading to NIS 81.87, after falling 6% drop in yesterday's market panic

Bethel Finances: FDA accepts Teva application for allergic rhinitis treatment

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The US Food and Drug Administration (FDA) has accepted Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) application for approval of nasal aerosol corticosteroid for the treatment of seasonal and perennial allergic rhinitis. Teva filed a New Drug Application (NDA) for the drug on the basis of the results of its Phase III safety and efficacy clinical trials of the drug beclomethasone dipropionate hydrofluoroalkane (BDP Nasal HFA).

In both trials, BDP Nasal HFA demonstrated significant improvement in nasal symptom scores of sneezing, runny nose, nasal itching and nasal congestion versus placebo. BDP Nasal HFA was generally well tolerated and the safety profile was similar to that of the placebo.

Teva VP Global Branded Products Prof. Yitzhak Peterburg said, "BDP Nasal HFA has demonstrated promising results in the treatment of both seasonal and perennial allergic rhinitis. We remain committed to addressing unmet needs and dissatisfaction with currently available treatments among the 60 million patients in the US who suffer from allergic rhinitis."

In contrast to current nasal treatments for seasonal and perennial allergic rhinitis, which are delivered by an aqueous or “wet” spray, Teva's treatment is a dry spray, driven by an environmentally friendly aerosol.

Teva's share price fell 1.3% in premarket trading on Nasdaq today to $40.19, giving a market cap of $38 billion, after rising 2.4% by mid-afternoon on the TASE today to NIS 142.40.

Bethel Finances: Banks help TASE end eight-day losing streak

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The Tel Aviv Stock Exchange (TASE) rose today. The Tel Aviv 25 Index rose 1.50% to 1,090.39 points, the Tel Aviv 100 Index rose 1.47% to 987.14 points, and the BlueTech 50 Index rose 1.68% to 250.29 points. Turnover was NIS 2.28 billion.

The TASE ended its eight-day losing streak, as Tel Aviv 25 Index recovered a quarter of yesterday's 7% fall in a volatile session. Asian and European markets fell today, and Wall Street opened lower.

The TASE will be closed on Tuesday for the Tisha B'Av fast.

In the foreign currency market, the shekel-dollar representative exchange rate rose 0.91% to NIS 3.552/$, and the shekel-euro representative exchange rate rose 1.28% to NIS 5.07/€.

In the bond market, long-term Shahar unlinked government bonds rose by up to 0.3%, but long-term Galil CPI-linked bonds fell by up to 0.2%. The corporate bond benchmark Tel-Bond 20 Index fell 0.24%.

In the stock market, Strauss Group Ltd. (TASE:STRS) rose 5.2% for the biggest gain among Tel Aviv 25 shares.

Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) rose 1.7% on the day's largest turnover of NIS 160 million.

Mobile carrier Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) rose 2.4%, and Makhteshim Agan Industries Ltd. (TASE: MAIN) rose 2.6%, after the companies published their financials for the second quarter. Their parent company, IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment Corporation (TASE: DISI), however, fell another 4.4% on top of yesterday's 17.5% plunge.

Israel Discount Bank (TASE: DSCT) rose 4.7%. UBS named the bank as one of its 20 stock picks in Europe. Bank Hapoalim (TASE: POLI) rose 4.9% and Bank Leumi (TASE: LUMI) rose 4.9%, reversing yesterday's falls, and driving the Banking Index up 3.1%.


Bethel Finances: S&P reiterates Israel's A bond rating

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Standard & Poor's today reiterated its A/A-1 sovereign credit rating for Israel with a "Stable" outlook. However, in line with Friday's downgrade of the US credit rating from AAA to AA+, S&P downgraded US guaranteed Israeli government bonds to AA+.

The downgrade affects six bond series totaling $5.94 billion.

S&P economists began their annual review of Israel a few days ago. Top sources in Jerusalem said that S&P's main concern was about housing prices. "They are worried about how we intend to deal with a real estate bubble, if one has already developed," said a source.

S&P is also concerned about repercussions from the upheavals in Arab countries on Israel and its security. Potentially future hostile regimes are liable to undermine Israel's stability, affect Israel's economic activity and growth, and, most of all, cause a sharp increase in defense spending thereby increasing the deficit and debt. Israel is also affected by the weakness in the US and European economies, which account for half of Israel's exports.


Bethel Finances: Israel Postal Co lost NIS 100m in 2010

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Will Agrexco's woes repeat themselves with the Israel Postal Company Ltd.? In light of the Post Office's huge losses, which are being revealed for the first time today, concerns are arising over whether the government company is capable of meeting the bond payments.

Granted, the Post Office did not officially publish its 2010 financial report, however, sources inform "Globes" that the company lost NIS 100 million in 2010. The sources believe that the Post Office will lose NIS 80 million in 2011, yet during these two years, the company still maintained a positive cash flow.

Next April, the Post Office will begin paying the principal on its NIS 400 million bond issue to institutional investors in 2010. These payments total NIS 60 million each year, with inflation raising the interest payments. The Post Office reportedly has sources to meet the bond payments in 2012, however in light of its losses over the past two years, concern is growing about its ability to meet subsequent bond payments.

"If the Post Office does not receive assistance from the Ministry of Finance, 2013 will be problematic," a source said. However, some of the financial institutions that bought the bonds are not particularly concerned, and believe that the government will stand behind the company if it becomes necessary. "This is a government-owned company, and the government wants to turn the Post Office Bank into a commercial bank. There is no reason to be concerned," said a senior executive of a large financial institution.

Sasi Shilo is the Israel Postal Company chairman, and Haim Almoznino is the CEO. They are both new to their positions - Shilo was appointed chairman at the end of 2010, and Almoznino, former deputy CEO of Delek Israel Fuel Corporation Ltd. (TASE: DLKIS) took up his post only in May, succeeding Avi Hochman, who is now managing B. Gaon Holdings Ltd. (TASE: GAON).


Bethel Finances: E-business co Plimus sold for $115m

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Israeli e-business company Plimus Inc. has been acquired by Boston-based private equity fund Great Hill Partners for $115 million, its first Israeli investment.

Two months ago, Plimus Israel CEO Eldad Ben Tora told "Globes", "We expect major financial events at the company." He said that the focus was not on an exit, but behind the scenes there were talks with Great Hill Partners, which has a portfolio worth $2.5 billion, including several online payment and e-commerce companies.

Plimus was founded in 2001 by Tomer Herzog and Danny Kleinberg, who are no longer with the company. The company's e-commerce and payment clearance platform is designed for companies that sell digital products, such as software, games, and content.

Plimus posted a net profit of $20 million on $200 million revenue in 2010, 40% growth over 2009. Plimus is headquartered in Silicon Valley, California and has an R&D center in Herzliya where 60 of its 100 employees work. According to IVC, the company will report $280 million in sales in 2011. The company was financed from equity until 2008, when it raised $18 million from Susquehanna Growth Equity.


Friday, August 5, 2011

Bethel Finances: Splits appear in tent protest leadership

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Adam Dovzhinsky, one of the tent protesters at Tel Aviv's Rothschild Boulevard, has been on hunger strike for 16 days. He said today, "The protesters are sitting and suffering here. Amid the heat, noise, and bellyaches, more and more people are talking about an alternative leadership. The people going to the press conferences, to the Knesset, and who are in the media front lines do not represent us. They're not even sitting here. A demand has been made to oust the prime minister - a political demand - and that is not a real demand of the people sitting in the tents."

Dovzhinsky is not the only disgruntled demonstrator. Many agree with him, saying that the rising demands and dialogue are made by people with no burning need to end the situation. Tent protesters say that they would also like to see Shas supporters join them. "It isn't clear to us why, until now, social movements like it have not joined us. The moment that happens, we'll have huge power here that no on will be able to withstand," said Dovzhinsky.

Dovzhinsky and his colleagues say that there are similar rumblings at other tent protest sites around the country. "My demands for ending my hunger strike are simple," he says, "I want the prime minister to meet and talk with us, and I want a law passed to cap rent, as in many other places in the world. That's the beginning."

Dovzhinsky adds that he has received no reply to his letter to the Prime Minister's Bureau.

Bethel Finances: Israel Land cancels Nigeria tin exploration agreement

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Israel Land Development Company (TASE: ILDC), controlled by chairman Ofer Nimrodi, has cancelled a tin exploration agreement in Nigeria. In a notice to the TASE, the company said that the terms for a contract to purchase a license had not been met.

Israel Land has set up a new subsidiary Israel Land Development Natural Resources Ltd., a sister company of natural gas exploration company Israel Land Development Company Energy Ltd. (TASE: IE), to handle its minerals exploration and production operations.

Israel Land's share price fell 1.1% by mid-afternoon on the TASE today to NIS 26.95, giving a market cap of NIS 757 million.

Bethel Finances: Delek US triples profit on higher revenue

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Delek Group Ltd. (TASE: DLEKG) subsidiary Delek US Holdings Inc. (NYSE:DK) tripled its net profit on higher revenue for the second quarter, beating the analysts' forecasts. Revenue rose to $1.85 billion for the second quarter from $998 million for the corresponding quarter of 2010.

Net profit from continuing operations more than tripled to $54.9 million ($0.96 per share) for the second quarter from $15 million for the corresponding quarter. Non-GAAP net profit from continuing operations rose to $45.7 million ($0.80 per share for the second quarter from $12.3 million for the corresponding quarter. The non-GAAP net profit excludes a $9.2 million capital gain on Delek US's investment in Lion Oil Company, which Delek US now includes in its financial reports.

Delek US beat the analysts' consensus of $0.69 earnings per share on $1.22 billion revenue.

Delek US's refining revenue totaled $1.16 billion for the second quarter. The refining operations' contribution margin rose to $110.4 million for the second quarter from $38.7 million for the corresponding quarter. The company's Tyler refinery contribution margin was $82.9 million and Lion Oil's El Dorado refinery's contribution margin was $27.5 million.

Retail revenue was $497 million, but its contribution margin fell to $14.6 million for the second quarter from $18.1 million for the corresponding quarter, which the company attributed to lower fuel demand due to higher prices.

Delek US Uzi Yemin said, “Entering the third quarter, our refining system has continued to benefit from a combination of stronger refined product margins and a further widening in crude price differentials, when compared to the first half of 2011."

Delek US had $148.2 million in cash and $459.1 million in debt at the end of June, resulting in a net debt position of $310.9 million.

Delek US's share price fell 1% yesterday to $15.53, giving a market cap of $897 million.

Bethel Finances: Clal Insurance receives offer for US operations

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Even as Nochi Dankner is in advanced talks to sell Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) to Pan-European Permira Funds LLC, the company is in talks to sell its US operations. In a notice to the TASE, Clal Insurance confirmed a "Globes" report that it has received an offer of $312 million for all of Clal US Holdings Inc., which wholly owns Guard Financial Group Inc., which in turn owns Guard Insurance Group Inc.

Clal Insurance acquired Guard Financial Group at a company value of $120 million five years ago; a sale at $312 million reflects a return on investment of 150% in dollar terms, but around 100% in shekel terms, due to the shekel's 20% appreciation against the dollar since the original acquisition.

Clal Insurance said that the offer was from a third party, but sources inform ''Globes'' that it is apparently a foreign company. Clal Insurance announced is also in talks to sell its UK operations, Broadgate Underwriting Ltd., which is syndicated with Lloyds of London.

Clal Insurance's investment in Guard has been successful above and beyond the increase in value; Guard has contributed to Clal's profit every year. If Clal sells both Guard and Broadgate, this will bring its overseas operations to an end.

Clal Insurance is reportedly selling Guard as part of IDB Holding Corp. Ltd. (TASE:IDBH) talks to sell the company to Permira, which apparently is not interested in Clal Insurance's non-Israeli operations, if and when it closes a deal.

When Clal Insurance acquired Guard in 2007, it was in the accident and health insurance business. It has subsequently expanded operations, and is currently licensed to operate in 46 US states. The company's income from premiums rose to NIS 865 million in 2010 from NIS 779 million in 2009 and NIS 771 million in 2008. Guard contributed NIS 123 million to Clal Insurance's profit in 2010, down from NIS 144 million in 2010, by six times the NIS 20 million contribution in 2008.

Clal Insurance's share price rose 3% in morning trading to NIS 80.87, giving a market cap of NIS 4.4 billion.

Bethel Finances: Splits appear in tent protest leadership

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In the midst of tent protest leaders' preparations for Saturday night's massive march, voices are calling for a change in leadership.

Adam Dovzhinsky, one of the tent protesters at Tel Aviv's Rothschild Boulevard, has been on hunger strike for 16 days. He said today, "The protesters are sitting and suffering here. Amid the heat, noise, and bellyaches, more and more people are talking about an alternative leadership. The people going to the press conferences, to the Knesset, and who are in the media front lines do not represent us. They're not even sitting here. A demand has been made to oust the prime minister - a political demand - and that is not a real demand of the people sitting in the tents."

Dovzhinsky is not the only disgruntled demonstrator. Many agree with him, saying that the rising demands and dialogue are made by people with no burning need to end the situation. Tent protesters say that they would also like to see Shas supporters join them. "It isn't clear to us why, until now, social movements like it have not joined us. The moment that happens, we'll have huge power here that no on will be able to withstand," said Dovzhinsky.

Dovzhinsky and his colleagues say that there are similar rumblings at other tent protest sites around the country. "My demands for ending my hunger strike are simple," he says, "I want the prime minister to meet and talk with us, and I want a law passed to cap rent, as in many other places in the world. That's the beginning."

Dovzhinsky adds that he has received no reply to his letter to the Prime Minister's Bureau.

Monday, August 1, 2011

Bethel Finances: Geocartography: Demand for homes plummeting

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An analysis by Geocartography Knowledge CEO Dr. Rina Degani on the eve of the tent protest found signs that the government's recent measures are having a major effect on the real estate market. Demand for homes was 20% lower in July 2011 than in May, without taking into account the effect of the tent protest.

"We expect demand for homes to fall further in August, in view of the growing housing protest," said Degani today. "The people currently in the market are aged 18-34, and far fewer are older than 55. People with a university education are one-third more likely to be seeking a home than other groups. As one might expect, the level of demand for homes rises with the level of income, but the gap between the wealthy and low income-earners has greatly widened, and is now 260%, which indicates that low income-earners, who earn less than the average national salary, are finding it very difficult to buy a home.

Degani added, "New immigrants are very unwilling to buy a home. Interestingly, in the south, Jerusalem and its environs, and in Haifa and the north, demand for homes is higher than in the Sharon and Tel Aviv. This is partly due to the need of young people in the periphery to buy an apartment, whereas some residents in the Sharon, Tel Aviv, and its environs don’t necessary buy an apartment out of need, but to improve their residence or to buy for their children. In contrast to others, they can afford to sit on the fence and wait to what will happen in the market."

Degani said, "The proportion of people seeking better homes is a little less than a third. Demand for better homes is highest among people aged 35-54, the group of parents with children, and is relatively high among secular Jews. Demand for better homes is twice as high among the secular compared with the religious and haredim (ultra-orthodox)."

Bethel Finances: Water prices soar, investment plummets

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Water rates paid by consumers have soared and the Water Authority insists that they reflect costs, but the Central Bureau of Statistics reports investment in developing water infrastructures was 41% less in 2010 than in the two preceding years.

Central Bureau of Statistics figures obtained by the Manufacturers Association of Israel show that NIS 2.5 billion was spent annually on water infrastructures in 2008 and 2009. This investment included construction of desalination plants, but only NIS 1.4 billion was invested in 2010.

"One of the main reasons for establishing the municipal water companies was to boost investment in water infrastructures, after years of neglect. But the Central Bureau of Statistics figures prove that it didn’t happen," Manufacturers Association economics division manager Oren Harambam told "Globes". "In the past few years, we've seen the price of water for the industrial and household sectors soar, even as investment in infrastructures inexplicably fell."

The Water Authority, which supervises the 54 municipal water companies, has constantly insisted that there is no relationship between the price of water and the establishment of the water companies, and that the water companies are rebuilding obsolete infrastructures in any case. Most of the water companies like to claim that they are completed to finance the rebuilding of infrastructures neglected for years by the municipalities.

The Water Authority told "Globes" today that the figures in the Central Bureau of Statistics report reflect how the desalination ventures were set up, and that the 2008-09 figures include the Soreq and Hadera desalination plants. A source at the Water Authority said that the recording would be reviewed.

The Water Authority claims that, in 2010, investment by the water companies increased 30% to NIS 850-900 million. The water companies are now submitting their operational reports for 2010. A partial review of these reports by the Water Authority found that 15 water companies made surplus profit on their income from collections. It estimates these surplus profits at NIS 100 million. The Water Authority defines surplus profit as the difference between the price of water sold to the water companies by Mekorot National Water Company and the variable costs of providing water and sewage services for municipal residents.

The Water Authority says that the reports do not indicate that the price of water, which is uniform nationwide, is too high, because all the other water companies reported losses.

"If, on the basis of these figures, we cut the price of water paid by the public, all the water companies will lose money next year," a senior Water Authority official told "Globes".

The Water Authority is considering what to do in response to the surplus profits, and will submit proposals to an upcoming meeting of the Water Council. Proposals include refunding the profits to the public through deductions on future water bills, allowing municipalities whose water companies are profitable to reap dividends from them, or transferring the profits to loss-making water companies through cross subsidies.

"The idea of such a subsidy is infuriating, but it's on the agenda," said a Water Authority official. "Why should a resident of Netanya, whose municipal water company efficiently collects money from him finance a water company in the Triangle where there is no good payment discipline."

Union of Local Authorities chairman Shlomo Bohbot said in response, "The situation only proves what we've been saying for a long time: the price of water is insane, wrong, and unjustified. The government could cut the price of water by at least 30%."

Bethel Finances: Teva's share price slumps as Laquinimod fails trial

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Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) today announced that the initial results from the Bravo Phase III clinical trial of its oral multiple sclerosis drug, Laquinimod. The trial did not achieve its primary endpoint of reducing the annualized relapse rate.

The trial, the second Phase III trial for Laquinimod was designed to evaluate its efficacy, safety and tolerability, compared with a placebo.

Trading in Teva's shares on the Tel Aviv Stock Exchange was suspended ahead of the announcement. When trading resumed shortly before the close the share price slumped 8% to NIS 147.60.

Sphera Funds Management Ltd. partner Ori Hershkovitz told "Bloomberg," "Laquinimod is dead, if not regulatorily, then commercially,"

Despite the failure Teva Group VP global branded products Prof. Yitzhak Peterburg tried to sound sanguine. He said, "We are encouraged by the overall outcomes achieved in the laquinimod Phase III clinical development program, and plan to submit applications to regulatory authorities in the US and EU. Teva remains committed to the clinical development of laquinimod and is confident that the drug could provide a unique option for the treatment of multiple sclerosis."

Teva chief R&D officer Dr. Ben-Zion Weiner told "Globes" that the trial was not a failure. "A failed trial is a trial in which the drug does not work. Our drug works. The intention of the announcement wasn’t that the drug failed, but that it did not meet its statistical target. There was not a proper balance of patients; there were groups with patients who were in worse shape and groups with patients in better shape. To correct this lack of correlation in patient morbidity, a standard statistical correction was made on previous cases, and the FDA has this correction as part of the analysis plan that Teva submitted to it a long time ago. This correction enables the groups to be balanced in real time. The treatment works, it reduces attacks, but without the statistical correction."

"Globes": So why didn’t you say so in your announcement?

Weiner: "I have no answer to that… Teva says that, as far it's concerned, it did not meet the endpoint but the trial was not a failure. If it were a failure, we would not have submitted an application to the FDA. The drug is safe and has no side effects beyond those in the Allegro trial."

Weiner said, "Ostensibly, we didn’t meet our primary endpoint. But because the patients were randomly divided into three groups, and they did not have the same level of the disease, they were not comparable. In such cases, as we notified the FDA in advance, we use a statistical correction. After the correction, we met the primary endpoint with statistical significance."

In morning trading on Nasdaq, Teva's share price was down 7.53% to $43.13, giving a market cap of $38.7 billion.

The share price of Teva's partner in developing Laquinimod, Sweden's Active Biotech AB (OMX ACTI: Pink Sheets: ATVBF), plummeted 45% on the Stockholm Stock Exchange on the news.

Bethel Finances: Gov't freezes gasoline price for one month

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The government will absorb the higher price for gasoline in August by cutting the excise, under an agreement between Minister of Finance Yuval Steinitz and Minister of National Infrastructures Uzi Landau today.

The price of self-service 95 octane gasoline was due to rise at midnight tonight by NIS 0.31 per liter to NIS 7.53, a near all-time high. However, Steinitz signed a directive cutting the excise - which accounts for 40% of the retail price of gasoline - by the amount of the increase. The directive will be valid until September 1.

During August, the Ministry of National Infrastructures prices committee is due to decide whether to reduce the fuel companies' marketing margin, which currently amounts to NIS 0.70 per liter. Steinitz and Landau agreed that if the committee cannot reach a decision by the end of August, the marketing margin will be cut by NIS 0.15 per liter, and the excise will be cut by the same amount, which will lower the price of gasoline by NIS 0.30 per liter.