ORT: The Value Is There, but It Still Sits in Marks, Dollars, and Patience

Introduction to the Company

At first glance, ORT looks like a small listed company with a cash pool and a few technology investments. That is only partly true. In practice, it is now a hybrid of a small holding company and one modest operating business, Transway, which provides software, maintenance, and back-office systems for smart ticketing in public transportation. That distinction matters, because 2025 proved that the operating layer can improve, but it also showed again that it still does not fully determine common-shareholder economics on its own.

What is working now is Transway. Revenue rose 19% to ILS 5.0 million, gross profit rose 34% to ILS 3.0 million, and segment profit rose 52% to ILS 2.0 million. In the second half, the pace improved further after activity with Top Card resumed. For anyone looking for evidence that ORT is not just a frozen investment shell, this is meaningful: there is a live operating business here, with existing customers, maintenance income, and a gradual shift from hardware toward software and service.

But it is still not a clean story. The active bottleneck is not debt, because there is very little of it. The real bottleneck is the gap between accounting value and accessible value. At year-end 2025, ORT carried its Skai stake at ILS 32.7 million and its stake in the partnership that owns Feldman Ice Cream at ILS 11.1 million, while also holding ILS 40.9 million of deposits and ILS 15.0 million of fintech-fund investments. Yet 2025 still ended with an ILS 11.4 million loss, mainly because of dollar exposure, fair-value marks, and a corporate cost structure that the operating business still cannot carry on its own.

That is why a superficial read can be misleading. You can look at the list of assets and conclude that the value is basically sitting there waiting to be recognized. That is the wrong read. In ORT, you have to separate value that exists in the statements from value that can actually make its way to shareholders. Skai is a private holding valued on a sales multiple. Pagaya is an investment that has started returning cash, but still under tight withdrawal constraints. The Feldman partnership has created real value, but it is still not a broad monetization event. Meanwhile, the stock itself is thinly traded, with a recent daily turnover of only about ILS 10 thousand and negligible short interest. The practical conclusion is straightforward: even if the value is there, the market’s path to pricing it remains slow.

The economic map is better understood through four layers rather than through one income statement:

Events and Triggers

The first trigger: Top Card came back. Activity with it had been paused in 2024, then resumed in 2025 after the parties reached understandings on how to continue the project. That is not a technical detail. In a company where all revenue comes from one small operating activity, a restart like this changes the quality of the entire year. It is visible in the numbers: second-half revenue rose 42% to ILS 2.4 million, and second-half segment profit more than doubled to ILS 910 thousand.

The second trigger: Transway improved, but on a different economic base than in the past. The company explicitly says that technological changes in public transport and the gradual shift away from legacy payment methods reduced the edge it once had in hardware. In its place, the business is now leaning more on software, back office, maintenance, and customer-specific development. That helps margin, but it also suggests the business now has a different ceiling than it once did.

The third trigger: Skai's value was refreshed. The year-end valuation used a 2.6x sales multiple and 2025 revenue of about $128.3 million, putting ORT's stake at $10.24 million, or ILS 32.7 million. On the one hand, this remains the company's main value anchor. On the other, it is not cash, and it is not immune to model risk: the valuation sensitivity shows ORT's holding moving between $9.6 million and $10.9 million across a 2.4x to 2.8x multiple range.

The fourth trigger: Pagaya kept returning cash, but not on terms that remove the friction. The remaining balance fell to $4.2 million after cumulative receipts of $5.9 million, and another $0.8 million came in after year-end. That is clearly positive. At the same time, the fund still controls the pace of withdrawals, the company is openly dissatisfied with that process, and the story has not yet become one of fully accessible capital.

The fifth trigger: 2025 did not deliver a new acquisition, even though management continues to search for control deals and has expanded its search beyond technology. Negotiations to invest in a private company serving the hospitality and food-service equipment market ended in July 2025 without agreement. That says two things at once: the company is genuinely trying to deploy capital, but it still has not proven that intention can become a completed transaction.

The sixth trigger: There was some board refresh in March 2026. Meir Nisenson completed a 9-year term, Niv Ahitov became chairman effective March 16, 2026, and Yaakov Vinokur was classified as an independent director on March 24, 2026. By itself, that does not change valuation. As a secondary trigger, it may matter if it points to a fresher capital-allocation discussion.

The seventh trigger: Even after another loss year, the board approved a further ILS 1.1 million dividend for payment in May 2026. That is a double signal. On one side, it tells the market the balance sheet is not under stress. On the other, it is still another cash outflow before the private-asset layer has been translated into a clear liquidity event.

Efficiency, Profitability and Competition

The core insight here is that the 2025 improvement is real, but it is not the result of a broad operating breakout. It is the result of a small business becoming somewhat better. That difference matters. Revenue rose, gross profit rose faster, and gross margin reached roughly 59.5%. That strongly suggests the shift toward maintenance contracts, back-office work, and targeted software development is producing a better economic mix than commoditized hardware.

In profitability terms, mix mattered more than sheer volume. Management itself explains the improvement through higher sales and a better mix. That fits well with the structural change in the business: less edge in hardware, more weight in software and service, and less dependence on how many end users actually transact through apps. In other words, ORT no longer needs a surge in ticketing volumes to get paid. It is leaning more on the fact that it supplies the software layer, maintenance, and the back office.

The less comfortable point is scale. Even in a good year, ILS 5.0 million of revenue and ILS 2.0 million of segment profit are still not enough to carry more than ILS 4.0 million of unallocated G&A. That may be the most important line in the whole 2025 read: Transway has stopped being the problem, but it has not yet become the solution.

Customer concentration remains very high. Two customers generated all of the company's continuing-operation revenue in 2025, with one contributing 63% and the second 37%. Their identity matters. Afifi is the long-standing installed base. Top Card is the customer that helped bring growth back after the pause in 2024. Beyond revenue, the company says that receivables and contract assets from a major customer fell to 24% at year-end 2025 from 51% a year earlier. That is an improvement in collection concentration, but it is not a fundamental de-risking of the business.

On the supplier side, the picture is more comfortable. ORT says it has no meaningful dependence on any supplier or subcontractor, and no special difficulty in sourcing components needed for service and maintenance, other than ongoing review of critical-part availability as customers ask for longer support periods. That means the current bottleneck is not supply chain. It is demand visibility, project continuity, and the company's ability to remain relevant in a transport system whose payment architecture is changing.

There is also a quality-of-profit point worth noting. R&D expense was ILS 676 thousand, but the company also says another ILS 590 thousand of developer costs tied to customer projects was included in cost of sales. That does not make the gross margin wrong, but it does mean the profitability profile needs to be read with operating context, not only through the gross-profit line.

Cash Flow, Debt and Capital Structure

The right way to read ORT's balance sheet is not through the cash line alone. If you do that, the picture looks far more stressed than it really is: cash and cash equivalents fell from ILS 28.0 million to ILS 4.3 million. But that is incomplete, because a large part of the movement simply went into deposits, which rose from ILS 9.8 million to ILS 40.9 million. In all-in cash-flexibility terms, ORT did not enter 2026 with a funding shortage. It entered with ILS 52.8 million of current assets against ILS 4.9 million of current liabilities and no financial debt.

That is the strong side. The weaker side is that not every current asset should be read as free cash. Short-term fintech investments of ILS 6.6 million are still financial assets exposed to currency, NAV marks, and fund-manager behavior. At the non-current level, there is another ILS 8.4 million of fintech investments. Together, the fintech bucket stood at ILS 15.0 million at year-end 2025, down sharply from ILS 29.7 million at the start of the year after ILS 9.1 million of investment returns and ILS 5.6 million of recognized losses.

Pagaya remains the center of that discussion. The company reports cumulative receipts of $5.9 million through year-end 2025 and another $808 thousand after the balance-sheet date. At the same time, it still describes a staged withdrawal mechanism, dedicated runoff vehicles, a forced withdrawal, and ongoing consideration of legal steps. This is an asset that is coming home, but on the fund's timetable, not on ORT's.

Currency exposure also remains a major line-item driver, even after it declined. At year-end 2025, ORT had ILS 58.3 million of dollar-denominated assets against ILS 43.6 million of non-linked assets and liabilities. Management's own sensitivity analysis shows that a 10% drop in the dollar would cut pre-tax profit and equity by about ILS 5.8 million. That is not a footnote. It is a reporting engine. In practice, the falling dollar hit 2025 profit and loss by ILS 8.7 million.

Even within the private holdings, the gap between business economics and shareholder reporting is visible. The Skai position fell in shekel terms mainly because of FX rather than because of a major drop in dollar value: the carrying value moved from ILS 37.7 million to ILS 32.7 million, driven mostly by ILS 4.85 million of FX losses and only ILS 304 thousand of negative revaluation. That sharpens an easy-to-miss point: in the near term, the dollar can move ORT's reported result more than the operating progress of the underlying asset itself.

The Feldman partnership shows the other side of the picture. This is a non-core holding, but one that has created both accounting and cash value. ORT invested ILS 3.3 million, received ILS 4.7 million of dividends and expense reimbursements through year-end 2025, and still carried ILS 11.1 million of fair value at year-end. This is exactly the sort of asset where value has not been only theoretical. But even here, absent a broader monetization event, it still is not enough to redefine the whole shareholder story.

In that sense, 2025 was a bridge year. There is no debt wall, no covenant squeeze, no refinancing event hanging over the company. But there is still no proof that the balance sheet can create accessible value faster than FX, marks, overhead, and dividends chip away at the cushion.

Outlook

This is the most important section in ORT, because 2026 will be judged less by revenue and more by whether the company can turn marked value into something that narrows the chronic gap between asset value and shareholder access. Before going deeper, five non-obvious takeaways are worth fixing in place.

First, 2025 was not a breakout year. It was a year of partial stabilization. Without another Volex-style write-off, with better Transway numbers, and with continued cash coming back from Pagaya, the report looks far healthier than 2024. But the loss did not disappear. The pressure simply moved from destroyed capital toward FX, marks, and overhead.

Second, Skai's valuation may be less volatile than ORT's equity story can make it look, but it still does not fully control the outcome. The sensitivity table shows that moving the multiple from 2.6x to 2.4x would cut ORT's holding value by about $648 thousand, roughly ILS 2.1 million. By contrast, the FX hit on Skai alone in 2025 was about ILS 4.85 million. In the near term, currency still matters more than the multiple.

Third, Transway improves the story, but does not replace it. Even if the business sustains its current run rate, it still does not cover more than ILS 4 million of listed-company overhead. For the shareholder thesis to strengthen meaningfully, either the operating business must become materially larger, or the investment layer must start working for shareholders in a much more visible way.

Fourth, management is still hunting for control deals and has broadened the search beyond tech. That matters more than it seems. It is effectively an admission that tech opportunities alone may not be enough. On one side, that broadens ORT's capital-allocation runway. On the other, it raises execution risk and the risk of strategic drift.

Fifth, the March 2026 governance refresh may not be accidental, but it is not enough on its own. A chairman change, the addition of an independent director, and the committee-level classification of that director are modest positives. Until they translate into different capital-allocation evidence, the market is unlikely to pay up for governance optics alone.

2026 looks like a bridge year, not a resolution year

The company does not provide a hard numeric outlook, which fits its structure. But from the strategy section, the forward-looking discussion, and the post-balance-sheet events, the direction is fairly clear: 2026 is a bridge between two models. On one side sits a company with cash, deposits, and private holdings. On the other sits a company trying to prove it can redeploy capital in a way that creates more directly accessible value.

That means the next 2 to 4 quarters really come down to four checkpoints:

1. Transway needs to show that 2025 was not just a rebound year. If Top Card remains active, Afifi stays stable, and the software-and-maintenance mix holds, the market can start assigning more weight to this layer.
2. Pagaya needs to keep turning into real cash. If 2026 looks like another year of orderly releases, the liquidity story improves. If not, the investment remains a stain on quality-of-cash perceptions.
3. Management needs to show either a concrete new deal or clear capital discipline. Not doing a deal can be the right call, but only if it is obvious the company is not forcing deployment.
4. Skai and Pelco need to hold their value, and ideally improve it. Not because those marks solve everything, but because in ORT every move in the private-holdings layer feeds straight into the equity story.

What the market may miss on first read

The market can easily look at the debt-free balance sheet, the deposit base, and the formal Skai valuation and conclude that this is mainly a patience story. That is only half true. The other half is that as long as Transway does not fund the listed-company layer, and as long as most of the value sits in private or slowly releasing assets, time itself becomes an economic variable. Every year without a clear capital event is another year in which FX, overhead, and market indifference can eat into the gap.

What could improve the reading quickly

There are three developments that could improve the interpretation fairly quickly. The first is another solid year in Transway, proving the strong second half of 2025 was not temporary. The second is continued cash release from Pagaya, bringing that bucket down to a clearly less material level. The third is a concrete capital event around an existing holding or a new deal that actually looks attractive. Without one of those, 2026 will remain a waiting year.

The main caveat

It is important not to confuse time with resolution. The absence of debt gives ORT time. It does not automatically give it a thesis. For the thesis to strengthen, that time has to be used in two directions at once: preserving the Transway improvement, and making the investment layer work for shareholders rather than merely for the fair-value line.

Risks

The first major risk is FX, and it is material. At year-end 2025, the company still carried ILS 58.3 million of dollar-linked assets, and management shows a pre-tax profit sensitivity of ILS 5.8 million to a 10% decline in the dollar. In 2025, that was not theoretical. The falling dollar already cost the P&L ILS 8.7 million. Anyone trying to read ORT only through Skai is missing that reported earnings remain highly exposed to currency.

The second risk is fair value itself. The auditors explicitly flagged the fair-value measurement of non-traded investments as a key audit matter, and the non-traded fair-value portfolio stood at ILS 58.8 million. That is not a technical comment. It means the company materially depends on models, NAV-based marks, and external valuations. That is not a reason to dismiss the carrying values, but it is a reason not to treat them as equivalent to cash.

The third risk is liquidity quality inside the alternative-investment bucket. Pagaya is moving in the right direction in terms of remaining balance, but the process is still slow and contested. The residual equity component in the Viola-managed funds is smaller, but still not the sort of asset one should read like a plain bank deposit.

The fourth risk is operating concentration. Transway still depends on just two customers, and in a company with less than ILS 5 million of continuing revenue, any delay, reset, or customer-side issue quickly becomes a meaningful event. The 2025 improvement reduced the severity of dependence on a single customer, but it did not solve the underlying concentration problem.

The fifth risk is capital allocation. ORT clearly wants to pursue control investments and is now willing to look beyond technology. That may ultimately create value, but it also creates room for mistakes. The failed negotiation that stretched into 2025 is a useful reminder that there is a long distance between an interesting target and a good transaction. In a company of this size, one weak deal could undo years of patience.

The sixth risk is governance and persistent discount. The CEO is the controlling shareholder's daughter, the headquarters is leased from a company under his control, and 2025 payments to the controlling shareholder and relatives totaled ILS 959 thousand, alongside ILS 247 thousand to related companies. That does not automatically imply a governance failure, but it does reinforce the reason why the market often keeps a discount on small holding-company structures.

Conclusions

ORT ended 2025 in a better place than where it ended 2024. Transway looks healthier, the balance sheet is still debt-free, and Pagaya is still shrinking. But the core shareholder thesis has not fully changed: the value is there, but a large part of it is still not directly accessible. What is likely to drive the market's short-to-medium-term interpretation is not whether ORT owns assets, but whether those assets are moving toward cash, recurring earnings, or a concrete capital event.

Current thesis in one line: ORT is a small holding company with an improving operating asset, but until it narrows the gap between marked value and accessible value, the operating improvement will remain secondary to the capital-structure story.

What clearly changed versus 2024 is that this is no longer a write-off-and-damage year like the Volex period. It is a stabilization year, with better Transway numbers and continued cash back from Pagaya. What did not fully change is that the company still has not found a large enough engine, or a sharp enough capital event, to close the gap between net asset value and common-shareholder economics.

The strongest counter-thesis is that the market is simply missing a debt-free balance sheet with ILS 45.2 million of cash and deposits, ILS 32.7 million in Skai, ILS 11.1 million in the Feldman partnership, and ILS 15.0 million in fintech investments. That is an intelligent argument. The problem is that it still assumes time alone will solve the accessibility question.

What could change market interpretation in the near term is a combination of three things: continued cash releases from Pagaya, another period showing that Transway can hold the second-half 2025 pace, and a concrete capital event around an existing holding or a new deal that actually looks value-creative. Without that, ORT may continue to trade as an interesting balance sheet with a monetization mechanism that is still too slow.

Why does this matter? Because ORT is a very clear example of the gap between value created in the statements and value that is truly reachable for common shareholders. Until that gap closes, even a better report does not automatically become a cleaner thesis.

What has to happen over the next 2 to 4 quarters is fairly clear: Transway needs to sustain its improvement, Pagaya needs to keep releasing cash, and management needs to show that the balance sheet can do something concrete beyond waiting. What would weaken the thesis is another year in which FX, overhead, and delay eat into value faster than ORT can surface it.