Gaon Group: What the Pneumatic Waste Platform Is Really Worth After the Two Ramat Gan Wins
The two Ramat Gan wins turn Gaon Group's pneumatic-waste activity into a real municipal platform with a combined base consideration of NIS 218 million, but only NIS 46 million sits in the planning-and-construction phase. Most of the value still depends on start-work orders, the pace of neighborhood development, and an equal-share joint venture whose exact economics are not disclosed.
The main article already argued that the pneumatic systems are not a side note inside Gaon Group, but a backlog layer that can change how the planning-and-execution business should be read. This follow-up isolates a narrower and more important question: after the two Ramat Gan wins, what is this platform actually worth, and what is still too early to price as if it were already locked in.
The right distinction here is between category validation and accessible value. The two wins prove that the company is no longer merely trying to enter a new niche. It has built a real municipal foothold with an international technology partner and with two projects in the same city. At the same time, the same filings show the other side of the story: most of the value is still long-dated, part of the economics sits inside an equal-share joint venture, and the second project has not yet reached the same execution stage as the first one.
So the correct reading is neither to dismiss the story nor to capitalize the full NIS 218 million as if it were already usable value. The platform is real, but at this stage it is worth more as proof of capability, future backlog, and the right to pursue additional tenders, and less as an immediate cash engine.
What The Two Wins Actually Prove
The company states that in 2024 and 2025 it entered pneumatic waste projects together with ENVAC through an equal-share joint venture. By the date of the annual report it already had two wins from the Ramat Gan municipality, and it also says explicitly that it intends to pursue more tenders and expand this field inside the group. This is no longer a feasibility test. It is the start of a platform.
In numbers, the first Ramat Gan project carries base consideration of about NIS 156 million, while the second project in TAML 1038 carries base consideration of about NIS 62 million. Together that is NIS 218 million before VAT, and before the municipality's option to expand the second project to an adjacent area, a move that could add up to about 30% to the second project's consideration, or up to roughly NIS 18.6 million more. As a scale marker, the entire planning-and-execution segment reported NIS 96.8 million of external revenue in 2025, so the two wins alone are 2.25 times that segment's full-year revenue.
This chart shows why the market cannot easily ignore the issue. The two Ramat Gan wins already create a nominal number that is very large relative to the current recognition pace of the segment. The backlog movement reinforces that read: segment backlog stood at NIS 306 million at year-end 2025, and at about NIS 368 million near publication of the annual report. The gap, NIS 62 million, almost exactly matches the base value of the second project. That is a strong indication that the post-balance-sheet backlog headline was driven mainly by the new win rather than by a sudden acceleration in cash conversion from the first project.
Where The Nominal Value Really Sits
The easiest mistake is to read the NIS 218 million as one block. The phase split of the two projects shows a very different picture. Out of the combined base amount, about NIS 46 million belongs to planning and construction, about NIS 145 million belongs to building connections, and about NIS 27 million belongs to operation and maintenance. In other words, only about one fifth of the nominal value sits in the relatively near execution phase. Two thirds sit in the connection layer, which is spread over about 12 years according to the pace of neighborhood development. The remainder sits in operation and maintenance, which begins only after the construction stage is completed.
That split is the core point. It shows that the platform is not built mainly from a classic EPC-like design-and-build segment, but from a long exposure to the pace of urban development and building connections. That is why the nominal value is high, but the pace at which it can turn into revenue, margin, and cash is much slower than the headline suggests.
| Project | Base consideration | Planning and construction | Building connections | Operation and maintenance | Current status | What is still open |
|---|---|---|---|---|---|---|
| Tel Hashomer South and Ramat Efal South | NIS 156 million | NIS 28 million | NIS 115 million | NIS 13 million | Start-work order received and work has begun | Permit timing, pace of neighborhood development, and actual conversion of building connections into revenue |
| TAML 1038 | NIS 62 million | NIS 18 million | NIS 30 million | NIS 14 million | Tender win announced in February 2026 | No start-work order yet, and receipt depends on conditions that are partly outside the company's control |
Here too, the gap between the two projects matters more than the combined total. The first project has already crossed from win to execution. The second is still at the stage of a win without a start-work order. There is no reason to price both projects on the same maturity curve.
Why NIS 218 Million Is Not NIS 218 Million Of Accessible Value
The first reason is the joint-venture layer. The company explicitly defines the pneumatic activity as being carried out together with ENVAC in an equal-share joint venture. It also splits responsibilities: the technology partner is mainly responsible for design, specification, setup of the technological system, and supply of equipment, while Gaon is mainly responsible for construction works, pipe supply, pipe jacking, and relevant procurement. So the NIS 218 million is the scale of the projects, not a disclosure of Gaon's precise economic share inside them. The filings do not disclose what Gaon's revenue share will be, what its margin share will be, or how the economics are divided inside the venture.
That is a critical point. Until there is disclosure on revenue split or margin structure, the contract sum cannot be translated directly into value attributable to Gaon's shareholders. The headline proves activity. It does not yet prove how much of it sits with Gaon itself after the technology partner layer, the equipment supply, and the execution costs.
The second reason is the payment and execution profile. In both projects, consideration is to be paid according to the progress of the works, and the company notes that in this segment customers are often government, municipal, or quasi-government bodies that tend to require bank guarantees and retain up to 5% of consideration. At the same time, the entire field is exposed to permits, statutory approvals, infrastructure coordination, safety requirements, regulatory changes, and supply-chain delays. So even when backlog is real, the path from backlog to cash is not short.
The third reason is that the company itself says one of the critical success factors in this planning-and-execution field is strong financial strength that allows heavy working-capital investment. That is an important signal between the lines. Anyone who reads the two wins only as a backlog story misses that this business also requires guarantee capacity, bridge funding, and cash patience. The pneumatic platform can become a value engine, but it can also be an engine that asks for more working capital before it gives value back.
The maturity gap between the two projects sharpens the point. In the first project the company had already received the start-work order and begun execution. In the second project, in the February 18, 2026 immediate report, the company states explicitly that it had not yet received the start-work order and that receipt depends on conditions that are partly outside the company's control. That is exactly the line between nominal value and accessible value. The first project has crossed an important certainty threshold. The second one has not.
The possible expansion of the second project into area KA 305 should also be read carefully. The upside is real, but it is subject to the municipality's discretion and to a planning process for expanded building rights. So it is positive optionality, not part of the base case.
What Has To Happen Before The Platform Becomes Value The Market Can Price
The first test is operational. The first project needs to move from a start-work order to visible execution milestones in the numbers, not only in a contract headline. Until there is proof that construction is genuinely advancing and that building connections are starting to line up with the underlying assumptions, the largest part of the value remains theoretical.
The second test is both financial and execution-based. The second project needs to receive its start-work order and move from a win into actual execution. Until that happens, the win adds backlog, but not the level of certainty the market usually wants before assigning fuller value.
The third test is disclosure quality. If the company wants the market to see not only backlog but a platform, it will eventually have to show what this economics layer looks like at Gaon level: how much revenue has been recognized, what the margin quality looks like, how much working capital is required, and how the joint venture translates project scale into public-company economics. Without that, the value remains mostly the value of a promise rather than the value of demonstrated realization.
That is also the right label for the coming year. This is not yet a full harvest year for the platform. It is a proof year. The platform already exists, but it still has to move from three marks on paper to three marks in the field: execution, start-work orders, and measurable economic recognition.
Bottom Line
The two Ramat Gan wins changed the question. The question is no longer whether Gaon Group can enter pneumatic waste infrastructure. It is already in the field, with a global technology partner, with two municipal wins, and with combined base value of NIS 218 million.
But that is still not proof that the NIS 218 million is worth NIS 218 million of accessible value. Most of the amount sits in building connections and maintenance over many years, part of the economics sits inside an equal-share joint venture, and the second project is still waiting for a start-work order. So the platform's real value today is higher than what could have been assigned to it before the first win, but materially lower than the nominal figure a superficial reading of the contracts might imply.
The thesis in one line now is this: Gaon's pneumatic platform has already been validated as a win platform, but not yet as a realization platform, so its main value today is foothold and future backlog rather than near-term cash or clear, disclosed economics at shareholder level.
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