Lahav 2025: The value is already there, but the real test is getting cash to the parent

Introduction to the Company

At first glance Lahav looks like a diversified group. The cleaner way to read it is as a holding company with four main value layers and one optional layer on top. The first layer is German income-producing real estate, with 127 assets at the end of 2025, average occupancy of 98%, and about 41% LTV according to the company presentation. The second is Delek Nechasim, which is now public. The third is Delek Israel. The fourth is Mifaat. The fifth, and more optional, layer is Prime and the energy assets around it. Anyone looking only at the 2025 bottom line and seeing about NIS 225 million of net profit and around NIS 1.349 billion of equity could miss the central point: Lahav’s value is spread across several layers, and only part of it sits at the parent level today.

What is working right now? Several engines at once. The German real-estate business is no longer leaning mainly on revaluation gains. Revenue in the German segment rose to NIS 104.5 million, while fair-value gains in Germany were only NIS 4.6 million. In other words, the profit there is now driven mainly by NOI and a larger portfolio, not by a one-off jump in valuation. Mifaat showed an even clearer operating step-up: about NIS 494.5 million of revenue, roughly NIS 74.1 million of EBITDA, and around NIS 37.1 million of net profit on a 100% basis. Delek Nechasim and Delek Israel are contributing positively through the equity method. Put simply, Lahav is not sitting on one story. It is sitting on several engines that are all doing real work.

What is still not clean is exactly what separates a holding company from an operating company. At the parent-company level, Lahav employed only 8 people at the end of 2025. That means metrics such as revenue per employee are almost meaningless at the parent level. The real economics sit inside the subsidiaries and associates, and the move from consolidated profit to cash that is actually reachable by common shareholders depends on dividends, realizations, partner introductions, capital raises, and debt refinancing. That is Lahav’s active bottleneck today. The issue is not asset quality. The issue is whether value created below the parent can actually move upward.

That also explains why 2025 matters so much. This was not just a year of growth. It was a year in which the structure changed. Delek Nechasim went public in July 2025. The merger between Lahav Green Energy and Prime closed in August 2025, and Lahav stopped fully consolidating Lahav Green Energy. In 2026 more value-unlocking layers were added: a potential Leumi Partners investment into Delek Israel, a potential Mizrahi Invest investment into Mifaat, and Delek Israel’s move around HOT Mobile. All of those could unlock value. None of them was fully closed yet.

From a market-screening perspective, this is no longer a tiny niche stock. In its March 2026 presentation the company showed a market cap of about NIS 2.97 billion. At the same time, the short-interest data tells a more mixed story: on March 27, 2026, short interest was 2.13% of float and SIR was 6.87, above sector averages of 1.12% and 3.138 respectively. That is not extreme short interest, but it is a sign that the market is already reading Lahav through a complexity lens rather than just through the headline of diversification.

The short economic map looks like this:

Events and Triggers

Two 2025 moves changed how the group should be read

The first trigger: Delek Nechasim became a public company in July 2025. It raised about NIS 173 million gross, and Lahav’s holding dropped to 30.56%. That improves price discovery and surfaces external value, but it also pushes part of the story into the capital-markets arena of a subsidiary rather than only the parent.

The second trigger: In August 2025 the merger of Lahav Green Energy into Prime was completed through a share exchange. Strategically the move makes sense because it concentrates the solar-energy activity under one platform. Analytically it also makes the report harder to read. Until August part of that activity was still fully consolidated. After that point it moves more clearly into the equity-accounted line. That means 2025 is a year in which a flat read of revenue and expense lines can easily mislead.

2026 has already opened three doors to value release, but none is fully closed yet

The third trigger: On January 19, 2026, Delek Israel signed a non-binding memorandum of understanding to acquire HOT Mobile at an equity valuation of about NIS 1.88 billion for HOT Mobile, subject to adjustments. On March 19, 2026, the term of the memorandum was extended through March 31, 2026. This could change Delek Israel’s profile from a fuel-and-retail operator into a broader consumer platform. It also introduces execution, regulatory, and integration risk.

The fourth trigger: On February 11, 2026, a non-binding principles document was signed under which Leumi Partners would invest about NIS 213 million into Delek Israel at a pre-money valuation of NIS 850 million and a post-money valuation of NIS 1.063 billion. On March 23, 2026, the period was extended through April 15, 2026, with an automatic extension to April 30, 2026 unless otherwise agreed. What does this improve? It gives Delek Israel an external price point and fresh capital. What remains open? Closing itself, the final terms, and whether the capital arrives while the company is also examining another large strategic transaction.

The fifth trigger: On January 26, 2026, a non-binding memorandum was signed for Mizrahi Invest to invest in Mifaat. Under the principles disclosed, Mizrahi would invest about NIS 98.8 million for 15% of Mifaat at a pre-money valuation of NIS 560 million, with an option to increase to 20%. This is a strong trigger because it could move Mifaat from being a good operating asset to being an asset with an external valuation anchor. It also shows that Lahav’s management is already trying to convert private activity into more liquid value.

Prime received a lot of good news, but most of it still sits in the build-out layer

The sixth trigger: In January 2026 Prime signed a letter of intent for about NIS 1.56 billion of financing from Mizrahi Tefahot and Bank Hapoalim for 23 to 25 projects including about 160 MW of solar and around 1,000 MWh of storage. This came on top of prior frameworks of about NIS 667 million, so the company was already speaking about roughly NIS 2.227 billion of dual-use financing frameworks.

The seventh trigger: In February 2026 Prime signed a non-binding memorandum with Delek Nechasim to establish storage facilities with potential capacity of up to about 1.5 GWh on fuel-station and commercial sites. At full build-out Prime spoke about roughly NIS 930 million of investment, about NIS 227 million of revenue and around NIS 107 million of EBITDA in the first full year of operation. That is an interesting option. As of the reporting context, it is still an option.

The eighth trigger: In March 2026 a binding framework agreement was signed with Edeka in Germany, initially for the construction and acquisition of photovoltaic systems on the roofs of 92 supermarkets. Stage A involves about 12.7 MW and investment of roughly EUR 11.4 million, with expected NOI of about EUR 1.7 million. The company also disclosed a non-binding Stage B around another 300 properties. This already sounds like a real operating move, not just a presentation story.

The table below summarizes the main events:

Efficiency, Profitability and Competition

The central story of 2025 is not just growth. It is the gap between a year that looks very strong at the consolidated level and a year that becomes less clean once profit quality is unpacked. Revenue rose to NIS 794.2 million from NIS 653.3 million in 2024, and profit before tax increased to NIS 231.1 million from NIS 163.5 million. Net profit reached NIS 225.0 million. But on a quarterly basis, more than half of the annual net profit was already booked in the third quarter, and the fourth quarter ended with only NIS 41.0 million of net profit versus NIS 60.5 million in the fourth quarter of 2024.

The reason matters. In the third quarter the company recorded NIS 74.8 million of other income. Anyone trying to project 2025 forward as a straight run-rate is therefore taking unnecessary analytical risk. The improvement is real, but it is not cleanly distributed across the year.

Germany now looks like a base, not a revaluation trick

This is one of the more important findings in the report. The German segment generated NIS 104.5 million of revenue in 2025, compared with NIS 98.2 million in 2024. Fair-value gains in Germany were only NIS 4.6 million, while segment profit was NIS 104.8 million. That means the German segment was not riding on an accounting jump this year. It was riding on a bigger portfolio and real NOI.

The presentation reinforces that view. At the end of 2025 the company showed German portfolio value of about NIS 1.7 billion attributable to Lahav, about NIS 79 million of NOI attributable to Lahav, an average nominal rate of roughly 3.2% fixed in euro, and 98% occupancy. During 2025 the company acquired 37 assets and sold two assets. This is no longer a pilot activity. It is a platform.

The yellow flag is that Lahav is still operating in a model of acquisition, improvement, refinancing, and at times sale. So even its most stable value base remains operational and financed, not passive.

Mifaat now looks like a real operating business, not just a holding

If one looks for the cleanest operating engine in 2025, it is probably Mifaat. On a 100% basis, Mifaat revenue rose from NIS 389.0 million to NIS 494.5 million. EBITDA increased from NIS 42.7 million to NIS 74.1 million, and net profit moved from NIS 14.6 million to NIS 37.1 million. That is a sharp improvement, and it is no coincidence that the company is already trying to bring in a financial partner.

The more interesting part is that the platform does not yet appear fully utilized. The presentation states a capacity of about 3,000 tons of waste per day at the transfer station after the upgrade, against current utilization of around 1,500 tons per day. In other words, even after the 2025 jump, the engine may not have exhausted itself yet.

The equity-accounted layer is no longer one uniform story

Another point that is easy to miss: a large share of Lahav’s economics runs through the equity method, but not all holdings are pulling in the same direction. Lahav’s share of profits from investees fell to NIS 133.9 million in 2025 from NIS 184.0 million in 2024. Inside that line the picture is already split: Germany contributed about NIS 94.2 million, Delek Nechasim about NIS 30.7 million, and Delek Israel about NIS 19.4 million, while Prime reduced the total by about NIS 14.8 million.

That is material because it means investors can no longer talk about the portfolio as if it were one block. The real-estate and fuel layers are supportive. The energy layer is still consuming patience.

The market is already pricing the holdings unevenly

The numbers here are sharp. At the end of 2025 the carrying value of Lahav’s stake in Delek Nechasim was about NIS 337.4 million, while the market value of that stake was around NIS 278.8 million. In Prime the picture was the opposite: the carrying value of Lahav’s stake was about NIS 140.7 million, while the market value of the stake was around NIS 285.7 million.

What does that mean? The market is no longer taking every holding at book value. Some holdings are being marked down and some are receiving option premium. That is why the NAV discussion cannot remain generic. Lahav now has to show where the books are conservative, where they may be too optimistic, and how any of that value is meant to move up the chain.

Cash Flow, Debt and Capital Structure

For Lahav, the more relevant cash lens is all-in cash flexibility. It is not enough to ask whether the businesses underneath know how to generate cash. The real question is how much is left after the actual uses of cash within a holding-company structure.

At the consolidated level the company reported positive cash flow from operating activities of NIS 49.2 million, compared with NIS 25.3 million in 2024. That is a real improvement. But the overall cash picture was weaker: negative investing cash flow of NIS 126.4 million and negative financing cash flow of NIS 40.0 million. Cash and cash equivalents fell to NIS 236.9 million from NIS 355.7 million a year earlier.

The more important point sits at the parent level. There, operating cash flow was negative NIS 14.1 million, and the board had to explain why this did not amount to a warning sign. The explanation is reasonable, but it is also revealing: under the current structure, receipts sourced from shareholder-loan repayments and interest income from investees are classified under financing activities, while head-office expenses are recorded in operating activities. So the negative solo operating cash flow does not necessarily signal an immediate liquidity problem, but it does show that the path from subsidiary profitability to free cash at the parent is not direct.

The core cash table looks like this:

Debt looks manageable, but the collateral sits exactly on the key assets

In December 2025 Lahav expanded its Bank Leumi credit by another NIS 60 million, bringing total credit principal from the bank to about NIS 250.8 million for a 9 to 10 year term. The average rate on those bank loans was 5.37%, with an effective rate of 5.50%.

From a covenant perspective the company is not near the wall. The debt coverage ratio stood at 0.37 against a ceiling of 1.5, and the debt service ratio at 1.52 against a floor of 1.1. That is comfortable headroom. But the market also needs to look at the other side: all company shares in Delek Israel and Delek Nechasim are pledged to Bank Leumi. So even if value is being created there, a meaningful part of the infrastructure that gives the parent access to that value is already serving as collateral for parent-level financing.

That is exactly Lahav’s 2026 dilemma. It has assets, reasonable flexibility, liquidity, and no immediate covenant squeeze. But the core value is already tied into debt and financing mechanisms, which means the real question is not only what the assets are worth but on what terms, in what time frame, and at which corporate layer that value can be converted into real flexibility.

Germany looks healthier on the financing side

In German real estate the financing structure looks more conservative. The presentation shows about 41% LTV and an average nominal rate of roughly 3.2% fixed in euro, and the annual report emphasizes that the property-level loans are generally non-recourse and do not include asset-value covenants. That matters because it means a meaningful part of the German financing risk stays at asset level and does not automatically climb to the parent.

Outlook and Forward View

Four non-obvious findings should frame 2026:

• 2025 already created value, but not in a clean straight line. More than half of annual net profit was booked in an unusually strong third quarter.
• Germany and Mifaat already look like operating engines. Prime still does not.
• Even with debt under control, the parent remains dependent on realizations, dividends, new partners, and market pricing in the holdings underneath.
• The three major value-release moves at the start of 2026, Leumi Partners in Delek Israel, Mizrahi in Mifaat, and HOT Mobile through Delek Israel, are still not fully binding.

This is a proof year, not a harvest year

If 2026 needs a label, it is a proof year. Not because the portfolio is weak, but because it is already large and diversified enough that the key question has shifted from growth to monetization. Lahav has largely done the build-out phase. It now has to show that the build-out can produce price, cash, or financing on good terms.

What has to happen at Delek Israel and Mifaat

At Delek Israel the market is waiting for two things at once: whether Leumi Partners actually comes in at the valuation set out in the principles document, and whether the HOT Mobile move turns from a reviewed transaction into a closed one. If only one of those happens, that would still be a positive signal. A cleaner read, however, would require evidence that Delek Israel has both an external price anchor and a strategic path that is actually tightening into execution.

At Mifaat the story is simpler. The company has already proven a sharp operating improvement. The next step is to see whether an external partner is actually willing to put money in at the disclosed valuation and, if so, whether Lahav uses that event to strengthen liquidity, prepare for a future IPO, or keep scaling the platform.

What has to happen at Prime

This is where the picture gets more complicated. On one side, Prime entered 2026 with financing frameworks, BESS procurement, a memorandum with Delek Nechasim, and the Edeka agreement. On the other side, at the end of 2025 it still posted a net loss of NIS 33.85 million, and Lahav’s share of that loss was about NIS 14.8 million. So the market may be impressed by the pipeline, but it still has not received proof of a mature cash path.

That makes the Prime test over the next 2 to 4 quarters something more demanding than signing another memorandum. The real test is connection pace, construction pace, equipment cost, use of financing frameworks, and the ability to move from the language of potential into the language of commercial operation.

What could change the market read in the near term

The closest positive trigger is a binding close on one of the external value transactions, especially Leumi at Delek Israel or Mizrahi at Mifaat. The closest negative trigger is continued extensions without closing, or additional Prime backlog that keeps growing faster than actual commercialization. In both directions, the market is unlikely to change its view because of another attractive slide. It is more likely to change its view when principles and exclusivity turn into contracts and cash.

Risks

The first risk is execution risk. The three main value moves of 2026 still rest, in the report and the surrounding local evidence, on non-binding memoranda or principles documents. Lahav cannot build a clean thesis on cash that has not yet arrived.

The second risk is access-to-value risk. Even if the assets themselves are good, much of the value sits in associates or joint ventures. That is not the same layer as free cash at the parent. The pledge of all Delek Israel and Delek Nechasim shares in favor of Bank Leumi strengthens this point.

The third risk is Prime execution risk. The requirement to order at least 1 GWh of storage systems during 2026, alongside large financing frameworks and a broad dual-use pipeline, increases the construction and execution burden. That can create a step-up. It can also create strain.

The fourth risk is currency and translation risk. A meaningful part of the activity and asset base is in Germany, and the report already shows that translation effects from foreign operations can move total comprehensive income materially. That does not necessarily damage the economics of the assets themselves, but it does affect how the year looks in reported numbers.

The fifth risk sits in Delek Israel. The report states that material claims were filed against Delek Israel and companies held by it, in amounts that may reach hundreds of millions of shekels, and in some cases Delek Israel’s management cannot currently estimate the outcome. Delek Israel’s auditors included an emphasis paragraph on this matter. This is not the core Lahav thesis, but it is clearly a warning light that should stay in view.

The sixth risk is already a market risk. Short interest in the stock rose sharply within a few weeks. On March 27, 2026, short interest stood at 2.13% of float and SIR at 6.87, versus near-negligible levels at the start of January. That is not extreme short interest, but it does mean the market is starting to test the company through the lens of execution and value conversion rather than just through a growth narrative.

Conclusions

Lahav ended 2025 as a stronger holding company than it was at the start of the year. Germany looks stable, Mifaat now looks like a genuine operating business, Delek Nechasim has a market, and Delek Israel carries strategic optionality. But this is still not a clean story, because the parent itself has not yet demonstrated a simple path to cash, and too much of the 2026 value story still depends on transactions that have not closed.

The current thesis in one line: Lahav has already built a better and more diversified portfolio, but until it shows that this value can move up to the parent, the market is likely to keep giving it only partial credit.

What changed versus the older way of reading Lahav is that this is now less a portfolio-expansion story and more a story of monetization, external pricing, and access to capital. The strongest counter-thesis is that the portfolio is already good and diversified enough for the market to close the gap even without one major realization move. That is an intelligent counter-thesis. Its problem is timing. Markets usually do not pay in advance for value that has not yet found its route upward.

The scorecard:

What could change the market interpretation over the near to medium term? A binding close on the Leumi deal at Delek Israel or the Mizrahi deal at Mifaat, real progress on HOT Mobile, and proof that Prime is moving from a chain of memoranda into a path of construction and commercialization. What would weaken the thesis? More extensions, more backlog, and more external-value stories that never actually close. Why does this matter? Because in Lahav the gap between value created and value accessible to common shareholders is the whole story.