Supergas Power In 2025: Electricity Is Scaling, But LPG Still Funds The Transition

Getting To Know The Company

Supergas Power is no longer read correctly if you look at it only as a legacy LPG distributor, but it is also not yet a clean electricity story. Economically, it now sits on three very different engines: LPG, which still carries most of the assets and most of the proven operating profit; natural gas and cogeneration, which add a second, relatively stable profit layer; and electricity, which is growing very fast but still has not crossed into proven economics. That is exactly what a superficial reading can miss when it sees NIS 1.02 billion of revenue, 19% growth, and a positive fourth quarter.

What is working now is clear enough. The electricity segment almost doubled revenue to NIS 380.3 million, cash flow from operations rose to NIS 86.1 million from only NIS 14.0 million a year earlier, and the efficiency plan approved in late 2024 already pushed general and administrative expenses down materially. But the active bottleneck needs to be named directly: the constraint is not growth, but the quality of growth. Electricity still ended 2025 with a gross loss of NIS 0.6 million and an operating loss of NIS 16.6 million. In other words, Supergas Power is scaling quickly in the very segment where it is still not making money, and it is using older profit pools to fund that scale-up.

The group is also broader than a single electricity headline suggests. In LPG it serves about 400,000 private customers and about 5,000 business and public customers, mainly including the Ministry of Defense. In natural gas and cogeneration it supplies compressed natural gas to about 1,000 buses and trucks, holds agreements for electricity and thermal energy totaling about 60 MW, and already operates cogeneration stations with aggregate capacity of about 33 MW. At year-end 2025 the group employed about 350 workers, excluding manpower employees. This is already a broad energy platform, not a small niche operator.

There is another important point below the consolidated statements. The company shows stronger operating cash flow, about NIS 375 million of unused short-term credit lines, and comfortable covenant compliance. Even so, at the solo parent-company level it ended the year with only NIS 0.5 million of cash, against NIS 150 million of commercial paper and NIS 55.8 million of current bond maturities. The balancing asset is a short-term receivable from a held company of NIS 210.2 million. So the value exists inside the group, but the liquidity readily available to the listed parent still depends in practice on pulling that value up from below.

The picture gets less clean when you look at the unit currently funding the transition. The LPG segment did not record an impairment, but the impairment work put its value in use at NIS 888.1 million against a carrying amount of NIS 829 million. That is only about NIS 59 million of cushion, roughly 7%, after a year in which the segment met its revenue plan but missed its profitability plan because import costs rose after the missile hit at Bazan and the disruption at the Ashdod refinery. So the real 2025 headline is not just “electricity is growing.” The real headline is that the company is funding a strategic transition through a legacy segment that came under real operating pressure this year, and through a liquidity layer that looks much tighter at the parent than the consolidated picture first implies.

The Economic Map Behind The Story

That chart explains why 2025 cannot be read through the revenue line alone. The company grew quickly, but the passage from revenue to EBITDA and then to net profit became less efficient.

Events And Triggers

Electricity Added More Volume, But Still Not Clean Profitability

The most important event of the year was the continued build-out of the electricity platform. In January 2025 the agreement with Prime Energy was expanded from 75 MW and 375 MWh to 100 MW and 500 MWh, and the term was updated to 22 years. The cumulative purchase volume was then estimated at NIS 1.6 billion to NIS 1.7 billion. In July 2025 EDF started flowing green power, and in November 2025 the partnership signed another agreement with Tzabar for storage facilities of about 65 MW AC, with first attribution expected by the end of the second quarter of 2026 and cumulative purchases estimated at about NIS 1 billion over the term.

After the balance-sheet date, in January 2026, the partnership won the Electricity Authority’s first tender for private suppliers and secured a right to contract for 55 MW from the Israel Electric Corporation for four years through the end of 2029, with total consideration of about NIS 165 million before indexation. That is positive because it expands electricity reserves and strengthens the commercial side of the platform. But it also sharpens the unresolved question: if electricity was still gross-loss making in 2025, how much of the next leg of volume will actually improve economics, and how much will simply add operating complexity and working-capital load.

The chart highlights the core gap in the thesis. Electricity is already close to LPG in revenue, but it is still nowhere near replacing it in profit.

The Efficiency Plan Helped, But Raw Materials Ate Part Of The Benefit

In late 2024, with a new CEO in place, the board adopted an efficiency plan that the company said should deliver about NIS 25 million of annual cash savings, with most of it also flowing through operating expenses. By 2025 a large share of those actions had already been implemented, and the effect is visible in the numbers: general and administrative expenses fell to NIS 55.5 million from NIS 68.1 million in 2024, a drop of 18.5%. Selling and marketing expenses also stayed almost flat despite the scale-up in electricity.

But this is where an easy reading becomes dangerous. The savings did not fully reach the bottom line because in the same year the company absorbed higher LPG prices, import costs, and related expenses following the Bazan hit in June 2025 and the ongoing disruption at the Ashdod refinery. The result is a mixed picture: real corporate efficiency gains, but not a clean improvement in consolidated economics.

Capital And Signaling: Management Is Projecting Confidence, But The Balance Sheet Still Demands Discipline

In August 2025 the company issued NIS 150 million of commercial paper, alongside a parallel one-year committed bank line of NIS 150 million. In November 2025 S&P Maalot reaffirmed the ilA/ilA-1 rating with a stable outlook. After the balance-sheet date, in March 2026, the board adopted new buyback plans of up to NIS 10 million in shares and up to NIS 10 million in bonds.

The signal is obvious: management wants to show that the balance sheet is strong enough to refinance debt, keep growing, and also consider buybacks. But signaling is not the same thing as unlimited room. At the parent-company level cash at year-end was very low, and distributable profits stood at only NIS 11.8 million. So the buyback is mainly a confidence statement, not proof that the capital story is already fully resolved.

The Small Trigger That Shows Where Management Wants To Go

In March 2026 the company also approved the purchase of 50% of a private consumer-products company active in importing, marketing, and trading camping, home, and garden brands, including gas-based outdoor cooking products. The upfront consideration was set at NIS 17.5 million, subject to adjustments, alongside contingent consideration of up to NIS 10 million and call and put mechanisms over the remaining shares.

This does not change the 2025 numbers, but it does show the direction of thought: the company is not only building electricity, it is also trying to broaden the LPG ecosystem into adjacent products. That can create commercial synergies, but it also reminds the reader that the group is still choosing to allocate fresh capital while the electricity engine has not yet crossed into full profitability.

Efficiency, Profitability And Competition

The central insight in 2025 is that the company does not suffer from a demand problem. It suffers from a gap between growth and profit quality. Revenue rose 19.4%, but gross profit fell 11.7%, EBITDA fell 10.9%, and operating profit fell 54.5%. Put differently, every incremental shekel of revenue was worth less to the profit line, in part because the company is growing fastest precisely in the segment where it is still paying to build the platform.

Who Actually Produced The Profit In 2025

In LPG, revenue rose 2.4% to NIS 427.4 million, but gross profit fell 9.2% to NIS 119.1 million and operating profit fell to NIS 17.1 million. In natural gas and cogeneration, revenue fell 9.8% to NIS 213.8 million and operating profit fell 13.2% to NIS 17.2 million. Electricity, by contrast, jumped 88.6% in revenue to NIS 380.3 million, but still ended the year with a gross loss of NIS 0.6 million and an operating loss of NIS 16.6 million.

That means the operating picture of the group is almost the reverse of its headline narrative. The main growth engine is still not generating profit, and the two engines funding it both weakened. So 2025 was not a breakout year. It was a bridge year.

That chart shows why the company still cannot lean on electricity alone. The loss there improved, but it still absorbs almost all of the operating profit coming from LPG and natural gas together.

The Fourth Quarter Improvement Is Real, But It Still Does Not Rewrite The Full-Year Economics

The fourth quarter looked much better than the full-year average. Revenue rose to NIS 262.7 million from NIS 226.4 million in the comparable quarter, gross profit was almost unchanged at NIS 48.3 million, and operating profit rose to NIS 13.1 million from NIS 5.6 million. After three volatile quarters, including a very weak third quarter with an operating loss of NIS 17.2 million, the year-end picture already looked materially more controlled.

Even so, it would be too easy to conclude that the problem is now behind the company. Management itself explains that part of the full-year decline came from a lower gain from dilution in BRP than in 2024. That is true, but it does not erase the fact that electricity gross profitability is still not stable, and that the legacy core segments both finished the year weaker.

That chart matters because it shows how non-linear the story still is. A strong fourth quarter is a useful start, but it comes after a very weak third quarter and therefore still does not prove a new profitability regime.

Quality Of Growth: Who Is Paying For The Expansion

Selling and marketing expenses barely increased, but the company states explicitly that credit-card commission expense rose because of electricity growth. The increase in receivables and payables was also mainly tied to the expansion of the electricity segment. So part of the growth is arriving with more operating friction and more working-capital load.

There is nothing inherently wrong with that. This is how a platform build can look. But it needs to be framed correctly: electricity still does not look like a profit engine. It looks like an engine that needs scale, capacity, and customer rollout before it might become a profit engine. Until the company shows that the new volume translates into consistently positive gross profit and better operating leverage, investors are still left with a growth story funded by other activities.

Competition Looks Different In Each Segment

In LPG, competition is about price, service, logistics, and import capability. The company operates in a market with many suppliers, and local refinery output is not enough to meet demand, so imports are essential. In natural gas and cogeneration, competition is more about service quality, continuity of supply, and the ability to build and operate facilities. In electricity, competition shifts more toward customer-acquisition cost, reserve capacity, and pricing to households and commercial customers.

What is actually interesting is that the company is trying to create synergies between all three worlds. That sounds good, but in 2025 the synergy still does not show up strongly enough in the numbers. The practical result is simple: LPG and natural gas are still carrying the weight of the electricity build-out.

Cash Flow, Debt And Capital Structure

Operating Cash Generation Improved Sharply, But The Full Cash Picture Is Less Comfortable Than It Looks

If you use a normalized cash-generation frame, 2025 was much better than 2024. Cash flow from operations rose to NIS 86.1 million from only NIS 14.0 million a year earlier, mainly because of better working capital, collections of old receivables, and interest from a loan to an associate. The gap versus accounting profit also matters: the company ended 2025 with a loss from continuing operations of NIS 2.9 million, but generated NIS 86.1 million of operating cash. That tells you the accounting bottom line did not capture the whole cash picture.

But if you move to an all-in cash flexibility frame, the story becomes less comfortable. In the same year the company invested NIS 65.1 million in property, plant, equipment and intangible assets, paid NIS 8.6 million of lease cash outflow, repaid NIS 43.3 million of long-term loans and NIS 59.8 million of bonds, and reduced short-term bank debt by NIS 100.0 million. Offsetting that, it issued NIS 150.0 million of commercial paper and received NIS 62.1 million from repayment of a loan to an associate. So the right question is not only whether the business generated operating cash, but how much cash truly remained after the actual cash uses of the year.

The point of that chart is not to show “liquidity stress.” It is to show that the cash created by the business is already working hard: maintenance, growth, refinancing, and deleveraging all compete for it.

The Working-Capital Deficit Is Not A Warning Sign, But It Is Not A Technical Footnote Either

At the end of 2025 the company had negative working capital of NIS 115.7 million. The company itself explains that a major part of this comes from customer deposits of NIS 71.9 million, which are classified as current liabilities because customers can request them back, and the board concluded that this does not amount to a warning sign. That is an important point. Not every working-capital deficit signals actual stress.

Still, the number should not be brushed aside completely. It says that part of the group’s flexibility relies on a business structure built on deposits, supplier financing, credit lines, and debt rolling. As long as the business operates normally, that can be comfortable. If one layer tightens, the sensitivity can rise quickly.

The Consolidated Balance Sheet Looks Reasonable, But The Solo Parent View Sharpens The Real Test

At the consolidated level the picture looks reasonable. Equity, including non-controlling interests, stood at NIS 741.7 million. The company is in compliance with all bond covenants, with equity of NIS 742 million against minimums of NIS 340 million for Series A and NIS 370 million for Series B. Net financial debt to CAP stood at 44% against a 70% ceiling, and net financial debt to net balance sheet stood at 34% against a 67% ceiling.

But anyone trying to understand the real quality of the story for common shareholders also needs to look at the solo parent. There, year-end cash was only NIS 0.5 million, against NIS 150.0 million of commercial paper, NIS 55.8 million of current bond maturities, and NIS 331.8 million of non-current bonds. The largest current asset on the other side is a short-term receivable from a held company of NIS 210.2 million. That is the key bridge between consolidated value and shareholder-accessible value: the parent can meet its obligations, but in practice it does so mainly if cash keeps moving up from the operating subsidiaries.

That does not point to an immediate event. But it does mean that, at the shareholder layer, flexibility depends on internal cash transferability and not only on consolidated profit.

Covenants Are Comfortable, But Even There A Small Asterisk Remains

Under its bank facilities, the company undertook, among other things, to keep net financial debt to EBITDA below 3.5, working capital to total short-term credit facilities above 1.25, equity above NIS 300 million, and tangible equity above 25% of tangible balance sheet. The company says it is in compliance with all of these. In addition, during 2025 the minimum pledged deposit with one bank was reduced from NIS 25 million to NIS 15 million, and the old debt-service-coverage covenant had already been canceled in 2024.

Those are clearly good signals. They show that banks moved with the company, not against it. But the bond market still carries one small yellow flag: Series A continues to pay a 0.25% coupon step-up because, since the March 2023 financials, the company has not met the indenture’s net financial debt to EBITDA threshold of 6. That is not a breach. It is, however, a reminder that the balance sheet has improved, but has not yet returned to a completely frictionless place.

Outlook

Before getting into the details, four non-obvious findings need to frame 2026:

• Electricity is already large enough to explain growth, but still not large enough to explain profit.
• LPG, which is currently funding the transition, enters 2026 with only a limited impairment cushion.
• Consolidated cash generation improved meaningfully, but parent-level room still depends on upstreaming from subsidiaries and ongoing refinancing.
• The buybacks and the consumer-products deal signal confidence, but they also raise the bar for capital-allocation discipline.

The right name for 2026 is a proof year. It is not a breakout year, because electricity still has not shown stable gross and operating profitability. It is not a stabilization year either, because the company is still changing the mix and structure of the business in a meaningful way. It is a proof year because, over the next two to four quarters, the market will mainly be asking one question: does the new electricity volume finally start dropping into the profit line, or does it keep demanding more resources while the legacy engines weaken?

What Has To Happen For The Thesis To Improve

The first checkpoint is for electricity to turn clearly gross-profit positive and materially less negative at the operating line. In 2025 the company nearly reached breakeven gross profit, but it still remained on the wrong side of the line. Once electricity starts showing positive gross profit across several quarters, the entire read of the story changes.

The second checkpoint is for LPG and natural gas to maintain reasonable profitability despite volatile energy prices. That matters not only because those are profitable businesses in their own right, but because they are the current funding base for the transition. If one of them weakens further, the electricity platform will look much less comfortably financed.

The third checkpoint is capital quality. The company needs to show that commercial paper, bonds, and buybacks do not compete with growth needs and with the parent company’s margin of safety. Put differently, if the 2024 dividend was manageable, 2026 will test whether more active capital allocation still looks disciplined.

The fourth checkpoint is execution in electricity supply. The 55 MW tender win, the Prime and Tzabar agreements, and the start of EDF supply have already built a commercial reserve base. The next step is to show that this reserve base translates not only into volume, but also into better economics.

What The Market Could Miss

The market may look at 2025 and see mainly three positive headlines: record revenue, operating cash flow that jumped sharply, and a strong fourth quarter. What it may miss is that the business funding the transition, namely LPG, looks less bulletproof than it sounds; that liquidity accessible to shareholders at the parent level is much tighter than the consolidated picture suggests; and that high electricity volume is still not the same thing as profitable electricity.

Another point the market could read too casually is the buyback. At the signaling level it looks supportive. At the economic level it is mostly a discipline test. If the company manages it well, it can use capital markets without harming flexibility. If not, it risks projecting confidence at precisely the stage where it still needs to preserve real room.

The Counter-Thesis That Deserves Respect

There is, of course, a reasonable bull case. It says 2025 was simply an uncomfortable transition year: raw-material prices rose, Bazan and the Ashdod refinery hurt LPG, BRP contributed less accounting profit, but the electricity business did grow, operating cash flow improved sharply, overhead came down, covenants are comfortable, and the supply base being built today can look much better in 2026 and 2027.

That is a serious argument, and it may prove right. But to embrace it fully, one still needs to see electricity actually starting to earn, not just grow, and one needs to see that the LPG cushion does not erode further. Until then, 2025 is better read as a year that built an option, not one that already monetized it.

Risks

LPG is funding the transition, but it is no longer a thick cushion. The LPG segment did not record an impairment, but the valuation showed value in use of NIS 888.1 million against a carrying amount of NIS 829 million. That cushion is not trivial, but it is not wide either. After a year in which profitability weakened because of import and raw-material pressures, this is a material yellow flag.

Import dependence and the local refining system remain real operating risks. The company states explicitly that it depends on Bazan and on the Ashdod refinery, the main LPG suppliers to the Israeli market, and that import costs and slower business activity hurt results. This is not a theoretical risk. It already hit 2025.

Electricity still needs to prove its economics. The segment nearly doubled revenue, but still ended with a gross loss and a double-digit operating loss. If customer-acquisition, operating, or working-capital costs keep growing faster than the margin pool, the growth story will remain a volume story rather than a value story.

At the parent layer, flexibility is not the same as liquidity. The solo financials show that the parent still depends on upstreaming cash from subsidiaries and on continued access to debt markets. That is not an immediate danger, but it is a real filter that separates value created inside the group from value that is quickly accessible to common shareholders.

FX exposure is still visible in equity. In 2025 the company recorded negative translation differences of NIS 53.8 million, mainly because of dollar weakness against the shekel. That did not hit operating cash flow, but it did reduce equity and reminds the reader that the group is not insulated from currency exposure.

Short interest does not add an external warning signal here. Short interest as a percentage of float stood at 0.00% at the end of March 2026, with SIR of 0.01, versus sector averages of 0.55% and 1.396 respectively. In other words, anyone worried here is worried about execution and capital structure, not about a technical market squeeze.

Conclusions

Supergas Power ends 2025 with a more interesting story, but not a cleaner one. Electricity is growing fast, operating cash flow improved materially, and the efficiency plan is already visible in the cost base. On the other side, electricity is still not profitable, the LPG segment funding the transition has weakened under raw-material and import pressure, and parent-company liquidity still depends too much on moving value inward and not enough on readily available cash.

Current thesis: Supergas Power is building a real electricity platform, but in 2025 it is still being funded mainly by LPG and natural gas rather than by electricity economics themselves.

What changed versus the simple 2024 reading is that electricity is now large enough to be a clear growth engine, but still not large enough to be a profit engine. At the same time, working capital, the solo parent view, and the LPG valuation all remind the reader that this transition is still sitting on a base that is good, but not bulletproof.

Strongest counter-thesis: the caution may be overstated because electricity is still naturally in build mode, the supply pipeline expanded materially, overhead has already come down, covenants are comfortable, and the 2025 operating cash result suggests that the group can fund the transition without unusual stress.

What can change market interpretation in the short to medium term? First, electricity moving into positive gross profit. Then proof that LPG and natural gas remain profitable through 2026. And finally, capital discipline: whether the company can manage buybacks, debt, and growth without tightening the parent-company margin of safety.

One line on why this matters: if electricity moves from customer acquisition to profitability, Supergas Power starts to look like an integrated energy company with a genuine new profit engine. If it does not, it remains a company loading a new engine onto an older base that is already under pressure.

For the thesis to strengthen over the next two to four quarters, the company needs to show electricity turning gross-profit positive, LPG avoiding another meaningful margin hit, and the parent continuing to service debt without turning buybacks into an overly aggressive use of capital. What would weaken the thesis is another year of electricity growth without profit, combined with further pressure in LPG or tighter parent-level flexibility.