ETGA 2025: A Broader Group, but a Tighter Balance Sheet

Company Introduction

On paper, ETGA still looks like a logistics company that added a financing arm. By 2025 that description is already too narrow. This is now a group trying to hold a full logistics chain and a non-bank credit platform under one roof, and to earn from the same client at more than one point in the value chain. Logistics still generates NIS 571.8 million, or 91.5% of revenue, but the incremental risk now sits far more in the balance sheet and the credit book than in the top line.

What is working today is clear enough. Both segments are profitable, Toam's credit book grew 24% to NIS 516.2 million, the Yachdav acquisition broadened the logistics offering, and the group ended the year with no covenant breach and with wider non-binding credit lines at both the Toam and group level.

That is also the trap in a superficial reading. Group revenue did rise 12% to NIS 625.2 million and net profit attributable to shareholders rose to NIS 37.2 million, but once the latest acquisition effect is neutralized and the year is viewed on a pro forma basis, as if Yachdav had been consolidated from the start of the year, group revenue actually fell 1% and logistics operating profit fell 9%. That is no longer a clean growth picture. It is a bigger group that still needs to prove that the added breadth is also adding quality.

The active bottleneck heading into 2026 is balance-sheet flexibility. Working capital swung from a positive NIS 122.4 million to negative NIS 24.1 million, the current ratio fell to 1.0, and the company moved from excess cash and deposits to roughly NIS 391 million of excess credit and loans. At the same time, goodwill and intangible assets reached NIS 132.5 million, more than half of equity attributable to shareholders. Part of the recent growth is already sitting above the hard-capital layer.

There is also a practical screen that has to be stated early. On the latest trading day in the prepared market view, turnover in the stock was just NIS 44.3 thousand. Even if operating results improve, market re-pricing may still be slow.

What matters right now

• Reported growth looks better than the underlying business. At the headline level the group grew, but on a pro forma basis the logistics engine weakened.
• The credit book is moving further toward real estate and second-lien risk. 70.7% of the book now sits in real-estate financing, and the large-exposure table already includes LTV levels of 96% and 101%.
• Capital allocation stayed aggressive. The company paid NIS 37 million of dividends in 2025, almost equal to the full-year profit, while also buying Yachdav and expanding the book.
• There is no backlog smoothing the story forward. Logistics runs on short transaction cycles, and financing depends on client requests and credit approvals. 2026 will be judged quarter by quarter.

ETGA's economic map

The group employed 341 people at year-end, including 314 in logistics and 24 in financing, which puts revenue per employee at roughly NIS 1.83 million. That is a reasonable number for a services group. It says nothing on its own about growth quality. For that, the next step is profitability and balance-sheet discipline.

This chart is the short version of the thesis: the group has grown fast over the last two years, but operating margin has not followed the same path.

Events And Triggers

Yachdav made the group bigger in one step

The defining event of 2025 was the Yachdav acquisition, signed in September and completed on December 1. ETGA paid NIS 110 million at closing and another NIS 10 million is due to be released from escrow after 12 months. From an accounting standpoint, the transaction created a purchase value of NIS 119.6 million, of which NIS 35.9 million was booked as goodwill and another NIS 20.6 million was allocated to customer relationships and brand.

What it improves is obvious enough: a broader logistics offering, stronger shipping and customs capabilities, and a fuller client proposition. But the price has to sit next to the benefit. Net cash used for the acquisition was NIS 82.5 million, and expansion through goodwill and acquired intangibles means part of the value still needs to pass the integration test before it becomes accessible value for shareholders.

Toam got more room, and more ability to stretch the balance sheet

On December 14, 2025, Toam received an updated expanded credit license and an updated expanded financial-asset-service license, both valid through December 31, 2030. At the same time, Toam's non-binding credit lines rose to NIS 970 million, while the group as a whole ended the year with about NIS 1.2 billion of non-binding bank lines, roughly NIS 700 million of them unused.

That is a supportive trigger because it reduces near-term operating funding stress and leaves room to continue growing. It is not a substitute for equity. Wider lines and broader licensing open the door to more deals. They do not answer whether the existing book is already sitting at the right risk-return balance.

Early 2026 looks like continuity, not a strategic reset

At the start of January 2026, Kineret Yaari became chair of the board, replacing Barak Dotan after already serving as a director. This looks more like continuity in the control and oversight structure than a sharp change in direction. The real 2026 triggers remain operating and balance-sheet driven, not personal.

The operating backdrop is still noisy

Logistics continued to run in an environment that moved between opportunity and disruption. Airline suspensions pushed airfreight prices higher, Red Sea attacks disrupted shipping routes, and the company itself says freight prices were relatively high in the first half of 2025 but declined in the second half, especially in the fourth quarter, alongside a weaker dollar. In financing, real-estate clients kept operating, but against labor shortages and slower project execution. That means 2026 also starts in an environment where there is limited buffer between external conditions and quarterly results.

Efficiency, Profitability And Competition

The key point in 2025 is that the group broadened faster than it cleaned up its earnings quality. The question is not whether there is more activity. There is. The question is whether the old and new engines are already producing healthier profitability, and for now the answer is only partly.

Logistics: the top line rose, but organic profitability weakened

The logistics segment generated NIS 571.8 million of revenue, NIS 102.6 million of gross profit, and NIS 35.6 million of operating profit in 2025. Gross margin improved to 17.9% from 16.5% in 2024, but operating margin fell to 6.2% from 6.7%. That is already a sign that growth did not stay clean at the expense level.

The sharper point sits in the pro forma view. As if Yachdav had been consolidated from the start of the year, logistics revenue would have fallen 2% to NIS 842.4 million and operating profit would have fallen 9% to NIS 47.4 million. That is a clear signal that reported growth in the segment relied on the Isline consolidation and one month of Yachdav, while the base business suffered from pricing and currency pressure.

Working-capital quality in logistics also weakened. Client days rose to 80 from 70, while supplier days stayed at 65. ETGA is therefore carrying more client financing in the same year its balance sheet became tighter. That is not dramatic on its own, but it does mean logistics is no longer just generating volume. It is also taking up more financing room.

There is an interesting moat-risk combination here. On one side, the group is the sole Israeli member of WWA, which operates in 76 countries with 188 branches and 2,706 weekly LCL services. On the other side, the company itself says losing that relationship could materially hurt medium-term results. That is exactly the kind of dependency a reader can miss by focusing only on the one-stop-shop story.

That mix matters because it shows the company is not exposed to one major logistics client, but it is exposed to a broad set of sea freight, air freight, and market-pricing conditions. In 2025, purchases from two shipping lines already accounted for roughly 9% and 16% of total group purchases.

Financing: growth is strong, but book quality is becoming the real question

The financing segment ended 2025 with NIS 53.4 million of revenue and NIS 14.0 million of operating profit. Operating margin remained high at 26.3%, but gross margin fell to 46.1% from 51.9%. The company's explanation is straightforward: cost of funding increased and credit-loss expense rose. In plain terms, the book got larger, but the money funding it got more expensive and the cushion did not stay the same.

This is the cleanest thesis chart in the report. It shows not only that the book grew, but that it moved back toward real estate. Real-estate financing reached NIS 364.9 million versus NIS 246.5 million in 2024, while commercial and import financing stood at NIS 151 million. ETGA is gradually becoming less of a complementary import-finance story and more of a real-estate credit story with a commercial leg around it.

The large-client table sharpens that point further. The largest borrower accounts for NIS 51.25 million, or 9.9% of the book, backed by a second lien at 96% LTV. Another borrower accounts for NIS 16.0 million at 101% LTV with a second lien. By year-end, just 18 clients with exposure above NIS 10 million held NIS 334.0 million in aggregate, almost two thirds of the full book. That already needs to be read like a credit book, not like a service line.

There is one more easy-to-miss point. The company insures about 57% of logistics client receivables, but only around 2% of the financing book is insured, mostly in factoring. The smaller revenue segment is therefore carrying a much larger share of direct loss risk.

Cash Flow, Debt And Capital Structure

The 2025 balance-sheet story is meaningfully less comfortable than the profit-and-loss story. That does not mean the company is under immediate pressure. It does mean the right lens from here is flexibility, not growth alone.

The right cash frame here is all-in cash flexibility

The relevant cash frame for this case is all-in cash flexibility, not normalized / maintenance cash generation. That is the right lens because the thesis is not about the theoretical cash generation of the old business before discretionary uses. It is about how much room the group actually had after acquisition spending, dividends, book growth, and financing needs.

From that perspective, NIS 86.1 million of operating cash flow is a good start, but not the end of the discussion. In the same year, the group also used NIS 83.0 million for investing activity, mainly the Yachdav acquisition, and paid NIS 37 million of dividends. To still finish the year with a NIS 43.4 million increase in cash, it also needed NIS 46.1 million of positive financing cash flow.

The most important nuance is that operating cash flow itself included a positive NIS 105.5 million contribution from higher bank credit, against a NIS 150.4 million increase in receivables. So positive CFO does not mean the group self-funded expansion comfortably out of operations. It means the business and the balance sheet had to work together to carry it.

More debt, more goodwill, less cushion

Short-term bank credit rose to NIS 472.6 million from NIS 278.4 million, and its annual average rose to NIS 330 million from NIS 212 million. At the same time, equity attributable to shareholders fell 6% to NIS 242.2 million, after dividends and a negative NIS 17.2 million translation effect in other comprehensive income. That is the core issue: the company grew, but the hard-equity layer did not grow with it.

The asset mix tells the same story. Goodwill and intangible assets reached NIS 132.5 million, including NIS 35.0 million allocated to Yachdav and NIS 35.9 million to Isline. That is not inherently problematic. It does mean that part of the last two years' growth still sits in assets that must keep proving themselves through future cash flows.

The supporting side of the thesis is that the group is still some distance away from an immediate funding wall. The equity-to-balance-sheet covenant is 15%, Toam's tangible-equity-to-tangible-balance-sheet covenant is 15%, and the company met both at year-end. In addition, more than NIS 700 million of bank lines were unused. That needs to be phrased accurately, though: these are non-binding lines. They provide room, not immunity.

The NIS 37 million dividend paid in 2025 says a lot about management's capital-allocation stance. The company is committed to a policy of at least 50% of recurring net profit, but in practice it distributed almost the full year's profit in the same year it also stretched the balance sheet for an acquisition and book growth. That is a double signal: confidence in future earnings, but also willingness to operate with a thinner cushion.

Outlook And Forward Read

Before getting into 2026, there are four non-obvious points that need to stay in view:

• The apparently good report is also a report of organic slowdown. What looks like logistics growth relies heavily on acquisition consolidation.
• Toam is larger, but also more concentrated. Profitability remains high, yet the book is more real-estate-heavy and more dependent on a small set of big exposures.
• The balance sheet still allows movement, but the error margin is smaller. Credit lines and covenant room buy time. They do not remove the proof burden.
• There is no backlog creating real visibility. Both logistics and financing leave 2026 exposed to genuine quarter-by-quarter execution tests.

2026 looks like a proof year

The company does not provide a structured numerical outlook for next year, so the right way to read the material is through economic judgment. 2026 does not look like a breakout year. It looks like a proof year. For the thesis to strengthen, ETGA needs to show three things at the same time: that logistics is stabilizing on a pro forma basis, that the credit book can keep growing without visible quality leakage, and that the balance sheet stops lagging every expansion move.

In logistics, the first test is base profitability. If the lower freight-rate environment of the second half and the weaker dollar persist, the group will have to offset them through synergies, a broader service offering, or tighter cost control. Otherwise, Yachdav will add breadth without enough added quality.

In financing, the first test is not book size but book behavior. The company has already shown access to banks, licensing, and appetite for growth. It now has to show that the heavier real-estate leg does not bring a jump in credit losses, delays, or dependence on a small number of stressed borrowers.

What must happen over the next 2 to 4 quarters

In the near term, the market is likely to care less about headline revenue and more about three tests: whether logistics profitability settles after the weaker second half, whether credit-book quality remains intact, and whether management signals better capital discipline between dividends, growth, and acquisitions.

Risks

The first risk is book quality, not just book size

A NIS 516.2 million book sounds impressive. A book where 70.7% sits in real estate, where 18 clients above NIS 10 million hold almost two thirds of the total, and where the large-exposure table already includes second liens at 96% and 101% LTV needs to be read differently. The company does describe underwriting processes, monitoring, and appraisals, but growth now comes with a larger possible error.

The second risk is that logistics stays broad, but not more profitable

The company operates in a highly competitive market, with roughly 250 players by its own estimate, and is exposed to freight pricing, geopolitics, and the dollar. If pricing stays lower and ETGA keeps financing more client days, the broader platform could remain a platform of volume before it becomes a platform of better earnings again.

The third risk is dependence on partners and systems

WWA is both an advantage and a dependency, and the same applies to the Amital and Focus systems. The company makes clear that market alternatives do not offer an optimal solution and that migration would require time and resources. This is a real operating risk because the group depends not only on physical execution but also on a network and systems junction that has to function continuously.

The fourth risk is a practical capital-markets constraint

Daily turnover of just NIS 44.3 thousand in the stock, alongside reliance on non-binding bank lines, creates a situation where even an operating improvement may not translate quickly into market re-rating. That is not a pure business risk, but it is clearly an actionability constraint.

Conclusions

ETGA ends 2025 as a larger, more diversified, and still profitable group in both engines, but also as a company that has moved the center of gravity from "can it expand?" to "can it digest expansion without stretching the balance sheet further?" What supports the thesis is the broader platform, credit-book growth, bank-line availability, and positive profitability. What blocks it is that reported growth relies partly on acquisitions, while the equity layer has become thinner in working-capital, debt, and goodwill terms.

In the near term, the market is likely to react less to revenue and more to whether the next few quarters deliver pro forma logistics improvement, stable credit quality, and better discipline between dividends, growth, and acquisitions. If those three vectors move the right way, 2025 may look in hindsight like a transition year. If not, it may look like a year in which the group bought breadth before it truly earned it.

Current thesis: ETGA has already proved that it can build a broader group, but it has not yet proved that the added breadth produces cleaner operating and balance-sheet value.

What changed: The story moved from growth through broader services and acquisitions to a quality-of-growth test, because organic logistics weakened while the balance sheet got tighter.

Counter-thesis: The market may be reading 2025 too harshly because much of the pressure came from an acquisition integration year, lower freight rates, and a weaker dollar, which means 2026 could look materially better even without another strategic move.

What could change the market reading in the short to medium term: Better pro forma logistics profitability, a clean credit-book print, and evidence of firmer capital discipline.

Why this matters: From here, ETGA's value will be judged less on its ability to add more activity and more on its ability to turn a broader group into a profit engine with real flexibility for common shareholders.

What must happen next: Over the next 2 to 4 quarters, the company needs to stabilize underlying logistics profitability, keep the credit book relatively clean despite current concentration, and stop tightening the balance sheet through short debt and aggressive distributions. If one of those breaks, the thesis weakens.