Alltrade Recycling In 2025: The Local Plants Are Working, But The Growth Engines Still Need Proof

Knowing the Company

At first glance, Alltrade Recycling looks like a circular-economy story built around patents, carbon credits and new plants. That is only half the picture. As of 2025 this is first and foremost an Israeli industrial recycling platform that already operates three sites, collects electronic waste and metals, breaks them down into raw materials and sells the outputs abroad. Only on top of that core sits the option layer: ARPE in Germany, the tin line, the plastic plant and the battery project.

What is already working is fairly clear. Revenue rose to NIS 72.7 million in 2025, gross profit reached NIS 32.2 million and EBITDA reached NIS 24.1 million. At the same time, based on the latest trading price after the February 2026 IPO, the market is already valuing the company at roughly NIS 500 million. In other words, the market is not pricing only what already works. It is also pricing what management says should arrive in the next few years.

The point a casual reader may miss is that most of the money still comes from Israeli recycling. On a segment basis, the recycling business generated NIS 63.6 million of revenue and NIS 25.2 million of EBITDA in 2025, while ARPE generated NIS 10.3 million of revenue but still posted negative EBITDA of about NIS 1.1 million. So the active bottleneck is not whether the company has a story. It is whether it can turn the newer story into clean profitability rather than slides, advances and backlog.

The current constraint is also not installed capacity. The two core plants are still far from full utilization. The SDA plant has potential annual capacity of roughly 20 thousand tons, but actual utilization near the report date was about 10 thousand tons. The LDA plant also has potential annual capacity of about 20 thousand tons, while actual utilization near the report date was only about 5 thousand tons. Put differently, the company still has growth room on infrastructure that is already in place. The real question is whether regulation, enforcement and collection volumes will bring in more feedstock, and whether ARPE can turn project backlog into revenue and margin.

The group’s 2025 economic map looks like this:

The segment figures are shown on a 100% basis, as management reviews them internally, not on a proportionate-ownership basis.

One more orientation layer matters here. This is mostly a raw-materials and processing business, not a classic "technology" revenue model. In 2025, revenue from other materials including plastics was NIS 33.1 million, revenue from precious-metal-bearing materials was NIS 20.6 million, reuse products contributed NIS 5.3 million, logistics sorting and other services contributed NIS 3.5 million, and international projects contributed NIS 10.2 million. That distinction matters because anyone buying the stock today is buying an operating recycling business with an engineering option layer on top, not the other way around.

Events and Triggers

The IPO changed 2026, not 2025

The main trigger: in February 2026 the company raised about NIS 150 million gross in its first public offering and shortly afterwards repaid roughly NIS 24.7 million of bank debt. That is a frame-changing event because it removes the bank-debt overhang and shifts Alltrade from being a growing industrial company with leverage into a company with a stronger cash base and more comfortable funding capacity for its expansion pipeline.

But precision matters here. That belongs to 2026. The 2025 financials still describe a company that ended the year with NIS 30.8 million of bank credit and loans. Anyone reading the year-end numbers as if the balance sheet was already "clean" is skipping a step. The balance sheet improved materially, but only after the balance-sheet date.

Expansion has already moved beyond the idea stage

The second trigger: the plastic plant and the battery plant are no longer abstract projects. The plastic plant is expected to require around NIS 48 million of investment, and by December 31, 2025 about NIS 7 million had already been invested. The company expects the plant to begin operating in 2027. In addition, back in January 2025 the company received approval for plastic and battery investment programs totaling about NIS 20 million, with grants of up to NIS 4 million. In January 2026 a broader battery program was also approved, including NIS 30 million of eligible equipment investment and an approved grant of about NIS 14.3 million.

The third trigger: the tin line has moved from concept to prototype. The company received approval for patent registration in Israel in January 2026, ARPE is already in advanced stages toward building a prototype, and management expects the prototype to be completed in the third quarter of 2026. That is real progress, but it is still not proven revenue. Until there is a working machine and commercialization, it remains a future engine rather than a present one.

The board is changing too, but that is not what unlocks the story

The fourth trigger: at the end of March 2026 the company appointed Ran Nahum Tshuva as a director. He also serves as a director at the controlling shareholder and works at Hion, a subsidiary of the controlling shareholder. That adds another hand to the board, but it is not yet the kind of external governance signal the market might have found more meaningful after the IPO. The company itself still states that it intends to appoint external directors in line with legal requirements.

The analytical takeaway is straightforward: management and the controlling group are still carrying the story, and investors remain heavily dependent on the execution quality of that group, not on a newly strengthened outside-governance layer.

Efficiency, Profitability and Competition

What really drove the margin improvement

The central insight is that the 2025 improvement is real, but not one-dimensional. Revenue grew 30%, gross profit grew 35%, and gross margin rose from 42.5% to 44.2%. That did not come only from higher volume. The company explicitly says the improvement also came from better material consumption, the termination of a lower-margin project, and better absorption of fixed costs across a larger revenue base.

That matters because it prevents an overly simple reading of 2025 as a guaranteed new baseline. If part of the margin gain came from exiting a weaker project and from improved operating leverage, investors still need to see how margins behave when ARPE grows, when new plants come online and when the cost structure shifts again.

There is also a clear acceleration inside the year itself. In the first half of 2025 revenue was NIS 27.3 million and EBITDA was NIS 7.7 million. In the second half, revenue rose to NIS 45.4 million and EBITDA to NIS 16.4 million. That is a very meaningful step-up and suggests the company exited 2025 at a higher run rate than the one it entered with.

Who earns money and who is still learning

To understand earnings quality, it helps to separate Israel from Germany. The recycling segment produced NIS 30.4 million of gross profit and NIS 25.2 million of EBITDA in 2025. ARPE produced NIS 1.4 million of gross profit, but still ended the year with negative EBITDA of NIS 1.1 million.

That means the international arm has not yet passed the business-model test. It can win projects, receive advances and build backlog, but it has not yet shown that its current contract structure can also produce meaningful operating contribution for the group. From a quality-of-growth perspective, that is a critical distinction.

Geography adds another useful layer. In 2025, sales abroad reached NIS 58.6 million versus NIS 14.2 million in Israel. By geography, Europe accounted for NIS 34.7 million, the Far East for NIS 21.7 million, Israel for NIS 14.2 million and other regions for NIS 2.2 million. This is an Israeli company with clearly export-heavy economics, which is why FX and metals matter almost as much as collection volume.

The moat exists, but it is not fully monetized yet

The recycling business in Israel is described by the company as a market with limited and regulated competition. That combination of regulation, specialized facilities, environmental standards, data-destruction capability and one-stop-shop service is a real advantage. The company also holds ISO certifications and is working toward CENELEC certification ahead of the expected January 2027 transition.

But that advantage is not fully visible yet in utilization. This is actually the positive yellow flag in the story. The company already has infrastructure that can grow further without immediately building more core capacity, but to get there it still needs more regulated waste flow, more enforcement and more collection volume. In other words, the moat exists, but monetizing it still depends partly on the market and the state.

Cash Flow, Debt and Capital Structure

normalized / maintenance cash generation

If one looks only at the headline, operating cash flow rose to NIS 18.1 million in 2025 from NIS 8.3 million in 2024. That is a strong number and it is also well above net income of NIS 10.6 million. What matters, though, is how it was built.

On the supportive side, the company benefited from NIS 13.4 million of profit-and-loss adjustments, mainly depreciation, financing expense and tax. On the heavy side, there was a NIS 21.3 million increase in receivables and other current assets, a NIS 4.1 million increase in trade receivables and a NIS 4.8 million increase in inventory. Those outflows were partly offset by a NIS 22.1 million increase in payables and other current liabilities and by a NIS 3.6 million increase in suppliers.

The conclusion is sharp: the strong operating cash flow is not the product of a simple and clean conversion of earnings into cash. It was also supported by advances and deferred revenue, mainly at ARPE, where deferred revenue reached NIS 22.2 million at year-end. That is not inherently a problem. In project businesses it is often the right way to operate. But it does mean investors should not take the full NIS 18.1 million as recurring free cash generation.

all-in cash flexibility

Looking at the broader cash picture, the company did get through 2025 in decent shape. From NIS 18.1 million of operating cash flow, it spent NIS 7.6 million on fixed assets, received NIS 2.9 million of investment grants, paid NIS 2.2 million of interest, NIS 2.1 million of lease cash, NIS 3.1 million of debt principal and NIS 1.2 million of cash dividend. After all of that, cash still increased by NIS 5.1 million to NIS 12.7 million.

That is exactly the difference between a business that can generate cash and one that already sits on a fully clean balance sheet. Alltrade had the first in 2025. It only got the second after the IPO.

What was hiding in the debt footnotes

As of December 31, 2025, total bank debt stood at NIS 30.8 million. On top of that, lease liabilities were NIS 14.1 million. Equity stood at NIS 63.5 million. That is not a broken balance sheet, but neither was it a truly unconstrained one at year-end.

The more interesting signal is buried in the loan note. The subsidiary needed a year-end waiver from the bank, with the permitted net-loss ceiling raised in February 2026 from NIS 2.2 million to NIS 2.75 million. The subsidiary ultimately complied, and the loan was repaid in March 2026, but the mere existence of the waiver shows that late 2025 was tighter than the post-IPO story might suggest.

The NIS 2.2 million dividend declared in November 2025 also deserves to be noted. It did not change the picture on its own, but it does remind investors that during the transition phase the company was still returning cash to shareholders while the operating platform was carrying bank debt and relying on targeted waivers.

Outlook

Before looking at 2026 and 2027, it helps to pin down four non-obvious findings:

• The engine that already works is Israeli recycling. ARPE is not there yet.
• The strong cash flow was supported not only by earnings conversion, but also by advances and deferred revenue.
• The active bottleneck is collection volume and enforcement, not installed capacity.
• The cleaner balance sheet is a February 2026 outcome, not the December 31, 2025 starting point.

That framing leads to the right definition for 2026: this is a proof year, not yet a full breakout year. The company already has operating proof points, but it still needs to show three things at once: that local recycling can keep filling existing capacity, that ARPE can turn backlog into revenue without remaining EBITDA-negative, and that the new plants and lines do not bring in too much capital spending before the associated revenue arrives.

ARPE needs to move from advances to margin

This is the most important issue for 2026. At the end of 2025 ARPE had two major customers, Revac AS and its Swedish subsidiary Revac Sverige AB. Purchase orders from them since activity began totaled about NIS 29 million, and advances received on those orders totaled roughly NIS 15.6 million. ARPE’s order backlog stood at NIS 26.4 million at year-end and had already risen to NIS 33.1 million near the report date.

The interesting part is the timing. According to the company’s own table, most of the backlog is expected to be recognized already in the first half of 2026, with the balance in the second half. That means the market should not need to wait two years to know whether ARPE works. It should get an answer relatively soon. If recognition arrives and profitability improves, the German arm becomes a real growth engine. If it keeps bringing advances but not EBITDA, it remains a narrative-supporting asset and little more.

The local growth engines are clearly marked, but not yet proven

The plastic plant, the tin line and the battery project can change the economics per ton. Separated plastics carry higher value than mixed plastics, and tin extraction is meant to add a new value layer inside the recycling chain. In addition, the LDA plant carries a potential carbon-credit revenue option if and when the certification and commercialization process is completed.

But it is important to separate value created on paper from value already accessible to shareholders. At this stage, most of those projects still sit in setup, planning, prototype or grant-approval mode. They can improve future economics per ton and future margins, but right now they mainly expand the execution front.

Regulation can be a growth driver, but it is not under the company’s control

Alltrade depends on regulation and enforcement to an unusual degree. The company itself says the main constraint on growth is uncertainty around public policy and regulation in the waste market. On the one hand, that sounds like a risk. On the other hand, if the move toward CENELEC standards in Israel is implemented from 2027 as the company expects, some unapproved operators may be pushed out and more feedstock may flow into approved facilities.

So this is not just a story about how much metal and plastic Alltrade can process. It is also a story about how much regulated waste will actually reach it. The company has the infrastructure. The question is whether the market and the state will help fill it.

The market also has clear near-term checkpoints

After year-end, three things already happened that the market will need to absorb: the IPO removed the bank-debt overhang, operations were limited in March 2026 because of Operation "Roaring Lion" and returned to full activity by month-end, and the company did not update its 2026 outlook. So the short-term reading is not only "the balance sheet is cleaner", but also "now the market needs to see that March did not leave an operating scar and that ARPE is actually delivering against its recognition schedule".

Risks

FX and metals

The first risk is FX. The company says about 82.6% of the group’s recycling revenue is exposed to exchange-rate changes, mainly the dollar versus the shekel, while it does not hedge FX risk. The sensitivity note shows that a 5% move in the dollar would have affected profit or loss in 2025 by roughly NIS 913 thousand. In practice, the shekel appreciation in 2025 already hurt financing expense, and FX differences reached NIS 2.243 million as part of NIS 6.0 million of net financing expense.

Alongside that sits metals-price risk. Part of the materials are shipped to refineries, settlement can take 90 to 120 days, and final pricing depends on metals prices and FX at the fixing date. The company does use commodity hedging at times, but this is not a case of fully locked-in exposure.

Customer concentration

In the local recycling business, concentration exists but looks manageable. The three largest customers, Aurubis AG, Hanawa Co. Ltd and Aurubis Olen, accounted in 2025 for about 12.5%, 11.9% and 10.7% of revenue. These are international refineries in Germany and Japan, and the company says it has alternatives in the market.

At ARPE, the picture is tighter. There the customer base is still very small, and just two customers define most of the current business. That is natural for a young subsidiary, but it is precisely why the market should not yet grant ARPE the valuation multiple of a mature platform.

Execution and key-person dependency

The company explicitly says it is materially dependent on Gadi Reichman and Bernhard Biener. That is not a side note. In the 2025 version of Alltrade, the leading human layer is not just management. It is part of the moat. It also means execution remains concentrated.

In addition, the production lines themselves are exposed to wear, technical failure and fire, and a failure in a major facility would hit throughput directly. Finally, the broad growth agenda can become a managerial burden. Plastics, batteries, tin, ARPE, regulation and carbon credits are all interesting. Taken together, they already require high capital discipline and strong execution.

Conclusions

Alltrade ends 2025 as a much stronger Israeli recycling company than it was a year earlier. The local core is profitable, installed capacity is still not full, and the post-balance-sheet IPO removed bank debt almost in one move. That is the side of the thesis that works.

But the picture is still not fully clean. The good 2025 cash flow relied partly on advances and deferred revenue, ARPE has not yet proven profitability, and the future growth engines still sit in setup, grant and prototype stages. That is why the short-to-medium-term market test will be about execution proof, not just optionality.

Current thesis: Alltrade enters 2026 with a profitable local recycling core and a cleaner balance sheet, but the next stage of the story depends on turning backlog, regulation and projects under construction into higher-quality earnings.

What changed versus the old read of the company: Alltrade is no longer just a growing Israeli recycling company. It now has an international projects arm and a broader buildout pipeline. At the same time, 2025 also proved that the next phase is not automatic, because the new arm still dilutes EBITDA.

Counter thesis: The market may already be giving too much credit to projects that are not yet proven. If ARPE remains loss-making, if utilization at the local plants does not rise and if regulation moves slowly, valuation could remain too dependent on future options.

What could change the market’s reading in the near to medium term: ARPE converting backlog into revenue and EBITDA, evidence that the March 2026 disruption did not spill into the following quarter, and real updates on the plastic plant timetable and the tin prototype.

Why this matters: Alltrade sits at a rare intersection of regulation, installed infrastructure and expansion options, but to justify a growth-company valuation it still has to show that value moves from plants and presentations into earnings and cash.

What must happen over the next 2 to 4 quarters: ARPE has to recognize backlog without further margin erosion, SDA and LDA utilization needs to rise before the new growth lines arrive, and the company has to keep funding execution without bringing back the financing pressure that disappeared after the IPO.