Almogim: Is Sales Velocity Too Dependent On Contractor Loans?

The main article argued that capital markets still fund Almogim's pace. This follow-up isolates the customer layer: not whether demand exists, but how much of 2025 sales velocity was held up by contractor loans and financing concessions.

The short answer is more than the headline suggests. The sales themselves do not look fake, and the company kept selling after year end. But the same annual package reports 2 different contractor-loan penetration rates, 2 different numbers for the revenue impact of the benefit, and at the same time shows a sharp move from buyer advances to buyer receivables. In other words, pace held up, but the cash quality behind it weakened.

That matters now because contractor loans are no longer a marginal marketing tool. In 2 separate parts of the annual package they are already described as a central sales model, and the company itself says it still cannot quantify the impact of the Bank of Israel temporary order, in force through the end of 2026, on 20/80 deals and contractor loans. In a stock that traded less than NIS 10 thousand on the latest day, that nuance may stay outside the price until cash flow says it more clearly.

One Year, Two Different Ratios

The first yellow flag is not the use of contractor loans itself. It is the inconsistency of the disclosure. In the business-description section the company says these deals were about 26% of all transactions in 2025. In the directors' report for the same year, the number rises to 39%. The revenue hit from the benefit is also shown once as NIS 4.9 million and elsewhere as NIS 5.3 million.

It is possible that these are different counting bases, but the package does not explain that. From the outside, it makes it harder to tell whether contractor loans were just a supporting layer inside the sales mix, or already a much more material part of it.

| Metric | Business Description | Directors' Report | Why It Matters | |-----|------|-------| | Share of 2025 transactions with contractor loans | 26% | 39% | The gap is too large to ignore because it changes the read on demand quality | | 2025 revenue impact of the benefit | NIS 4.9m | NIS 5.3m | Even the P&L effect is not presented consistently | | Interest paid to mortgage banks | NIS 4.2m | NIS 4.2m | This is the hard anchor showing that the financing support already carried a real cash cost |

The analytical point is simple. If the company wants investors to believe the financing support is not material, it first needs to describe it the same way across the annual package. As long as the ratio moves between 26% and 39%, the safer reading is that the tool matters more than management is trying to frame.

The Cost Is Already Running Through Earnings, And It Is Not Fully Behind Us

The company says these financing arrangements are embedded in the apartment sale price and are not material relative to results. That is a more aggressive framing than the numbers support. Even if we take the lower figure of NIS 4.9 million, that is not trivial against annual net profit of NIS 33.8 million.

More importantly, not all of the cost has already flowed through the income statement. Under other receivables and balances, Almogim ended 2025 with NIS 4.623 million of prepaid contractor-loan interest expense, after NIS 5.681 million at the end of 2024. That means part of the financing cost has already been paid in cash, but has not yet fully passed through revenue reduction.

That is exactly what a superficial read can miss. Contractor loans are not just a marketing trick that helps sign deals faster. They move a real economic cost through 3 layers at once: interest paid to the bank, lower reported revenue recognized by stage of completion, and a balance-sheet asset that says some of the price will still keep leaking into future periods.

For a residential developer, that is not automatically a problem if the tool is used selectively to move inventory. But it does mean that growth supported by financing concessions is not the same as ordinary growth.

The Balance Sheet Already Shows Buyers Paying Later

This is where the picture gets sharp. By year end 2025, buyer receivables, meaning revenue recognized before full cash collection, had jumped to NIS 247.3 million from NIS 97.0 million a year earlier. At the same time, buyer advances fell to NIS 39.2 million from NIS 62.2 million. The ratio of buyer receivables to buyer advances surged from about 1.6x to about 6.3x.

That is the core of the story. If contractor loans do what the company says they do, they can indeed push collections into the bank's project account and help buyer underwriting. But they also change the collection profile: less classic upfront cash from the buyer, and more recognized revenue that has not yet become available cash.

The full cash-flow statement confirms it. In 2025 operating cash flow was negative NIS 439.4 million. Inside that, buyer receivables rose by NIS 147.1 million and buyer advances fell by NIS 23.0 million. It is hard to ask for clearer evidence that the sales pace leaned more on the balance sheet and less on early customer cash.

The project-level split shows this is not just an abstract accounting point. At year end 2025, buyer receivables stood at NIS 90.8 million in Reserve Phase 2, NIS 63.6 million in Shamayim VaAretz, NIS 53.1 million in Or Yam 2, and NIS 37.8 million in Venezia Phase 1. By contrast, the more meaningful advance balances were still in ALUMA, NIS 22.7 million, and Bravo, NIS 12.0 million.

The implication is that Almogim is not selling all of its inventory at the same quality. In some projects the buyer already creates a very large receivable against a low advance. In others, mainly earlier-stage ones, there is still a more comfortable advance layer. So it is a mistake to read all 2025 sales as one uniform block.

It Is Still Working, Which Is Why The Regulatory Risk Matters More

It is important not to become simplistic here. Contractor loans are not automatically a sign of weak demand or bad buyers. The company explicitly argues that bank underwriting improves buyer quality, and that the gap between contractor-loan pricing and project-lending pricing can reach as much as 2.5%, so in theory some of the cost may come back through lower project finance expense.

The cancellation data also does not scream stress. During 2025 only 2 contracts were cancelled, for a combined NIS 4.327 million, and from January 1, 2026 through close to the report date no contracts were cancelled at all. In the March 2026 presentation, the company already spoke about 251 units sold during 2025 and through the presentation date, for NIS 819 million including VAT. In 3 major projects under execution it showed 83 units sold in ALUMA, 111 in Shamayim VaAretz, and 10 in HaRav Kook.

Precisely because the tool still works, the regulatory risk becomes sharper. The Bank of Israel temporary order through the end of 2026 was not written against a product that does not move the market. It was written because 20/80 deals and contractor loans had become a meaningful sales engine across the sector. When Almogim says it still cannot quantify the impact, it is effectively saying that one of its key sales tools is operating inside a regulatory frame that may tighten.

Bottom Line

The main article said capital markets still fund the pace. This continuation adds that the financed customer is doing something similar from the other side of the transaction. Almogim's 2025 sales velocity was real, but it was not clean. Part of it rested on contractor loans, lower reported revenue, interest expense paid to mortgage banks, and a sharp shift from buyer advances to buyer receivables.

The serious counter-thesis is that the company is using the tool rationally: cancellations are low, the bank screens buyers, and the spread between project financing cost and contractor-loan pricing may even offset part of the burden. That is a fair argument. But to buy it, investors still need to see 2 things that are not yet visible in the annual package: a clear reconciliation of the 26% versus 39% disclosure gap, and a reversal in the receivables-versus-advances ratio instead of further deterioration.

Until then, the right read on Almogim is this: sales are moving, but their quality depends too much on financing support to already count as clean growth.