ETGA in the First Quarter: Yachdav Lifts Revenue, the Credit Book Stretches the Balance Sheet
ETGA reported 33% revenue growth and net profit attributable to shareholders of NIS 10.4 million, but on an adjusted comparison base revenue declined and logistics still needs to prove the Yachdav acquisition. At the same time, the credit book expanded, higher-risk credit exposure rose, and the post-quarter credit-book acquisition increases the group's dependence on short-term bank lines.
ETGA opened 2026 with a report that looks strong if the reader stops at the headline revenue line: revenue rose 33%, and net profit attributable to shareholders increased to NIS 10.4 million. That reading is too partial. Yachdav, acquired in December, added about NIS 78 million of revenue, but on an adjusted comparison base as if Yachdav had also been consolidated in the prior-year quarter, revenue fell 15% and operating profit fell 10%. On the other side of the group, the credit book grew to NIS 592.5 million, real estate financing reached about NIS 444 million, and the customer note shows a jump in the part of the book where credit risk increased significantly. After the quarter, the company also acquired 80% of another credit portfolio for about NIS 226 million, funded through existing non-binding credit lines. The first quarter is therefore not proof of a breakout year. It is a proof year: logistics has to show that Yachdav adds profitability rather than only revenue, while Toam has to prove that credit growth is not coming at the expense of collateral quality, liquidity, and the ability to keep returning cash.
The Group Is Broader, but the Adjusted Base Cools the Story
ETGA is built around two engines: logistics and freight forwarding on one side, and non-bank credit on the other. The combination can be strong when a customer receives import, logistics, and financing services from one group, but it also forces the company to fund working capital and a credit book at the same time. The previous annual analysis framed the question as whether the broader group created after the Yachdav acquisition would generate operating value, or mainly stretch the balance sheet. The first quarter answers only partially: Yachdav is already visible in revenue, but the quality of the improvement is not yet proven.
Revenue in the quarter was NIS 219.3 million, compared with NIS 164.6 million in the prior-year quarter, a 33% increase. Yachdav contributed about NIS 78 million, and the company says the increase was partly offset by price adjustments following lower average international freight costs and a weaker dollar. When Yachdav is assumed to have been consolidated in the prior-year quarter as well, the comparison flips: revenue falls from NIS 256.9 million to NIS 219.3 million, and operating profit falls from NIS 17.6 million to NIS 15.8 million.
In logistics itself, the adjusted comparison base shows a 16% revenue decline, a 10% decline in gross profit, and a 13% decline in operating profit. The reported logistics operating margin fell to 5.9%, compared with 6.4% in the prior-year quarter, and on the adjusted base it rose only slightly from 5.7% to 5.9%. This is not proof that the deal failed, but it is the direct continuation of the Yachdav question: an acquisition can increase revenue almost immediately, while shareholder value arrives only if the broader service basket raises profit per customer or strengthens pricing power.
The Credit Book Grows, and the Sensitive Layer Has Expanded
In financing, the quarter looks stable at the profit line but less impressive relative to the size of the book. Financing revenue rose 13% to NIS 13.8 million, but gross profit rose only 3% to NIS 6.4 million. Gross margin fell from 50.1% to 46.6%, and segment operating profit was almost unchanged at NIS 3.68 million. The company attributes the gap to a decline in the prime rate and lower credit spreads in real estate financing transactions.
The customer note is sharper than the operating line. Gross customers in the financing segment increased to NIS 603.1 million, compared with NIS 526.3 million at the end of 2025. Real estate financing reached NIS 443.8 million, compared with NIS 364.9 million at the end of 2025. At the same time, the part of the book where credit risk increased significantly rose to NIS 19.6 million, compared with NIS 3.8 million at year-end.
| Financing Book Metric | Mar. 31, 2025 | Dec. 31, 2025 | Mar. 31, 2026 | Read-Through |
|---|---|---|---|---|
| Gross customer balance | 474.5 | 526.3 | 603.1 | The book is still expanding rapidly |
| Real estate financing | 285.0 | 364.9 | 443.8 | Real estate is now the clear majority of the book |
| Exposure where credit risk increased significantly | 10.4 | 3.8 | 19.6 | An early signal that needs close tracking |
| Allowance for credit losses | 7.1 | 10.0 | 10.5 | The allowance ratio rose to 1.7% of customers |
These numbers do not mean credit losses are about to spike. Credit-loss expense in the quarter was about NIS 0.5 million, and both the company and Toam comply with their financial covenants. Still, after the prior analysis on credit-book quality, the checkpoint has moved. A larger book is not enough. The growth needs to remain backed by strong collateral and normal collection behavior.
The collateral mix also calls for caution. Out of a real estate financing book of NIS 443.8 million, first-ranking liens account for only NIS 145.3 million, while second-ranking liens account for NIS 171.1 million, project surplus pledges for NIS 54.3 million, and other collateral for NIS 73.1 million. In the LTV table, NIS 166.6 million sits in the 85.1% and above bucket under the option that considers the senior lender's collateral cap. That is not automatically abnormal for a real estate credit business, but after rapid growth it strengthens the need to examine the quality of the safety layer behind the book.
The Post-Quarter Portfolio Purchase Makes 2026 More Balance-Sheet Heavy
The most important event for the next few quarters is not in the March 31 numbers. On May 14, 2026, Toam completed the purchase of 80% of a third party's rights and obligations in a credit portfolio. The portfolio was set at about NIS 282 million, and Toam Real Estate paid about NIS 226 million for its share. The portfolio's average effective interest rate is prime plus about 3%, and the presentation adds that it includes 11 loans, senior or mezzanine debt, for urban-renewal projects under financial accompaniment.
The deal strengthens the financing business in size and market presence, but it changes the risk profile of 2026. The consideration alone equals about 38% of the financing segment's customer balance at the end of the quarter, and the transaction was funded through existing short-term, non-binding credit lines. Therefore, the March balance sheet does not yet include the full post-transaction expansion.
The economic implication cuts both ways. Toam receives an existing portfolio with a spread above prime, while the seller retains 20% of the rights and obligations. That could improve revenue pace if the portfolio performs as expected. But the expansion is happening while the existing real estate book is already growing rapidly, the allowance ratio has risen, and part of the book has moved into a higher-risk layer. The next reports will therefore test not the fact that the deal closed, but the quality of the acquired book once it enters the balance sheet.
Cash Flow and Dividends Set the Next Proof Point
Net profit is not the issue this quarter. The gap between profit and cash is the issue. Operating cash flow was negative by NIS 45.9 million, compared with positive operating cash flow of NIS 9.6 million in the prior-year quarter. The company explains the gap through repayment of a withholding-tax liability recorded at the end of 2025, amounting to about NIS 33 million, and working-capital movements.
The right framing here is all-in cash flexibility after the quarter's actual cash uses. Operating activity consumed NIS 45.9 million, net investment cash flow was relatively immaterial, and lease-liability repayments were NIS 1.8 million. Before changes in bank credit, the quarter consumed almost NIS 48 million of cash. The company partly covered the gap with NIS 13.8 million of net short-term bank credit, and cash declined from NIS 81.9 million at the start of the year to NIS 47.4 million at the end of March.
At the same time, the company keeps returning cash at a high pace. A NIS 9 million dividend was declared during the quarter and had not yet been paid at the balance-sheet date, and another NIS 10 million dividend was approved on the report approval date. In the presentation, the company highlights NIS 37 million of distributions over the last 12 months and a policy of distributing at least 50% of net profit. In a quarter with negative operating cash flow, credit-book expansion, a large credit transaction after the balance-sheet date, and negative working capital, the dividend is not only a confidence signal. It is also a cash use that needs to be tested against credit lines and customer-book quality.
2026 starts as a proof year, not a proven breakout year. Logistics must show that Yachdav integration lifts operating profit on an adjusted comparison base, and Toam must show that a larger credit book, including the portfolio acquired after the quarter, remains high quality while real estate and construction remain sensitive. The positive read strengthens with stable or improving logistics profitability, stabilization in the credit balances where risk increased, and operating cash flow that again supports dividends and growth. It weakens if profit remains positive but continues to come with negative cash flow, rising arrears, or further expansion of the real estate book through weaker collateral layers.
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