InterCure Ltd. INCR has shown resilience in its H1 2024 performance despite facing significant challenges, according to equity research by Pablo Zuanic of Zuanic & Associates. The company reported revenues of 126 million NIS ($33.97 million), surpassing the estimated 121 million NIS. 

However, this is still below pre-October 2023 levels of 414 million NIS, mainly due to the ongoing disruption at its southern Israeli facility, which has been occupied by the IDF. The company invested heavily in restoring this facility and expects it to return to full operational capacity in the coming quarters.

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Cash Reserves Plummet: Government Compensation Boosts EBITDA 

InterCure reported an EBITDA of 17.6 million NIS for H1 2024, compared to the 5 million NIS estimate. However, this includes government compensation for damages caused by the conflict, which makes comparisons difficult. 

The company ended June with 21 million NIS in cash, down from 111 million NIS in December 2023. Additionally, Zuanic noted the net debt increased from 60 million NIS to 112 million NIS over the same period, although the company has access to an unused credit line of over 22 million NIS.

Double-Digit Growth On The Horizon

Looking ahead, InterCure is guiding for double-digit sales growth in H2 2024, with revenues expected to reach around 140 million NIS, lower than previous estimates of 180 million NIS. 

The company’s expansion strategy includes launching more than 30 new GMP SKUs in collaboration with brands such as Cookies, Binske and Organigram OGI. InterCure plans to introduce Cookies products in Germany by Q4 2024, in addition to ongoing sales in the UK.

Stock Performance And Valuation

The stock has experienced a drop from its May 2024 peak of $3.12 to $1.97. Despite the decline, Zuanic notes that the company’s valuation remains attractive, with the stock trading at 1x sales and 8x EBITDA for CY25. 

InterCure’s enterprise value is currently estimated by Zuanic at $132 million, including $96 million in market capitalization and $36 million in net debt.

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