Shikun & Binui: Sale of energy arm boosts net profit and credit rating

The sale of Shikun & Binui Energy to the Generation fund has pushed Shikun & Binui to a jump in net profit and led to an upgrade in the rating of the company's bond series. The main business sector of the company, controlled by Nati Saidoff and managed by Amit Birman, is contracting in Israel. Alongside this, it is engaged in contracting in the USA, residential real estate development in Israel and Europe, concessions, and energy — a sector that will pass to the possession of Generation following the agreement to sell the subsidiary, Shikun & Binui Energy, for 4.45 billion shekels.

Until the first quarter of 2026, the company held another business sector: contracting abroad (excluding the USA), where it carried out various works mainly in African countries. During the quarter, it sold its remaining activity in Nigeria and ceased reporting on this sector.

Despite a decrease in total performance, with revenues 4% lower than the corresponding quarter last year at 2.3 billion shekels, gross profit plummeting by 67% to 150 million shekels, and operating profit falling by 69% to 84 million shekels, Shikun & Binui concluded the second quarter of 2026 with a 45% improvement in net profit attributable to shareholders, totaling 141 million shekels. The main reason for this is the recording of tax income of 323 million shekels due to the utilization of carried-forward losses within the framework of the expected profit from the sale of Shikun & Binui Energy.

The company estimates that the cash flow from the transaction, after tax, will be in the range of 2.7 to 2.9 billion shekels, and profit after tax will reach 1.6 to 1.9 billion shekels. The completion of the transaction also holds another advantage: a significant reduction in debt. As of the end of June, the debt reached 12.1 billion shekels, one billion higher than at the end of 2025. However, the company expects that under the influence of the transaction, it will reach only 5.9 billion shekels by the third quarter of 2027. S&P Maalot has already reacted by upgrading the rating of the company's four series of unsecured bonds to A+.

In contracting activity in Israel, Shikun & Binui enjoyed a 17% improvement in revenues to 1.38 billion shekels, driven by progress on projects for the IDF, including Kiryat HaTikshuv, Kiryat HaModiin, and a multi-corps base near Ramle. Meanwhile, the strong shekel negatively affected contracting activity in the USA, where revenues fell by 25% to 382 million shekels. Shikun & Binui is traded at a value of 9.8 billion shekels, with its stock falling 9% since the beginning of the year.