Trump’s Mexico Wall the Next Potential Business for the Israeli Company that Fenced in Gaza

It’s good news for Magal Security Systems Ltd. boss Saar Koursh as the border security business is thriving. And his biggest – the Gaza Strip.

Apart from helping in the construction of barriers along the Egyptian and Jordanian frontiers, the biggest achievement for the Israeli company is wrapping Gaza in a fence to prevent militant attacks – one of the most debated border security measure ever.

Koursh, Magal’s chief executive officer, said that it’s now competing for the contract to build a wall on Kenya’s border with Somalia. Mexico could be next on his list if Donald Trump makes it to the White House.

“The border business was down, but then came ISIS and the Syrian conflict. The world is changing and borders are coming back big-time,” Koursh, 44, said in an interview, using an acronym for Islamic State.

Surging demand for fortified frontiers has been created by mounting jihadist violence and waves of migration. Critics however argue that along with solutions to political, social and economic problems, improved intelligence would be more effective in terms of the long-term effectiveness of such defenses.

Smart fences,” which are integrated with video cameras, ground sensors, motion detectors and satellite monitoring, is best demonstrated at Gaza, the scene of three wars with Israel since 2008. Trapping its 1.8 million residents, the Hamas-ruled area has been turned into a prison by the Israel’s fencing project, Palestinians say.

However investors aren’t deterred by the controversy. There has been a 23 percent this year in Magal’s Nasdaq-traded American Depositary Receipts. That’s well above the average 0.3 percent gain and is among the best in comparison to 183 peers with a market capitalization above $50 million.

In the first quarter, revenue reached $12.6 million, a rise of 7 percent. As the shekel’s strength against the dollar “negatively affected the financial expenses”, the company posted a net loss of $500,000 while gross profits also increased.

Beyond Israel and Magal’s biggest market in the U.S., the company is eyeing acquisitions in Europe, Koursh said. Focus on selling products — such as fences, cameras and detection equipment — over project management would be the new strategy for the company.

Getting hold of a “smart city” product that it plans to introduce in the Tel Aviv suburb of Holon was possible by Magal’s $14 million acquisition in April of Ontario-based Aimetis Corp., a maker of video surveillance equipment. Agreement to line Holon’s streets with hundreds of cameras linked to alarm systems , intercoms and emergency buttons in public areas for $5 million was signed company last week.

“Israel is known as a leader in developing anti-intruder systems because of the threats it faces constantly,” said Yiftach Shapir, a senior fellow specializing in military technology at the Institute for National Security Studies in Tel Aviv. Such barriers “are not impermeable, especially with a very long border like in the southern U.S that needs constant patrolling,” he said.

However, Trump’s controversial proposal to stop undocumented immigrants from slipping across the 2,000 mile-long border between the U.S. and Mexico by building a barrier is being closely followed by Magal.

“We would join forces with a major U.S. defense company that has experience with such projects worldwide. We’ve done it in the past and we would definitely want to do it,” Koursh said.

(Adapted from Bloomberg.com)

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