” 2022 is a year that promises to be relatively difficult due to a poor agricultural campaign and the exacerbation of inflationary pressures on world commodity prices “, writes from the outset the research unit of the banking group.
Indeed, in a context marked by a sharp slowdown in economic growth (2022 GDP expected at +1%) and exceptionally high inflation levels (5.4% versus a historical average of 1.1%) the profit base of all companies listed on the Casablanca stock exchange should, according to forecasts, increase by 6.9% in 2022.
Restated for exceptional items recorded in 2021, mainly including a provision for BCP of around MAD 1 billion relating to giving in payment, the adjusted profit base should register an increase of only 3.5% in 2022E compared to 2021.
“According to our expectations, the adjusted profit mass should stand at 30 billion in 2022, almost at the same level as 2019”, they write.
What about valuations?
“At the time of writing this note, the market is trading at the January 2020 level. In a normative environment, valuation levels at the beginning of the year reflect investors’ expectations in relation to the annual results of the previous year published in March of the current year.. Thus, starting from this postulate, we could intuitively deduce that currently the market is correctly valued given that the profit mass should equal that of 2019 in 2022, and that the market trades exactly at the level of January 2020 “.
However, the downward curve does not seem to be attenuating and the market still seems to be in a bearish momentum. AND to explain: In our opinion, the market anticipates the impact of a possible tension on the yield curve on the cost of capital and therefore on the valuation levels of companies..
“A sharp increase in rates on the secondary market for Treasury bills will lead to an increase in the cost of capital and de facto a fall in valuation levels, further accelerating the downward trend of the market. Thus, beyond the evolution of the beneficiary mass in 2022Emarket valuation levels will remain dependent on the evolution of rates on the secondary market for Treasury bills”, concludes CFG Bank.
Sectors with positive growth…
In 2022, market growth will be driven by several sectors according to CFG Bank, starting with mining (+326 MDH), banks (+221 MDH), telecoms (+171 MDH), port operators (+146 MDH ), and tourism (+106 MDH).
…And other sectors under pressure
On the other hand, the food industry (-54 MDH), cement (-100 MDH), automobile distribution (-133 MDH) or even energy (-184 MDH) will be under pressure. Several reasons are mentioned: Increase in input prices, semiconductor crisis, drop in sales volumes, etc.
A context still tense on the rates
Although at the end of its last board meeting held on June 21, Banque Al Maghrib decided to keep the key rate unchanged at 1.5%, rates on the secondary market for Treasury bills have nevertheless increased since the beginning of the year, remind analysts for whom Morocco should face a slowdown in growth in 2022 and a budget deficit well above its pre-crisis level. The State will not only have to finance this deficit, in an environment marked by an increase in international rates, but will also have to resort to innovative financing mechanisms such as PPPs (public-private partnerships) and the securitization of assets in order to avoid widening this deficit further.
And to explain that the amplitude with which the rates will increase in 2022 remains dependent on several factors including in particular:
1. The capacity of the State to finance itself internationally;
2. The evolution of compensation charges by the end of the year
3. Changes in the key rate between now and the end of the year.
In other words, ” beyond the evolution of the beneficiary mass in 2022E market valuation levels will remain dependent on the evolution of rates on the secondary market for Treasury bills »