L’amélioration attendue du mix énergétique de Sonasid devrait lui permettre de renforcer encore plus sa compétitivité face aux opérateurs européens.

Sonasid, title to accumulate according to BMCE Capital Research

The expected improvement in Sonasid’s energy mix should enable it to further strengthen its competitiveness against European operators.

BMCE Capital Global Research (BKGR) recommends the accumulation of the Sonasid stock. Its analysts explain this recommendation by the group’s good orientation in 2021: “The steelmaker’s activity should maintain a growing pace, posting revenues up 12% to 5.038 billion DH for 2022”. This performance should be driven by a more favorable price effect with historically high levels of rolling margins in addition to the start of the marketing of its steel fiber scheduled for the fourth quarter of the year. Furthermore, the expected improvement in the group’s energy mix, with the use of renewable energies and the move upmarket of products, should enable it to further strengthen its competitiveness against European operators, who are still affected by the increase in their energy bills. BKGR thus underlines several strengths for the title. Sonasid is initially the leader on the national market with an estimated market share of between 41 and 43%. Its industrial tool is fully amortized. The operator is integrated upstream and partially downstream. The company is positioned on value-added projects. It has also improved its energy mix, which has enabled it to reduce its costs. The group has also diversified its distribution channels by opting for direct distribution. It is a non-indebted company with a healthy financial situation. Finally, the company uses 85% renewable energies to replace fuel oil. On the other hand, the group must face two weaknesses. The first concerns upstream-forward integration, which carries risks. The second is linked to the strong dependence on imports of scrap metal.

The group’s business has a multitude of opportunities, according to BKGR’s analysis. Sonasid can thus take advantage of the increase in anti-dumping measures on a national scale. The company can also benefit from the implementation of support measures for the construction sector in order to mitigate the impact of the rise in prices as well as the anticipated increase in the use of local scrap metal. Another asset, if the generalization of VAT on scrap metal is introduced in the 2023 Finance Bill, this will make it possible to fight against the informal sector.

The company will also be able to benefit from the improvement in national energy competitiveness following the rise in electricity prices in Europe. The group can also take advantage of the strong potential of regional and international markets. Finally, niche activities with higher added value also represent interesting opportunities to capture. Regarding the threats facing the steelmaker, BKGR recalls the slowdown in the construction sector weighed down by soaring commodity prices. Another obstacle is the absence of anti-dumping measures on concrete reinforcing bars. The persistence of the informal sector in the supply of scrap metal also affects Sonasid’s activity. The group is also faced with dependence on changes in steel and scrap prices on an international scale. High energy and electrode costs affect the steelmaker’s business. Finally, Sonasid has to deal with production overcapacity both nationally and internationally.


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