EXECUTIVE SUMMARY
At the end of this 1st quarter of 2022, 66 listed companies representing more than 99% of the mar-ket capitalization published their quarterly indicators. These announcements come in an unprece-dented inflationary context either at the international or the local levels.
After analyzing the quarterly press releases of listed companies and on the basis of our exchanges with the various economic operators within the market, we emerge with 5 key messages:
- At the end of Q1-22, the market's aggregate revenue recorded a sustained growth of 14.8% to MAD 71.4 Bn against MAD 62.2 Bn in Q1-21. This is the largest increase observed since the out-break of the Covid-19 crisis. Originally, a very significant price effect following the repercussion of the increase in inputs in the final sale price. For example: energy, food products, raw materi-als, packaging and finally logistics;
- The Mining, Energy, Agri-business and Building Material sectors are the main contributors to the market's revenues' growth , i.e. a cumulative increase of MAD 7,309 Mn thus explaining nearly 80% of the variation in the quarterly market's revenue ;
- Faced with the acceleration of inflationary pressures since the month of May, listed companies would deal with two major risks during the 2nd half of 2022:
- On the one hand, more visible pressure on margin levels following the disposal of inventories built up in recent quarters. Starting in May, inventory renewal is expected to take place at spot prices well above the average levels observed in Q1-22;
- On the other hand, a possible slowdown in Demand justified by a more marked wait-and-see attitude of economic players in a context marked by an unprecedented in-crease in raw materials prices. The deceleration in the growth of cement sales since December 2021 clearly justifies this.
- We anticipate two disparate developments within the Equity market. From H2-22, exporting companies should benefit from a marked improvement in their profitability, while operators who rely mainly on local Demand should strive to defend their historical margin level;
- We believe that the recent correction of the MASI index reflects a change of investors perception towards the evolution of the listed companies' achievements in 2022E as well as towards the upward pressures on the Yield curve in Morocco. This sentiment is clearly reflected in the results of the AGR Confidence Index (Cf. AGR Morocco Confidence Index) and those of the AGR Risk Premium (Cf. AGR Equity Risk Premium Morocco May-22).
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