RESULTS IN LIGN WITH EXPECTATIONS ..., A BETTER-THAN EXPECTED DIVIDEND
2020 achievements in line with our forecasts
In a context marked by the fall in domestic cement consumption of -10.0% in 2020, CIMAR outperforms its sector by limiting the drop in its revenues to -7.2% against an AGR estimate of -6.4 % (Cf. Start 2021 under the cash-conversion perspective).
This is attributed to the ramp up of the clinker export activity, allowing both to cope with the contraction in local Demand and to support the capacity utilization rate of its plants.
As expected, EBITDA shows a sharper drop of -9.9% due to the low margin levels generated by the clinker export activity. The recurring net income is better than expected at MAD 967 Mn against an estimate of MAD 939 Mn. The latter does not take into account the donation of MAD 100 Mn to the Covid-19 fund and an impairment of more than MAD 150 Mn on one of its foreign subsidiaries.
A better than expected dividend, supported by the generation of cash-flow
For the FY 2020, CIMAR announces an ordinary DPS of MAD 90, up 5.9% compared to 2019. This is a higher DPS than our initial forecasts, i.e. a DPS of MAD 85.
As a result, the stock's D/Y stands at an attractive level of 5.1%, i.e. 2.6 times higher than the yield offered by the 5-year T-Bonds. At the origin of this performance, CIMAR's solid ability to defend its cash-flow generation through relatively high margin levels and very good control of its working capital.
Maintaining of our target price at MAD 1,800
Taking into account the operational and financial achievements of CIMAR, we keep our target price unchanged at MAD 1,800. Since the publication of our strategic report in January 2021, CIMAR stock jumped by 7.0% while offering an attractive D/Y higher than 5.0%. In the end, we recommend HOLDING the stock in the portfolios.
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