A LESS FAVORABLE CONTEXT IN 2020 ... NEW GROWTH DRIVERS IN 2021
Declining operational achievements, widely anticipated
In 2020, Marsa Maroc recorded a much-awaited drop in its results within a context marked by a significant slowdown in port activity on a global scale. The operator's revenue shows an annual decline of -5.2% to MAD 2,757 Mn, in line with our estimate of MAD 2,735 Mn.
The recurring NIGS settled at nearly MAD 500 Mn, down -25.7% over the same period. The latter is lower than our initial estimate of MAD 561 Mn. By including the donation to the Covid-19 fund of MAD 300 Mn, the NIGS comes out to MAD 292 Mn, down -56.5%.
A delayed impact of the Covid-19 crisis on port traffic
The traffic handled by Marsa Maroc stood at 35.6 MT in 2020, down -6% compared to 2019. Note that in 2020, we witnessed a delayed effect of the health crisis on traffic port. In fact, the drop in overall traffic accelerated significantly during the second half of the year with declines of -8% in Q3-20 and -11% in Q4-20 against only -2% during H1-20.
The decline in activity combined with the increase in operating expenses following the start-up of the TC3 terminal of the Tanger Med II port, resulted in a sharper drop in operating income of -19% to MAD 759 Mn. This is below our initial estimate of MAD 782 Mn.
A DPS of MAD 8, in line with our initial forecast
In line with our expectations, Marsa Maroc revised its DPS downward from MAD 9.7 in 2019 to MAD 8.0 in 2020. Consequently, the D/Y settles at 3.8%, i.e. 190 BPS higher than that of the 5 year T-Bonds.
A stock to HOLD, thanks to its new growth drivers
Thanks to the positive outlook of the port activity in Morocco and taking into account the start-up of the TC3 terminal of the Tanger Med II port, we believe that the current valuation levels of Marsa Maroc are fundamentally justified. So, we Recommend HOLDING the stock in portfolios with a target price of MAD 199.
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