The outlook for listed companies is positive in the short term. BMCE Capital Research (BKR), which has just delivered its 2020-2021 forecasts for issuers, forecasts a drop in financial aggregates for fiscal year 2020 due to the effects of the crisis before a return to growth from 2021.
The analysis and research office of Bank of Africa forecasts a decline in turnover of a scope of 40 stocks (representing 90% of the market) constituting the BKR selection from 3.7% to 208.4 billion DH in 2020 This drop is mainly attributable to the “bad behavior of the industrial rating”.
The turnover of listed industrial activities would fall by 7.3% to nearly 138 billion DH due to work stoppages in real estate, the fall in oil prices for oil companies and the decline in volumes and activity for building materials.
“The expected decline in overall turnover would be partially offset by the improvement in banks’ NBI”, claims BKR. The investment bank expects an increase of 5.1% of this aggregate to 52.4 billion DH at the end of fiscal year 2020. This development should however turn around in 2021 with an increase of 6.4% to 221 , 6 billion DH of income.
Same observation on the operational level, with a decline in operating income from the rating of -1.8% in 2020 to 50.5 billion DH “including the weight of contributions to the Covid-19 Fund mainly for financials as well as the decline in the financial result of Insurance ”. For 2021, the scenario should be reversed with an expected increase in overall operating income of nearly 15% to 58.3 billion DH.
The evolution of the profitability of listed companies will follow the same trend as those of REX and CA. The profit mass of the rating would deteriorate by nearly 19% to 19.7 billion DH in 2020 before rebounding from 34.4% to 26.4 billion DH in 2021.
As for dividends, BKR forecasts a slight improvement of 6.5% to DH 14.5 billion mainly due to the impact of the health crisis on the distribution policy of listed companies in 2019 (abstention or reduction of distribution).
BKR analysts note that this dividend level remains below the normative level of 2018 which was 20.2 billion DH. Hence a D / Y of the scope selected by BKR which should be set at 3% in 2020 and 3.9% in 2021 against 2.4% in 2019.
Decrease in the price of the stock market
The valuation levels of the Casablanca Stock Exchange have always been considered high. The coronavirus crisis has not helped matters. Taking into account the evolution of the earning capacity as well as that of the stock market prices, the scope selected by BKR treats at 24.4 times its profits from 2020 to October 7, 2020. This level should drop to 18.1 times the profits in 2021. On the profitability side, the market’s ROE should stand at 9.5% and 12.2% in 2020 and 2021 respectively.
Moulay Ahmed BELGHITI