Favorable prospects for the cement sector

Favorable prospects for the cement sector
Favorable prospects for the cement sector

Cement sales in Morocco have experienced a downward trend over the last ten years after a prosperous decade in the early 2000s. In 2023, volumes stabilized for the second consecutive year at 12.5 million tonnes with an average monthly change. by 6.4% last year compared to -10% on average per month in 2022. The glimmers of a recovery are therefore starting to become perceptible. For Noufle Aouragh, Analysis & Research Manager at MSIN, who spoke at a conference on the prospects of listed companies organized by the Casablanca Stock Exchange and the APSB, this dynamic should continue.

Many catalysts for the sector

For the manager, the 5-year reconstruction program for the regions affected by the Al Haouz earthquake, as well as the development of road, hotel and sports infrastructures linked to the organization of the CAN 2025 and the 2030 World Cup in Morocco, are growth drivers for the two listed cement manufacturers. In addition, the recovery of the real estate sector from 2024, following the launch of the new housing assistance program which will run over the period 2024-2028, is another important relay, with two thirds of sales being catalyzed by this sector.

LafargeHolcim Morocco: New production capacities

Concerning LafargeHolcim Maroc, its activity showed growth of 2.8% in 2023 and should accelerate from 2024 in line with the improvement in the economic situation. “For this reason, we forecast, over the period 2024-2028, an average annual growth rate of 7.1% of its turnover,” explains the analyst who expects a turnover of 9.1 billion dirhams in 2024 after 8.2 billion in 2023.

At the same time, LHM’s Net Profit Share of the Group (RNPG) would be impacted in the coming years by the new tax measures proposed as part of the 2023 Tax Act, which aim to gradually increase corporate tax to 35% over a period. of 4 years and to maintain the social solidarity contribution until 2025. In this context, the results would show an average growth of 7.4% by 2026 with an RNPG of 2 billion dirhams in 2024 after 1.5 billion in 2023.

The commissioning of the new cement plant in Agadir-Souss, with a production capacity of 1.6 million tonnes per year, would allow the group to continue its development in the South of Morocco, in addition to the development of exports. clinker and cement in West Africa and South America through the LHM Africa subsidiary. LHM has a strong positioning on major infrastructure projects (ports, wind farms, construction of large dams, interconnection of basins, construction of CFC towers, the Tiznit-Dakhla expressway, etc. ).

On the dividend side, Noufle Aouragh plans a dividend per share (DPA) of 70 dirhams in 2024 and 2025, before increasing to 80 dirhams in 2026, representing distribution rates of 81%, 73% and 77% over the next three years.

MSIN values ​​the stock at 2,171 dirhams and recommends holding it with a target price of 8.55%.

Ciments du Maroc: New products serving growth

For its part, Ciments du Maroc should benefit from the clinker grinding unit in Nador, which will strengthen the expansion of the group’s operations in the Northern region. The growth of the clinker export activity should generate new growth drivers for the group. On the local market, the positioning of the group in the South region, as well as the development of the Aggregates activity in connection with the extension of the main aggregates quarries in Benslimane and Ouled Abbou and the upgrading of the Aït quarry Baha and the crushing station in Oued Souss are all growth drivers.

In this context, turnover should experience an average annual growth rate (CAGR) of 5% over the period 2019-2026, with a level of 4.8 billion dirhams in 2024 compared to 4.33 billion in 2023. The RNPG should return above one billion dirhams this year to reach 1.31 billion in 2026. The dividend should gradually increase to 90 dirhams per share in 2026, with a payout rate close to historical levels, around 100 %.

For MSIN, the stock should be kept with a target price of 1,954 dirhams.

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