The current Jet Contractors model has several advantages, including better positioning in calls for tenders. This is also the case for the sector’s juggernaut, also listed, TGCC. The latter is a direct competitor to Jet Contractors and manages to hold its own in a market increasingly reserved for large operators.
5 players to compete for major projects
In this market, where public procurement will represent several tens of billions of dirhams per year until 2028, there are five competing: Jet Contractors, TGCC, SOGEA (subsidiary of the Vinci group, specializing in public works and construction). building), BYMARO (specialized in building and civil engineering projects) and SGTM. While all these players have strengths to showcase in the construction segment, Jet Contractors has been able to diversify to seek major contracts in infrastructure and energy, which gives it a unique advantage in certain markets combining construction. classic and know-how in new professions. The group finds itself in competition with international groups in these niches, but it benefits from the national preference clause for greater market capture. This is also what we have noticed over the past few months.
Specialized subsidiaries: the heart of the strategy for winning calls for tenders
To anticipate this new type of market, the group has in recent years established several subsidiaries specializing in different trades to provide additional expertise to Jet Contractors. This complementarity is highlighted when bidding for calls for tender and allows certain large-scale contracts to be obtained. Markets such as Oujda station, Rabat Ville station, or the École Centrale de Casablanca were won thanks to the proposal of an integrated offer. This offer includes the management of all the stages necessary for the smooth running of the project (from study and design to delivery), which allows for better management and optimal monitoring by clients.
Orderers prefer single lot markets
Responding to calls for tender in single batches offers numerous advantages to principals, in particular the possibility of having a single contact to manage the work of different batches, which results in better coordination of the work and control security of the entire production chain. Work execution schedules are optimized, and greater consistency is obtained in the implementation of work. Having the ability to respond in single batches, Jet Contractors has been able to access new, larger markets in recent years. To optimize its costs, the group can outsource services to companies outside its scope when the offer of one of its subsidiaries is less competitive or does not meet technical requirements.
Jet Contractors mainly bids alone in tenders. It can also bid in groups and subcontract the production of the different project components to its subsidiaries and sister companies. This is particularly the case within the framework of the process launched by ONEE for the selection of qualified companies for the construction of the El Menzel STEP, with a planned capacity of 300 to 400 MW, where six groups of companies have submitted their applications, three of which were prequalified. Jet Contractors is part of one of the consortiums with foreign players.
A more profitable model
The model based on sister or subsidiary companies offers fairly significant margin generation, even more so when it comes to projects requiring specific technical expertise other than construction know-how. Indeed, Jet Contractors manages to secure an operating margin of between 6.3% and 7.3% over the last three financial years (2021 to 2023). Based on this operational profitability and taking into account the low CAPEX required for the projected development, the generation of significant operational cash flows depends on the speed of growth in turnover from one year to the next and the WCR in number of days of turnover.
Also, the strategic positioning of Jet Contractors has enabled it to reach a milestone with an overall consolidated turnover of more than 1.8 billion dirhams in 2022 and 2.2 billion dirhams in 2023, an average annual increase of more than 16% since 2013, and a group order book remaining to be executed amounting to 7.9 billion dirhams at the end of December 2023, in growth of 27% compared to December 31, 2022, the export share of which represents nearly 46% of the portfolio.
In 2024, these figures should be largely beaten with a cumulative turnover over the first three quarters of 2.1 billion dirhams, growing by 54% compared to the first three quarters of 2023, while improving cash flow by 17 % thanks to the optimization of the WCR.
Jet Contractors has strong differentiating assets in its competitive environment which allow it to secure a diversified and profitable order book. It exceeded 9 billion dirhams at the end of September 2024.
“In order to be able to pass on the benefits to shareholders, Jet Contractors will ensure that its growth is controlled and will work technically and structurally to reduce its relative WCR (in days of turnover)”promises the group in its reference document registered with the AMMC.
