The release of H1-22 results of listed companies comes amid an unprecedented context marked by an acceleration of inflation at local and international level. Despite the resilience of earnings growth at the end of June 2022, the Equity market seems to be more penalized by less favorable investor expectations, particularly after Bank Al-Maghrib raised its Key Rate by 50 BPS to 2.0% for the 1st time since 2008.
As an indication, the MASI index lost -5.0% during the first 5 trading sessions following the Central Bank's decision, thus widening the underperformance of the stock market to -13.0% since the beginning of the year 2022.
As of today, 71 listed companies representing more than 99% of market capitalization have published their financial results at the end of June 2022. Restated for the fine related to Maroc Telecom, this shows a profit growth of +13.5% to MAD 17.0 Bn in line with that of activity (+15.9%) and operating income (+12.3%).
Beyond the aggregated market achievements, we stand out with three main convictions:
- The earning growth hides a great disparity between on the one hand, the Banking & Mining sectors which justify nearly 90% of the increase and on the other hand, the other sectors which remain penalized by the increase in inputs costs and an unfavorable foreign exchange effect;
- The communication of listed companies with regard to their growth prospects in the second half of 2022 is less positive compared to that of the last quarters. We identify a series of risks whose impact is not fully integrated into the results. We cite as examples: (1) persistent inflation, (2) disruption of Demand, (3) supply difficulties, (4) rainfall deficit and (5) currency volatility;
- We expect the downward trend in the Equity market to continue over the next three months. This scenario is fundamentally justified by the visible deterioration in the growth prospects of several listed sectors during this second half. Under these conditions, the dividend level which has supported stock’s valuation multiples for several years could now be called into question.
