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BMCE capital recommends keeping the Cosumar share

Cosumar is a stock to keep in your portfolio according to BMCE Capital Global Research (BKGR). “For the Moroccan leader in sugar production, we anticipate a slight increase in consolidated turnover of 2.5% in 2022”, indicates BKGR. This growth is attributable to the anticipated increase in domestic demand, which should be driven by the return to full capacity of CHR and the recovery of activity from industrial customers. The latter is combined with an export price effect linked to the improvement in the white premium (between 110 and 120 dollars). The operating margins of the sugar operator were to show a response this year due to a sugar harvest weighed down by low rainfall but also due to the observed rise in the prices of energy products and packaging. BKGR analysts thus point to several strengths in the company.

First, Cosumar holds a monopolistic position on the Moroccan sugar market. Also, part of the group’s supplies is secured by the total control of agricultural upstream in Morocco. Another advantage, Cosumar has a large industrial facility, strategically located near sugar crops and the port of Casablanca, which allows logistics costs to be optimised. The company has also significantly reduced its energy bill since switching to clean coal. It also stepped up its international development by launching Durrah Sugar Refinery in Saudi Arabia, in which the operator is a co-investor with 43.28%. Finally, its last strength lies in the start-up, in January 2020, of its subsidiary in Guinea Conakry specializing in the packaging of white sugar, Comaguis. However, two weaknesses stand out for Cosumar according to BKGR. First, the company’s export margins are low. Secondly, the yield of sugar from local beet sources is stabilized.

In terms of opportunities, there are two for the sugar operator. First, the signing of the State-Fimasucre program contract brought the sector up to standard. Then, the group continues to seek new targets internationally. In addition, the group faces several threats. They are consistent in particular in a 2021/2022 sugar campaign, a possible decompensation by the State of sugar in the medium term, which could affect sales. Other barriers identified, the company faces high energy costs and the white is faced with a strong fluctuation of the premium internationally.




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