Taqa Morocco: Still Buying, BKGR Raises Target Price to 3078 DH

In the first six months of 2025, Taqa Morocco's consolidated revenues decreased by 4.8%, amounting to 5.38 billion dirhams. This decline is attributed to negative price effects from falling international coal prices, slightly lower availability due to a scheduled revision of Unit 6, and an unfavorable USD/MAD exchange rate. The EBITDA followed a similar downward trend, dropping by 9.7%, while the operating margin slipped to 30.7%. The group's net profit fell by 17%, reaching 437 million dirhams. However, BKGR noted that the dynamics partially improved in the third quarter. By the end of September, the revenue decline was limited to 2.2%, totaling 7.96 billion dirhams, indicating a more favorable Q3, although it did not completely offset the year's accumulated losses. The EBITDA at the end of September also showed a more contained decline of 6.7%, amounting to 2.41 billion dirhams. Looking ahead to 2025-2026, BKGR expects a gradual recovery driven by improved availability rates of facilities. Revenue is projected to increase by 2.1% in 2025, reaching 11.1 billion dirhams, with further acceleration in 2026 due to stabilized coal prices and a less unfavorable exchange environment. The analysis office also anticipates a slight rebound in the EBITDA margin in 2025, followed by normalization in 2026 due to a major scheduled revision as part of the maintenance plan. This evolution is expected to allow consolidated net profit to regain a growth trajectory, with a projected net profit of 1.08 billion dirhams in 2025 and 1.12 billion dirhams in 2026. A strategic structural shift is planned for 2030, as the report emphasizes Taqa Morocco's significant transformation. The company is gradually moving away from coal to develop a low-carbon multi-business model. This strategic shift, supported by a partnership with Nareva and the Mohammed VI Investment Fund, involves an exceptional investment program of 130 billion dirhams. This program includes an electric highway connecting the south to the industrial center of the country, a major expansion of the Tahaddart gas plant, the development of additional renewable energy capacities for ONEE, and hydraulic infrastructures including a water highway and several desalination plants powered by green energy. According to BKGR, this trajectory paves the way for structural growth based on more diversified and predictable revenues. By 2030, the projected installed capacity is expected to be around 8,700 MW, reinforcing the group's status as a leading regional player in energy infrastructure. A revised valuation indicates significant potential for re-rating. The updated net profit, as per BKGR's method, reveals a valuation substantially higher than before, due to revised growth assumptions and a decrease in the risk-free rate to 2.74%. The target price is thus set at 3,078 DH, up from 1,733 DH previously. The analysis highlights that the planned investment portfolio, primarily financed through dedicated structures and including a 42.5% stake for Taqa Morocco, serves as a significant value creation lever in the medium term. On the stock market, Taqa Morocco has shown an impressive increase of 71.6% in 2025 (as of December 3), confirming growing investor interest in the stock. This rise has mechanically pushed the P/E ratio to 50x, a high level but deemed sustainable given the new perspectives offered by the group's strategic repositioning. Ultimately, BKGR maintains its buy recommendation with a target of 3,078 DH, representing a 34% upside potential over twelve months.