Companies to watch: CTM (Morocco)
With a PER (profit earning ratio) of 14.3 times, CTM is considered today as one of the most interesting values on the Moroccan stock exchange, in spite of its weak liquidity ratio compared to those of larger companies. Recently, after it analyzing its growth potential, the company’s stock was recommended by WAFA BOURSE.
CTM is a company dealing in the transport of goods and people, including interurban, international and tourist travel; the forwarding of parcels, and transportation. The structural evolution of its total turnover indicates the historic dominance and inherent stability of interurban travel, the rapid development of the parcel post, the mixed evolution of international transport, and a noticeable but unspectacular improvement in tourist transport.
In order to promote the development of each activity, CTM used the services of a management consultant to formulate an overall strategy and to define the organizational support that would complement the objectives fixed by general management.
The consultants defined a strategy for each activity with a clear budget for investment programs. This study confirmed the leadership of CTM in the interurban transport market, but noted that CTM should further improve its position in spite of increasing competition in the sector, following the last measures taken by the Ministry of Transport to improve quality of service.
The market for parcel post in Morocco has been experiencing a boom, and there remains great potential for growth. Aware of this promise, CTM recently has made a significant effort to develop this area of activity. It separated this department from passenger transport, opened of a specialized agency, and launched of a communication campaign to promote CTM as major service provider.
In 1999 international transport contributed 13.5 percent to CTM’s turnover. The company operates within a framework of bilateral conventions between Morocco and a number of European countries, through which agreements are reached with companies in those countries to pool resources for public transport and parcel services. In partnership with Eurolines, CTM provides services between Morocco and France, Belgium, Spain, Italy and Germany.
CTM share of the Moroccan tourism market is estimated at 9.4. Customers of CTM coming in from abroad are mainly MRA (Moroccans residing abroad) and, to a lesser degree, foreign tourists, which gives the activity both a seasonal character (foreign tourist) and a perennial (MRA) character. The CTM tourist activity consists of putting buses at the disposal of groups for events and/or tourist activities. CTM’s customers a sourced mainly from local and foreign travel agencies or tour groups, including Club Med, Jet Tours, etc.
Tourism counts for only 3.9 percent in the company’s total turnover in 1999. This is due to a rather passive marketing policy, at least until recently. Indeed, a significant rise in turnover that has occurred of late does not evidently result from an effort of the company to develop the activity, but only from special events.
Tourist is another area that should benefit from CTM new and more aggressive marketing strategy. According to analysts of WAFA BOURSE, the CTM share has a theoretical value of around 410-550 DH. The current value of the company’s share price is 17 percentage points lower. This makes it an interesting buy for a long-term placement. – (Albawaba-MEBG)