(BFM Bourse) – The Defense sector and the breakthrough of SES-Imagotag will remain as the highlights of 2022 within the second index of the Paris Stock Exchange. Conversely, Orpea, Solutions30 and Atos end a vintage to forget.
(Note: this article is a greatly updated version of a previous paper published on November 13)
The Parisian market suffered last year, undermined by galloping inflation, the rise in interest rates, the tightening of monetary policies, the surge in commodity prices and the conflict in Ukraine. In the end, the SBF 120 fell by 10.3% over 2022 as a whole. that others have, on the contrary, experienced a year 2022 to forget.
Dassault Aviation on the front line
Defense groups are clearly the big winners of the year. Moreover, on the Frankfurt Stock Exchange, Rheinmetall, which supplies armor to the German army, experienced an increase of more than 120% over the whole of 2022.
Dassault Aviation (+66.5%) thus posted the largest increase in the SBF 120, while Thales (+59.49%) came in third place, and recorded the largest increase in the CAC 40. Of course, these two groups have strong fundamentals. Thales continues to meet market expectations with robust financial results, and a positioning that allows it to offer products with high technological value in buoyant end markets (defense, space) or in the process of recovery, such as civil aeronautics . Dassault Aviation is buoyed by the recent commercial successes of the Rafale. Recently the group found itself well positioned to win an order for 16 fighter planes in Colombia. Its second market, business jets, showed very encouraging signs in the first half.
But these two values have especially benefited from a true 180 degree turn on the part of investors. In recent years, the market had neglected defense groups, these stocks being perceived as unattractive for operators sensitive to ESG themes (environment, social and governance, that is to say extra-financial criteria). The war in Ukraine was a game-changer, bringing advocacy groups back on investors’ radar, allowing shares of these companies to soar on the stock market, and reinvigorate depressed valuations.
SES-Imagotag the beautiful revelation
Between the two Defense groups comes SES-Imagotag (+62.2%), which joined the SBF 120 during the month of December, during the last quarterly review of the Euronext Paris indices. An entry which came to reward the excellent stock market performance of this company, with a jump of more than 1,000% over ten years. The world leader in electronic labeling has chained stock market records after reporting exceptional growth over the quarters. Between June and September, SES-Imagotag, for example, posted an insolent growth of 107.9% over one year. The group enjoyed a huge spotlight in March, after greatly expanding its partnership with US retail giant Walmart. In September, Fnac Darty selected SES-Imagotag to deploy its smart label solutions in 200 stores.
Among the other increases, we note that the groups linked to oil prices, which have moved up in 2022 despite a rocky course, are also well placed. This is the case of Vallourec (+39.4%) and TotalEnergies (+33.69%).
Bic (+35%) and Ipsos (+42%) for their part were able to exceed market expectations by publishing convincing results and raising their annual outlook.
Orpea’s annus horribilis
On the side of the biggest declines. Orpea rises without too much surprise on the top step of the podium with a fall of 93% over the whole of 2022. The group has experienced real stock market ordeal since the publication of the book The Gravediggers whose accusations of mistreatment of its residents had notably led it to entrust an independent audit to two firms, Grant Thornton and Alvarez & Marsal. The results of this audit had confirmed several malfunctions, particularly in the management of human resources, but had also ruled out the existence of a rationing system on the food provided to residents. In France, justice opened a preliminary investigation in April for institutional mistreatment and financial offenses, following a report by the government. The company has since changed its management, governance and many of its practices.
The retirement home operator most recently foundered after announcing a sweeping financial restructuring. This plan provides for fundraising of nearly 6 billion euros, including approximately 600 million euros in new debt guaranteed on assets and more than 5 billion euros in the form of several capital increases. A recapitalization described as “titanic” by the analyst of the independent research office AlphaValue, Yi Zhong, in a note published in November, and which will result in a “massive” dilution for its shareholders. The year 2022 was thus an annus horribilis for Orpea.
Valneva fourth biggest drop
The second largest drop is to be put on the liabilities side of Solutions 30 (-75.95%). The group had faced charges of fraud and money laundering since December 2020, which it vigorously denied. In 2022, operations stall. The group shows a drop in its revenue in organic data over the first nine months of the year. The activity is weighed down by the fall in its revenues in France, due to the arrival at maturity of very high speed in the “telecoms” activity and the end of the deployment of smart electricity meters in the “energy” activity. . The company promises to return to more dynamic growth in 2023. “Even if the price remains shaken by the uncertainties about the 2022 landing, the prospects for a rebound from 2023 are significant”, estimates TP ICAP Midcap.
Atos (-75.90%) for its part recorded the third largest drop. At the beginning of the year, the group published several warnings about its 2021 results before presenting a strategic plan which was poorly received by the market, a plan which had been announced by the general manager, Rodolphe Belmer at the same time as… his departure . However, third quarter activity sent encouraging signals. Atos also managed to move forward with its divestment program, with the sale of its Italian operations last month.
The group is now preparing to split into two with a company that will bring together the historical activities of data center infrastructure management (“Tech Foundations”), while the second will bring together the activities related to digital transformation as well as those of Big Data and Security (BDS).
Valneva shows the fourth largest drop, with a fall of 74.6% since January, missing the “podium” by a breath. The specialist in vaccines against infectious diseases had seen its valuation jump in 2021 (+ 216%) but suffered the full brunt of the improvement in the health context and the difficulties with its vaccine against Covid-19. Although it obtained marketing authorization in Europe at the end of June, the European Commission has drastically reduced its order with the group. From potentially 60 million doses, the European Union has reduced its order to… 1.25 million. The company has suspended production of its vaccine and announced job cuts of up to a quarter of its workforce.
Among the other “losers” of the SBF 120 are indebted groups which are the subject of investor concerns about their balance sheet such as the automotive supplier Faurecia (-62.7%) and the distribution group Casino (-57 .8%).
By Julien Marion (text) and Théophile Magoria (computer graphics)
Julien Marion – ©2022 BFM Bourse