Weekly Market Report

Trading Week Ended: 11 – 15 March 2017

Summary

Main Topics

- TSE All-Share Index closes at 76,737, up 0.6% on the week but 4.3% down over the year

- IFB Overall index adds 0.7% in the final week of the Iranian year to record an 8.2% an­nual growth

- Insurance is TSE top performing sector of the year with 32% increase

 

Tehran Stock Exchange

The Tehran Stock Exchange All-Share Index edged up 0.6% over the last full trading week of the Iranian calendar year, closing at 76,737 for a loss of 4.3% over the 12 months. Other Financial Services (+4.9%) was the top gainer among sectors for the week due to further gains by leasing companies. The weakest sector of the week was Metallic Products (-18%) which was dragged down by Machine Sazi Arak Mfg. Co. (MARK -25%). MARK resumed trading on the TSE this week after four months absence and was the big­gest faller among stocks. Its first quarter statement for the financial year ending Septem­ber 22 disclosed net income down 71% from a year ago to IRR 25 billion (approx. USD 0.6 million) due to lower sales and higher product costs.

 

The TSE 30 index of the thirty largest companies by market capitalization gained 0.2% over the week to close at 3,077, resulting in a 9.0% decline over the year. Mobin Petro­chemical Co. (MOBN +4.7%) was the biggest gainer in the top 30s this week following weeks of trading in a narrow range. The company released its initial projection for the next financial year ending March 20, 2018, forecasting net income of IRR 12,904 billion (approx. USD 344 million). Mobin also revised upwards its net income projection for the current financial year ending March 19 to IRR 11,784 billion (approx. USD 314 million) from IRR 11,345 billion (approx. USD 303 million). The improvement is due to lower de­preciation costs after the tax authorities permitted the company to consider a longer life span for some of its facilities. The weakest share this week on the TSE30 index was Iran Khodro (IKCO -6.0%) following its release of disappointing projections for the next finan­cial year ending March 20, 2018. IKCO has forecast a fall in net income of 27% to IRR 1,598 billion (approx. USD 42 million) due to expectations of higher operating costs and less income from sales of investments. However for the current year Iran Khodro has raised its projected net income to IRR 2,185 billion (approx. USD 58 million) from IRR 1,865 billion (approx. USD 49 million) owing to a 13% gain in sales.

 

This week the Average Daily Trade Volume (ADTV) rose 76% to USD 132 million on the back of various block trades. Stocks posting the highest weekly traded value were led by Iran Transfo Corp. (TRNS -2.2%), MAPNA Group (MAPN -1.7%) and Machine Sazi Arak Mfg. Co. (MARK -25.0%) with USD 9 million, USD 6.4 million and USD 5.6 million of trades respectively.

 

Iran Fara Bourse

The Iran Fara Bourse (IFB) overall index closed at 871, up 0.7% from last week. Its ADTV surged 86% to USD 93 million, mostly because of higher trade volume in debt securities. Debt instruments were the most popular, posting 65% growth in total traded value to USD 307 million. For the year the IFB overall index has gained 8.2%.

 

Foreign Exchange Market

The official rate of the US dollar was almost unchanged, set by the Central Bank of Iran at IRR 32,422, just 0.01% higher than the previous week. The free market rate of the US dollar edged up 0.3% to close at IRR 37,425. The CBI increased the official euro rate by 1.8% to IIR 34,766, while on the free market it gained 1.2% to close at IRR 40,354. The official rate of the British pound ended 0.9% higher at IRR 39,775 and closed up 2.8% on the free market at IRR 48,100.

 

Annual Performances

This was the last full trading week of the Tehran Stock Exchange before the end of the Iranian calendar year on March 20. Saturday will be the last official trading day of the year. Shortages of liquidity remained the main concern of companies for the third consecutive year, while weaker demand brought further difficulties for a broad range of companies in various sectors, from retail to housing. However national economic growth has jumped from less than 1% to over 7% in the past nine months, helped by foreign trade opportuni­ties in the aftermath of the JCPOA and higher commodity prices on global markets. Gains of some sectors on the TSE have sometimes underperformed growth in industries as to an extent this recent expansion was foreseen by investors and reflected in higher share prices in the last quarter of the previous Iranian calendar year. During this trading year, the top four major sectors on the TSE were Insurance (+32%), Base Metals (27%), Rub­ber & Plastics (+24%) and IT (+21%). Insurance companies benefited from the termination of value added tax on the sector. However their third quarter reports showed that payouts for claims were 3% higher than revenues from insurance policies sold. The Base Metals sector was boosted by higher prices of iron ore, copper and steel on global markets, with average share prices growing 7% in the first half of the year to almost 20% in the second half. Tire manufacturing companies, listed under the Rubber & Plastic index, experienced steady growth throughout the year on higher sales because of increased domestic auto­mobile production and limits imposed on imports of foreign tires. The IT sector gained mainly on the back of payment processing companies, with some analysts pointing to market expectation of constant growth in the industry over the next years as the main driv­er. The biggest fallers of the year were led by Automotive which dropped 39% and Trans­portation & Logistics which lost 30%. Automotive had gained 115% last year but stocks fell back this year despite a positive performance by the auto industry. Similarly for Transpor­tation & Logistics which lost half of last year’s gains. Shipping companies grew less than expected.

 

Comparing performances of the second half of the year with the first half, the biggest changes were seen in two sectors: Cement and Metallic Products. The Cement sector index fell almost 10% in the first half but bounced back 15% in the second. Since late Au­gust cement manufacturers have agreed to produce only up to 70% of capacity and re­move discount schemes which had led to intense competition in the industry. Metallic Products rose 18% in the first half but fell 25% in the second. The sector has been affect­ed this year by speculative trading in Azarab Industries Co. (AZAB) and Machine Sazi Ar­ak Mfg. Co. (MARK).

FX Information

Description

16 March 2017

9 March 2017

% Change

Official USD - IRR

32,422

32,420

0.01

Market USD - IRR

37,425

37,327

0.3

Official EUR - IRR

34,766

34,137

1.8

Market EUR - IRR

40,354

39,867

1.2

Official GBP - IRR

39,775

39,425

0.9

Market GBP - IRR

48,100

46,800

2.8

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2016

TSE Overall Index—TEDPIX

76,737

452

0.6

(4.3)

TSE30 Index

3,077

6

0.2

(9.0)

Iran Fara Bourse Overall Index

871

6

0.7

8.2

Description

This Period

Last Period

Market P/E

7.2

7.2

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

132

75

76

IFB Average Daily Traded Val­ue (Million USD) **

93

50

86

Industry Index Information

Description

Close

% Change

Printing & Publishing

136,776

5.2

Wooden Products

60,905

4.9

Other Financial Services

2,282

4.9

Insurance

5,176

3.9

Utility Service Providers

189

3.7

Metallic Ore

13,720

3.5

Oil Drilling & Services

648

2.4

Oil Products

202,284

2.2

Construction

725

1.9

IT

8,826

1.8

Pharmaceuticals

9,166

1.6

Telecommunication

885

1.4

Investment

1,782

1.1

Machinery & Equipment

14,860

0.8

Cement

706

0.7

TSE All-Share Index

76,738

0.6

Leather Production & Products

1,710

0.6

Agriculture

7,012

0.5

Transportation & Logistics

3,822

0.4

Rubber & Plastics

18,934

0.4

Banking

585

0.3

Non-Metallic Ores

2,163

0.1

Coal Mining

1,265

0.0

Medical & Measurement Products

10,244

0.0

Mining

16,981

0.0

Foods excluding Sugar

3,569

(0.1)

Textile

1,380

(0.1)

Base Metals

33,412

(0.3)

Sugar

5,332

(0.5)

Ceramics & Tiles

1,986

(0.6)

Chemicals

4,714

(1.0)

Industrial Conglomerates

7,172

(1.3)

Engineering Services

713

(1.7)

Machinery & Electric Equipment

489,925

(1.7)

Paper Products

7,860

(2.2)

Automotive

16,867

(2.6)

Metallic Products

31,676

(18.0)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

BDAN

Dana Insurance Co.

9.5

19.8

TKSM

Takceram Tile Manufacturing Co.

2.9

18.0

ROOI

Iran Zinc Mines Dev. Co.

6.6

17.9

BALI

Buali Investment Co.

3.2

16.1

MSTI

Motorsazan Tractor Mfg. Co.

8.7

14.9

TSE Top 5 Losers

Company

Close **

(USD Cents)

% Change

MARK

Machine Sazi Arak

5.2

(25.0)

HTOK

Tuka Transportation Co.

7.5

(15.9)

SGEN

Qayen Cement Co.

51.0

(11.9)

GGAZ

Ghazvin Sugar Co.

6.0

(9.4)

PLAK

Polyacryl Iran Corp.

1.3

(8.3)

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

TRNS

Iran Transfo Corp.

36.4

9.0

MAPN

MAPNA Group

20.0

6.4

MARK

Machine Sazi Arak Mfg. Co.

5.2

5.6

SIPA

SIAPA Group

3.1

5.4

IKCO

Iran Khodro

7.0

3.8

** All figures in USD are converted from IRR at the free market rate

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