Weekly Market Report

Trading Week: 21 – 25 October 2017

Summary

Main Topics

·       Stocks rise for a second week, led by base metals; car makers fall

·       Investors react to six-month company reports 

·       The CBI raises official dollar rate, narrowing gap with market rate

·       Inflation rises to 8.2%; rents increase

·       Nearly 45,000 cars imported in six months

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) rose for the second week, while the ADTV (Average Daily Trade Volume) gained 17% to USD 54 million. The TEDPIX, which advanced 1% for the week to finish at 86,636, is now up by 10% over 12 months. The market was mixed as investors evaluated interim reports.  Heavy weight commodity sectors like base metals, chemicals, and petroleum products, as well as telecoms stocks, supported the index while car makers and iron ore producers lost ground.

 

Base Metals was the top gainer among sectors, adding 4.3%, boosted by Esfahan Mo­barakeh Steel Co. (FOLD) which rose 11.6% over the week on top of a 9% increase the previous week. FOLD jumped last Saturday after releasing updated projections for its fi­nancial year ending March 2018, which raised its EPS forecast by 78% to IRR 538 from IRR 302. FOLD reported revenues of nearly USD 1.7 billion, mainly from flat steel prod­ucts, for the April-September period, up 43% from the same period last year. FOLD has covered 45% of its projected annual revenue and 55% of its full-year EPS estimate in the first half. Its share price has doubled in 12 months on the back of a sharp increase in the domestic price of steel, driven by higher global prices and a weaker rial.

 

Kish South Kaveh Steel Co. (KVEH), which held its IPO last week, made more gains to bring its post-IPO return to 15.3%. It was the most traded stock with total volume of USD 17.8 million, although prices stabilized quicker than other recent IPOs. Other steel makers were almost flat for the week, including Khouzestan Steel Co. (FKHZ) and Khorasan Steel Co. (FKAS). National Iranian Copper Industries Co. (MSMI) fell 1.4%.

 

The Automotive sector fell 5.4%. Iran’s largest car makers, Iran Khodro Co. (IKCO) and SAIPA (SIPA), fell 5.3% and 8% respectively. IKCO’s interim report showed that sales for the six months increased 26% from the same period last year to USD 3.3 billion but costs rose 30%, resulting in a fall in gross margins to 7.7% from 10.9%. 

 

SIPA revised down full-year guidance based on its six-month performance. SIPA expects sales of nearly USD 2.9 billion for the year ending March 2018, down 1.6% from its previ­ous estimate. Projections for net income were revised down by 20% to USD 100 million. The company operates on slim margins and net income is very sensitive to changes in parameters.

 

Iran Fara Bourse

The IFB Overall Index rose 1.9% to close at 946.6, bringing its return since March 20 to 8.2%. Zagros Petrochemical Co. (PZGZ), a main methanol exporter, climbed 12.9%. PZGZ filed a letter with the SEO which explained it was unable to update its guidance be­cause essentially it could not reliably forecast neither global prices nor the exchange rate and their eventual effect on its EPS. Marun Petrochemical Co. (PMRZ), a large olefin pro­ducer, rose 2.8%. Esfahan Steel Co. (ZOBZ) added 3.2%.

 

Foreign Exchange Market

The rial remained steady on the open market at IRR 40,184, despite the CBI raising the official dollar rate by a relatively high 0.6% to IRR 34,489. A central bank official said the CBI would unveil a package of policies in March 2018 to overhaul the FX market and make it more “business friendly”.

 

Economic Development

Inflation is stabilising according to figures published by the Central Bank of Iran this week. The CBI’s consumer prices index showed inflation in the month ending October 22 re­mained steady at a year-on-year 8.4%, The Central Bank recently cut interest rates on deposits, which usually encourages landlords to raise rents. The recent depreciation of the rial may also start to add to inflation in coming months.

 

Foreign trade data showed imports totaled USD 23.6 billion from April to September. Im­ports of cars and auto parts jumped 37% compared to the same year-ago period to USD 1.7 billion, including nearly 45,000 cars valued at USD 1.2 billion.

FX Information

Description

26 October 2017

18 October 2017

% Change

Official USD - IRR

34,489

34,273

0.6

Market USD - IRR

40,184

40,189

(0.01)

Official EUR - IRR

40,787

40,322

1.2

Market EUR - IRR

47,284

47,357

(0.2)

Official GBP - IRR

45,755

45,325

0.9

Market GBP - IRR

53,550

53,300

0.5

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

86,636

868

1.0

12.9

TSE30 Index

3,588

54

1.5

16.6

Iran Fara Bourse Overall Index

946

17

1.9

8.2

Description

This Period

Last Period

Market P/E

6.9

6.9

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

54

46

17

IFB Average Daily Traded Val­ue (Million USD) **

33

39

(15)

Industry Index Information

Description

Close

% Change

Base Metals

48,399

4.3

Sugar

9,014

3.6

Oil Drilling & Services

437

3.5

Oil Products

273,828

3.1

IT & Communications

169

2.9

Telecommunication

1,083

2.6

Industrial Conglomerates

7,927

1.6

Chemicals

5,147

1.4

TSE All-Share Index

86,637

1.0

Other Financial Services

2,191

1.0

Investment

1,924

0.9

Ceramics & Tiles

2,172

0.5

IT

12,440

0.5

Non-Metallic Ores

2,196

0.4

Engineering Services

666

0.2

Utility Service Providers

211

0.1

Medical & Measurement Products

10,244

0.0

Leather Production & Products

2,075

(0.01)

Construction

686

(0.1)

Transportation & Logistics

4,162

(0.1)

Machinery & Electric Equipment

485,226

(0.2)

Banking

561

(0.2)

Insurance

4,822

(0.4)

Foods excluding Sugar

3,491

(0.8)

Metallic Products

31,240

(0.9)

Cement

648

(0.9)

Machinery & Equipment

15,845

(0.9)

Metallic Ore

16,196

(0.9)

Mining

12,390

(1.0)

Pharmaceuticals

8,952

(1.1)

Textile

1,282

(1.3)

Paper Products

13,183

(1.5)

Printing & Publishing

188,077

(1.8)

Wooden Products

47,905

(3.2)

Coal Mining

1,275

(4.4)

Agriculture

6,512

(4.8)

Automotive

15,586

(5.4)

Rubber & Plastics

20,769

(5.5)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

GSHI

Khorasan Shirin Sugar Co.

65.9

26.8

DODE

Doodeh Sanati Pars Co.

10.8

17.4

MNGZ

Iran Manganese Mines Co.

9.0

16.4

KVEH

Kish South Kaveh Steel Co.

5.1

15.3

GESF

Esfahan Sugar Co.

23.4

8.6

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

KVEH

Kish South Kaveh Steel Co.

5.1

17.8

FOLD

Esfahan Mobarakeh Steel Co.

5.9

15.2

HWEB

Hi Web

11.4

10.0

PTEH

Tehran Oil Refining Co.

9.1

6.8

PNTB

Tabriz Oil Refining Co.

15.7

5.8

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

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