Weekly Market Report

Trading Week: 25 – 29 November 2017

Summary

Main Topics

· TEDPIX hits record high as almost all sectors make gains

· Rial weakens on free market, with official rate little changed

· Non-oil trade deficit widens on higher imports

· Producer prices up 11.3% over 12 months

· Apartment sales and average prices increase in Tehran

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) rose 2.0% to end the week at 91,152 after setting a rec­ord trading high of 91,329. It marked the seventh consecutive week of gains while the av­erage daily trading value rose 8% to USD 65 million. The TSE30 index of large-cap com­panies rose 3.6%, bringing its return since March to 26.6%, compared to 18.8% for the TEDPIX.

 

Indices of almost all major industries ended the week in positive territory while commodity stocks, including metallic ores and base metals, gave the TEDPIX a big lift to new records. Many companies in these industries have a very simple business model and directly bene­fit from higher global prices and a weaker rial. Six-month interim reports released so far confirm this trend and positive adjustments in EPS estimates are expected if prices and exchange rates remain stable at current levels.

 

The Metallic Ore index rose 8.5% to become the best performing sector of the week after small-cap wood products. Iron ore producers Chadormalu Mining and Industrial Co (CHML) and Golgohar Mining & Industrial Co. (GOLG) rose 8.6% and 7.1% respectively. Omid Investment Management Co. (OIMC), an industrial conglomerate and a main share­holder of CHML and GOLG, climbed 7.7%. Mines & Metals Development Investment Co. (MADN), also a large investment holding, rose 12.8%.

 

Other industrial conglomerates also climbed and their index rose 6.2% this week. Ghadir Investment Co. (GDIR), a main shareholder of petrochemical companies and refineries, advanced 5.8%.  GDIR, with its subsidiary Parsian Oil & Gas Development Co. (PASN), is the second largest shareholder of Pars Petrochemical Co after Persian Gulf Petrochemi­cal Co. (PKLJ). Pars is a main supplier of ethane and benefits from a higher dollar official exchange rate. PASN climbed 3.5%.

 

Base Metals rose 4.4% after adding 5.6% last week, with large steel and copper produc­ers continuing to rise. National Iranian Copper Industries Co. (MSMI) climbed 7.9% after gaining 8.5% last week. MSMI ended the week with a market cap of ~ USD 3 billion and a P/E of 7.6x based on its own EPS estimate. MSMI used a rial-usd exchange rate of IRR 38,500 in its estimates for the second half of the fiscal year ending March 2018, well be­low the current exchange rate of IRR 41,237.

 

Esfahan Mobarakeh Steel (FOLD) rose 4.8% to increase its one-year total return to 117%. Iran Aluminum Co. (ALIR) advanced 4.7% although it ended the week with a selling queue. ALIR’s share price has soared nearly five-fold since it resumed trading in mid-August after 22 months of suspension. ALIR is a low-margin aluminum bar producer and still heavily dependent on imported raw materials. ALIR generated a loss last year but ex­pects to return to profit this year.  

 

Iran Fara Bourse

The IFB Overall Index rose 1.3% to take its return since March to 17.7%. Arfa Iron & Steel Co. (ARFZ), an iron bar producer which uses direct reduced technology, rose 14% this week. ARFZ’s six-month interim report shows that sales increased 46% to around USD 127 million while its EPS was negative because of a loss of ~USD 26 million from the translation of a euro loan at a higher exchange rate. With a market cap of ~USD 307 mil­lion, ARFZ closed with a P/E of 8.9x based on its own estimate of EPS for the current fis­cal year. Iron ore producer CHML holds a 43% stake in ARFZ. Methanol exporter Zagros Petrochemical Co. (PZGZ) climbed 6.2%. Large-cap olefin producer Marun Petrochemical Co. (PMRZ) continued its run, adding another 2.2% this week.

 

Foreign Exchange Market

The rial-dollar exchange rate rose 0.7% to IRR 41,237 even as the Central Bank of Iran (CBI) kept the official rate almost unchanged at IRR 35,265. This is the second week that the CBI has kept the official rate stable after months of steady increases. The government is expected to finalize its budget by December 6 and the recent increase in the official rate will provide more flexibility for its finances. 

 

Economic Development

Iran’s non-oil trade deficit widened in the eight months to November 21 on higher imports and a small decline in exports. Imports rose 17.5% compared to the same year-ago period to USD 32.4 billion. Non-oil exports, which include petrochemicals and condensates, fell 1.2% to USD 28.5 billion. Agricultural products, such as rice, feeding corn and soybean, were among top imports along with automotive parts and vehicles.

 

The number of apartments sold in Tehran in November was 18.5% up on the same month last year at 14,700, and 6.9% higher than October, the CBI reported. The average sale price rose 2.1% over the month to just below USD 1,200 per square meter and was 10.9% higher than a year ago in line with the overall inflation rate.

 

The producer prices index (PPI) increased 0.6% in November from the previous month, the CBI reported. The PPI was up 11.3% on a 12-month basis against 11.6% in October.

~ Effective rial-usd exchange rate for conversions: IRR 41,000

FX Information

Description

30 November 2017

23 November 2017

% Change

Official USD - IRR

35,265

35,235

0.1

Market USD - IRR

41,237

40,948

0.7

Official EUR - IRR

41,838

41,704

0.3

Market EUR - IRR

48,939

48,388

1.1

Official GBP - IRR

47,497

46,965

1.1

Market GBP - IRR

55,900

54,838

1.9

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

91,152

1,813

2.0

18.8

TSE30 Index

3,894

136

3.6

26.6

Iran Fara Bourse Overall Index

1,030

13

1.3

17.7

Description

This Period

Last Period

Market P/E

6.9

6.8

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

65

60

8

IFB Average Daily Traded Val­ue (Million USD) **

43

59

(27)

Industry Index Information

Description

Close

% Change

Wooden Products

53,508

20.0

Metallic Ore

17,954

8.5

Industrial Conglomerates

8,605

6.2

Agriculture

6,707

5.6

Printing & Publishing

196,800

5.5

Base Metals

52,694

4.4

Foods excluding Sugar

3,528

3.1

Investment

2,040

2.7

TSE All-Share Index

91,152

2.0

Engineering Services

754

1.6

Chemicals

5,384

1.5

Sugar

8,995

1.2

Telecommunication

1,105

1.2

Automotive

16,450

1.1

Ceramics & Tiles

2,123

1.0

Insurance

4,756

1.0

Oil Drilling & Services

446

0.9

Oil Products

321,315

0.8

Utility Service Providers

220

0.5

Textile

1,286

0.5

Transportation & Logistics

3,938

0.4

Banking

570

0.3

Machinery & Electric Equipment

493,573

0.1

IT & Communications

177

0.0

Medical & Measurement Products

10,244

0.0

Mining

12,058

0.0

Coal Mining

1,345

(0.1)

Leather Production & Products

2,064

(0.2)

Machinery & Equipment

15,968

(0.3)

Non-Metallic Ores

2,171

(0.3)

Construction

660

(0.4)

Cement

636

(0.5)

Metallic Products

25,797

(0.5)

Pharmaceuticals

8,750

(0.5)

Rubber & Plastics

20,763

(0.9)

Other Financial Services

2,100

(1.0)

IT

12,180

(1.8)

Paper Products

13,144

(2.5)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

ALVN

Alvand Tile and Ceramic Ind. Co.

6.8

20.9

FIBR

Fibre Iran Co.

15.2

20.0

FNAR

ZAR Spring Mfg. Co.

2.4

18.8

MSMI

National Iranian Copper Ind. Co.

5.0

7.9

ALIR

Iran Aluminum Co.

3.9

4.7

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

MADN

Mines and Metals Dev. Inv. Co.

4.2

15.1

FOLD

Esfahan Mobarakeh Steel Co.

6.6

12.9

GOLG

Golgohar Mining & Industrial Co.

7.2

11.3

PNES

Esfahan Oil Refining Co.

10.2

10.6

ALIR

Iran Aluminum Co.

3.9

9.5

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

Turquoise Partners - Firouzeh Asia Brokerage

All Rights Reserved - 2017

Follow us on