Weekly Market Report

Trading Week: 18 – 22 November 2017

Summary

Main Topics

· Stocks and volumes climb, TEDPIX closes near all-time high

· TSE30 Index gains 2.9%; up 22.1% since March

· Rial little changed as CBI keeps official rate steady

· Iran’s crude steel output rises 24.2% over 12 months  

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) rose 1.5% to 89,339, ending the week just 161 points below its all-time high set in January 2014. It was the sixth consecutive week of gains while volumes were also higher than in recent weeks. The average daily trading value rose more than 60% from last week to USD 60 million. The TSE30 Index advanced 2.9%, boosted by large-cap companies such as Esfahan Mobarakeh Steel Co. (FOLD), Bandar Abbas Oil Refining Co. (PNBA), and Golgohar Mining & Industrial Co. (GOLG). The TSE30 has gained 22.1% since March, against 16.4% for the TEDPIX.

Refineries, base metals, and metallic ores were the best performers of the week as higher global prices and a weaker rial, both official and open market, boosted profits, especially in local currency terms. 

Oil Products climbed 6.7%, with the sector extending its gains over 12 months to 55%. PNBA, the largest refinery with a market cap of about USD 2.3 billion, rose 8.5%. Esfahan Oil Refining Co. (PNES) added 11.2% and was the most traded stock by value on the TSE with volume of USD 20.9 million. Tabriz Oil Refining Co. (PNTB) gained 10.4% and Teh­ran Oil Refining Co. (PTEH) advanced 1.3%, with both among the top five traded stocks of the week. Refineries sell key petroleum products, including gasoline, to the government based on the official exchange rate. The steadily increasing dollar rate plus the stability of crude oil prices have raised expectations for refineries.

Base Metals, which includes large steel and copper producers, rose 5.6%. FOLD, the larg­est maker of flat steel products, added 8.1% after rising 3.9% last week. Khouzestan Steel Co. (FKHZ), a main steel bar producer, rose 8.2% and closed with a P/E of 5.2x based on its own EPS projection. Not all companies in the index are rising however. Companies like LMICO (LMIR), which uses steel as its inputs to make cast iron pipes and fittings, are struggling with rising costs. LMIR fell 2.3% this week and is 8.5% down since March. Na­tional Iranian Copper Industries Co. (MSMI), by far the biggest copper producer, rose 2.6% and is up 26% over 12 months.

Metallic Ores rose 5.6%, with the index up 21% over 12 months. Large iron ore producers Golgohar Mining & Industrial Co. (GOLG) and Chadormalu Mining and Industrial Co (CHML) rose this week along with one of their major shareholders, Mines & Metals Devel­opment Investment Co. (MADN). GOLG climbed 7% and ended the week with a buying queue. GOLG and CHML sell almost all of their iron ore to domestic steel mills, while their sale price is linked to the domestic price of steel rather than the global price of iron ore. 

The indices of most other large-cap industries were little changed over the week, including Chemicals, Banks, and Telecommunication. Automotive and Cement fell 2.2%. Cement producers had risen last week after the earthquake in western Iran. However, as ex­plained last week, the cement industry still faces challenges, including insufficient domes­tic demand compared to capacity, intense competition and trade barriers in neighboring countries.   

 

Iran Fara Bourse

The IFB Overall Index climbed 2% to 1,017, lifted by large-cap Marun Petrochemical Co. (PMRZ) which gained 3.1% after jumping 8.5% last week. Marun published the interim financial statements of its subsidiary Laleh Petrochemical Co., a polyethylene producer, showing revenues up 35% and a 22% increase in net income during the first six months of the fiscal year ending March 2018. Methanol exporter Zagros Petrochemical Co. (PZGZ) rose 6%. Refineries on the IFB climbed this week, with Shiraz Refining Co (PRZZ) up 9.4% and Lavan Refining Co. (PNLZ) adding 13.6%.

 

Foreign Exchange Market

The Central Bank of Iran (CBI) kept the official rial-dollar exchange rate almost unchanged at IRR 35,235. This helped the market exchange rate to stabilize, with the dollar gaining just 0.1% to IRR 40,948 which is still 16.2% above the official rate. Gold coins were in de­mand on higher world gold prices, although this does not fully explain the 6.8% increase in coins this week. The domestic gold coin market is usually more volatile than the domestic FX market and prices sometimes deviate from prices implied by the global price of gold and the rial-dollar market exchange rate. 

 

Economic Development

Iran produced 1.98 million tonnes of crude steel in October, up 24.2% from the same month last year, the World Steel Association (WSA) reported. Output in the first 10 months of 2017 reached 17.9 million tonnes, up 20.9% from the same year-ago period. Iran ac­counted for about 1.27% of total world production of crude steel in 2016 and aims to sub­stantially increase its capacity, counting on abundant energy supplies as a competitive advantage. However, supply chain development is behind plan and access to water has become a new challenge in recent years, especially for mills close to large cities.    

The cost of almost all construction materials, including steel,  increased markedly in the six months ending September 22, according to a semi-annual report published by the Sta­tistical Center of Iran (SCI). Price of different types of steel profiles and rods climbed by 42% to 69%.

The number of building permits issued nationally in spring this year fell 2.8% to 79,700 compared to the same period last year, according to a quarterly SCI report. Permits is­sued in Tehran fell 4.9% to nearly 14,900.

FX Information

Description

23 November 2017

14 November 2017

% Change

Official USD - IRR

35,235

35,237

(0.01)

Market USD - IRR

40,948

40,894

0.1

Official EUR - IRR

41,704

41,508

0.5

Market EUR - IRR

48,388

47,868

1.1

Official GBP - IRR

46,965

46,427

1.2

Market GBP - IRR

54,838

55,000

(0.3)

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

89,339

1,333

1.5

16.4

TSE30 Index

3,757

107

2.9

22.1

Iran Fara Bourse Overall Index

1,017

20

2.0

16.2

Description

This Period

Last Period

Market P/E

6.8

6.7

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

60

37

62

IFB Average Daily Traded Val­ue (Million USD) **

59

137

(57)

Industry Index Information

Description

Close

% Change

Oil Products

318,775

6.7

Base Metals

50,489

5.6

Metallic Ore

16,544

5.6

Rubber & Plastics

20,949

5.3

Wooden Products

44,591

1.9

Coal Mining

1,347

1.9

TSE All-Share Index

89,339

1.5

Investment

1,987

1.2

Ceramics & Tiles

2,101

1.2

Textile

1,280

0.5

Chemicals

5,306

0.5

Banking

569

0.4

IT

12,401

0.4

Industrial Conglomerates

8,104

0.4

Machinery & Equipment

16,016

0.3

Machinery & Electric Equipment

493,141

0.3

Non-Metallic Ores

2,179

0.3

Paper Products

13,476

0.2

Utility Service Providers

219

0.05

Foods excluding Sugar

3,422

0.04

IT & Communications

177

0.0

Medical & Measurement Products

10,244

0.0

Mining

12,058

0.0

Leather Production & Products

2,068

(0.2)

Engineering Services

742

(0.4)

Telecommunication

1,093

(0.4)

Pharmaceuticals

8,798

(0.4)

Transportation & Logistics

3,922

(0.6)

Construction

662

(0.6)

Sugar

8,890

(0.7)

Agriculture

6,350

(1.0)

Cement

639

(2.2)

Automotive

16,274

(2.2)

Insurance

4,709

(2.3)

Oil Drilling & Services

442

(3.4)

Metallic Products

25,932

(3.6)

Other Financial Services

2,122

(4.1)

Printing & Publishing

186,623

(4.1)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

ALMR

Alumrad Co.

9.2

19.3

ALVN

Alvand Tile Co.

5.7

13.9

SEIL

Ilam Cement Co.

7.8

10.7

ALIR

Iran Aluminum Co.

3.7

8.9

TOSA

Iran Industrial Development Co.

3.6

5.5

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

PNES

Esfahan Oil Refining Co.

9.9

20.9

FOLD

Esfahan Mobarakeh Steel Co.

6.3

8.8

PTEH

Tehran Oil Refining Co.

9.2

4.6

PNTB

Tabriz Oil Refining Co.

18.3

4.5

ALIR

Iran Aluminum Co.

3.7

3.3

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

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All Rights Reserved - 2017

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