Weekly Market Report

Trading Week: 11 – 15 November 2017

Summary

Main Topics

· TSE Overall Index closes at highest since January 2014 but volumes fall.

· Cement producers rise on post-quake reconstruction estimates.

· Official dollar rate increases but gap widens with free market.

· Government budget deficit falls on higher oil prices and weaker rial.   

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) rose 0.1% over the week to close at 88,005, its highest since January 2014. It was the fifth consecutive weekly increase although market signals have been mixed over the past fortnight and most major sectors showed little change. Vol­umes were low and the average daily trading value slipped 7% to USD 37 million.

 

The Cement sector rose 2.6% on higher estimates for domestic demand following the dev­astating earthquake in western Iran on November 12 which killed more than 1000 people and also hit areas of northern Iraq. Three cement producers were among the TSE top five gainers of the week. Gharb Cement Industries Inc. (SGRB) rose 15.7%, Darab Cement Co. (SDAB) added 7.9% and Ilam Cement Co. (SEIL) was up 7.7%. All three ended the week with pending buy orders after hitting the daily limit of 5%.

 

Despite this week’s rally, the Cement index is still 10% down over 12 months. The industry has significant excess capacity while cement’s low price-to-weight ratio makes it unattrac­tive for export, at least over long distances. Even in neighboring countries, Iranian cement exporters face trade barriers and intense competition.

 

Persian Gulf Petrochemical Co (PKLJ), the largest publicly listed company with a market cap of USD 5.9 billion, climbed 1.2% this week. Its exports benefit from the higher dollar market exchange rate. As the main shareholder of an ethane supplier it also benefits from the higher official exchange rate. The Chemicals sector remained little changed however as Parsian Oil & Gas Development Co. (PASN) and Tamin Petroleum & Petrochemical Investment Co. (PTAP) both fell on the week.

 

Base Metals and Oil Products, which includes refineries, added nearly 1%, making up last week’s declines. Esfahan Mobarakeh Steel Co. (FOLD) rose 3.9% with a weekly trading value of USD 6.3 million, which was the second highest after Esfahan Oil Refining Co. (PNES). FOLD published its audited full-year EPS estimate which was 1.5% higher than the unaudited version. FOLD closed with a P/E of 4.39x based on its own EPS projection.

 

Car makers were mixed and the Automotive index ended the week 0.9% lower. Volume was high and the sector posted the week’s third highest trading value. 

 

Iran Fara Bourse

The IFB Overall Index climbed 2%, boosted by its main constituent Marun Petrochemical Co (PMRZ) which rose 8.5%. PMRZ, a major olefin producer, closed with a market cap of USD 3.5 billion, accounting for nearly 24% of Fara Bourse’s total capitalization. Zagros Petrochemical Co (PZGZ) and Esfahan Steel Co (ZOBZ) ended the week slightly lower.  

 

Foreign Exchange Market

The rial weakened this week as the market exchange rate followed official rates and react­ed to developments in the Middle East, particularly tensions over Lebanon. The dollar’s market exchange rate rose 0.5% to IRR 40,894, having climbed above 41,000 in mid-week. The Central Bank of Iran (CBI) raised the official dollar rate by 0.3% to IRR 35,237. The rate of increase was less than in recent weeks and the official rate declined slightly from Tuesday to Wednesday.

 

Economic Development

Iran’s budget deficit fell 29% to USD 4.4 billion in the six months to September 22, largely due to a substantial increase in oil revenues because of higher global prices and a weaker rial based on the official exchange rate. Latest CBI figures show that revenues from oil and petroleum products for the first half of the Iranian calendar year rose 82% to USD 11 billion compared to the same year-ago period. Non-oil revenues totalled USD 13.9 billion. Tax revenues fell slightly and accounted for 76% of non-oil revenues.

FX Information

Description

14 November 2017

8 November 2017

% Change

Official USD - IRR

35,237

35,149

0.3

Market USD - IRR

40,894

40,688

0.5

Official EUR - IRR

41,508

40,769

1.8

Market EUR - IRR

47,868

47,564

0.6

Official GBP - IRR

46,427

46,294

0.3

Market GBP - IRR

55,000

54,100

1.7

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

88,005

108

0.1

14.7

TSE30 Index

3,650

3

0.1

18.6

Iran Fara Bourse Overall Index

990

13

1.3

13.1

Description

This Period

Last Period

Market P/E

6.7

6.7

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

37

40

(7)

IFB Average Daily Traded Val­ue (Million USD) **

137

41

234

Industry Index Information

Description

Close

% Change

Paper Products

13,446

6.3

Printing & Publishing

194,686

3.6

Coal Mining

1,322

3.0

Other Financial Services

2,212

2.7

Cement

654

2.6

Machinery & Equipment

15,962

2.4

Base Metals

47,827

1.1

Oil Products

298,876

0.9

Engineering Services

744

0.4

Construction

666

0.3

Ceramics & Tiles

2,076

0.3

Investment

1,963

0.2

Pharmaceuticals

8,837

0.2

TSE All-Share Index

88,006

0.1

Telecommunication

1,097

0.04

Chemicals

5,281

0.02

IT & Communications

177

0.0

Medical & Measurement Products

10,244

0.0

IT

12,351

(0.1)

Banking

566

(0.1)

Leather Production & Products

2,072

(0.2)

Textile

1,274

(0.2)

Rubber & Plastics

19,894

(0.2)

Machinery & Electric Equipment

491,514

(0.2)

Metallic Ore

15,674

(0.3)

Industrial Conglomerates

8,074

(0.3)

Agriculture

6,412

(0.3)

Wooden Products

43,765

(0.6)

Utility Service Providers

219

(0.7)

Metallic Products

26,907

(0.7)

Automotive

16,639

(0.9)

Foods excluding Sugar

3,420

(1.1)

Mining

12,058

(1.2)

Transportation & Logistics

3,947

(1.3)

Insurance

4,818

(1.3)

Non-Metallic Ores

2,173

(1.8)

Sugar

8,949

(3.5)

Oil Drilling & Services

457

(5.4)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

MNGZ

Iran Manganese Mines Co.

13.1

20.2

SGRB

Gharb Cement Industries Inc.

7.9

15.7

TRIR

Iran Tractor Manufacturing Co.

6.5

9.6

SDAB

Darab Cement Co.

3.0

7.9

SEIL

Ilam Cement Co.

7.0

7.7

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

PNES

Esfahan Oil Refining Co.

8.9

6.4

FOLD

Esfahan Mobarakeh Steel Co.

5.9

6.3

ALIR

Iran Aluminum Co.

3.4

4.8

KRTI

Iran Carton Co.

16.5

3.4

TKIN

Techinco Co.

32.5

2.1

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

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