Weekly Market Report

Trading Week: 23 - 27 September 2017

Summary

Main Topics

- According to the Central Bank of Iran, inflation rate falls below 10%

- Higher activity in Tehran’s housing market

- Narrower gap between official and market exchange rates

- Strong demand for newly-listed companies

- Europe rejected the idea of renegotiating the nuclear deal

 

Tehran Stock Exchange

After a relatively volatile week, the TSE Overall Index (TEDPIX) ended the week flat at 85,819. TEDPIX is still up 11.8% since March 20 and very close to the highest level since January 2014. The average daily trading value was USD 74 million, nearly 23% higher than last week. The weekly trading value was also the highest in four months.

 

Chodan Sazan Industrial Co. rose by another 23% this week to bring its two-week post-IPO growth to as much as 65%. In response to the strong demand for its shares, the com­pany announced that there was no change in its full-year EPS estimate. The company produces cast iron rolls and casting products and sells more than 90 percent of its prod­ucts in the domestic market.

 

IT index was the top gainer thanks to another newly-listed company, HiWeb, which record­ed 27.6% increase and ended the week with a buying queue. Among the large cap indus­tries, Telecom rose 2.5% and Oil products and Automotive rose 1.2% and 1.1% respec­tively. Iranian car makers Saipa and Iran Khodro were also among value leaders of the week. Banks rose 0.3% while the majority of companies in this sector are still suspended from trading. The reason is a long dispute over the standards for publishing the financial statements. However, there are signs of progress with the CBI and the Ministry of Eco­nomic Affairs being expected to sign a directive this week that may eventually put an end to this challenge.

 

Refineries rose as the oil price rose and price of Brent oil approached $60/bbl. Tensions over Iraqi Kurdistan’s independence vote and the fear of unexpected disruption in oil sup­plies boosted demand for oil.  A stronger official exchange rate was also a good news for the refineries.

 

Iran Fara Bourse

The IFB Overall Index climbed 0.4%, increasing its growth from March to 9.8%. Trading value was slightly lower than last week. The IPO of Rishmac Company, the sixth initial offering since the beginning of the Iranian new year on March 20th, received strong de­mand, which is often the case for Iranian IPOs. Rishmac’s revenue comes from production and export of licorice extract which has applications in food and pharmaceutical industries. Rishmac’s share (RPEZ) rose 21.5% for the week after hitting the 5% daily limit every day. Its current price translates to a forward P/E of 6.5x based on the company’s earning pro­jections.

 

Foreign Exchange Market

The gap between the official and market exchange rates narrowed this week as a 0.7% increase in the official rate surpassed the 0.2% increase in the market rate. The US dollar was trading at IRR 39,111 in the free market, which is still 15.6% above the official rate. The CBI has promised the unification of the exchange rates, a policy that generally favors exporters though the cost profile of companies also matters. The foreign exchange market showed resilience to the US president Trump’s recent threats aimed at weakening the nu­clear deal with Iran. The resistance from other major powers should have played a role. This week European ambassadors to Washington strongly rejected the idea of weakening or renegotiating the deal and insisted that they will keep cooperating with Iran.   

 

Economic Development

Latest economic reports from the CBI point to price stability and higher activities in the housing market. For the month ended September 22, the CPI rose by 0.3% from the previ­ous month and 8.4% from the same month last year. The inflation rate was just below 10% on the 12-month average CPI basis.

 

Another report showed that transactions in the housing market of capital Tehran were 9.2% higher for the month ended September 22 compared to the same period last year. The average sales price also increased by 9.7% to USD 1,217 per square meter. Old buildings aged 16 years or more recorded the largest increase in the number of transac­tions. For the spring and summer of this year, the number of transactions and the average price increased by 2.6% and 6.2% respectively.

FX Information

Description

28 September 2017

21 September 2017

% Change

Official USD - IRR

33,805

33,570

0.7

Market USD - IRR

39,111

39,047

0.2

Official EUR - IRR

39,666

39,899

(0.6)

Market EUR - IRR

46,471

46,871

(0.9)

Official GBP - IRR

45,231

45,292

(0.1)

Market GBP - IRR

51,800

52,300

(1.0)

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

85,819

(12)

(0.01)

11.8

TSE30 Index

3,503

(19.4)

(0.6)

13.9

Iran Fara Bourse Overall Index

961

3

0.4

9.8

Description

This Period

Last Period

Market P/E

6.8

6.8

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

74

60

23

IFB Average Daily Traded Val­ue (Million USD) **

57

62

(8)

Industry Index Information

Description

Close

% Change

IT & Communications

163

27.6

Oil Drilling & Services

480

3.7

Leather Production & Products

2,097

2.6

Telecommunication

1,023

2.5

Metallic Products

32,282

2.4

IT

12,746

2.1

Printing & Publishing

202,389

1.7

Utility Service Providers

209

1.7

Non-Metallic Ores

2,371

1.6

Sugar

8,954

1.6

Oil Products

264,151

1.2

Investment

1,964

1.2

Automotive

17,790

1.1

Machinery & Equipment

16,163

1.0

Transportation & Logistics

4,148

0.9

Wooden Products

56,328

0.9

Ceramics & Tiles

2,347

0.6

Banking

566

0.3

Construction

698

0.2

Insurance

5,040

0.1

Medical & Measurement Products

10,244

0.0

TSE All-Share Index

85,819

(0.0)

Foods excluding Sugar

3,722

(0.2)

Machinery & Electric Equipment

494,374

(0.3)

Chemicals

5,035

(0.3)

Textile

1,301

(0.5)

Cement

674

(0.5)

Industrial Conglomerates

7,840

(0.9)

Pharmaceuticals

9,275

(0.9)

Other Financial Services

2,239

(1.4)

Engineering Services

680

(1.7)

Mining

12,581

(1.8)

Agriculture

7,084

(1.8)

Metallic Ore

16,615

(2.4)

Rubber & Plastics

22,452

(2.5)

Coal Mining

1,325

(2.8)

Base Metals

44,076

(2.9)

Paper Products

12,919

(3.5)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

DODE

Doodeh Sanati Pars Co.

9.2

36.8

HWEB

Hi Web

11.3

27.6

ALIR

Iran Aluminum Co.

5.0

25.5

CHDN

Chodan Sazan Industrial Co.

8.2

23.2

APPE

Asan Pardakht Persian Co.

34.8

12.1

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

CHDN

Chodan Sazan Industrial Co.

8.2

13.9

HWEB

Hi Web

11.3

9.3

SIPA

SAIPA Group

3.1

8.5

APPE

Asan Pardakht Persian Co.

34.8

7.7

IKCO

Iran Khodro

6.8

3.3

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

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