Weekly Market Report

Trading Week: 28 October - 1 November 2017

Summary

Main Topics

·       Stocks rise for a third week, led by refineries, automotive and engineering

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

·       Russia’s Putin visits Tehran for summit, shows support for nuclear deal

·       Producer prices increase 1.3% in October; up 11.6% year-on-year

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) climbed 1.4% to end the week at 87,844, close to levels last seen in early 2014. The TSE30 gained 1.8%. The rally that started after US President Donald Trump decertified Iran’s compliance with the nuclear deal is now in its third week. Higher global commodity prices and a weaker rial remain the main drivers of growth. The average daily trading volume was just under USD 53 million, little changed from last week.

Oil Products, which includes big refineries, rose 9.1%, making a 12-month gain for the sector of 40%. Bandar Abbas Oil Refining Co (PNBA), one of the 10 biggest listed compa­nies, climbed 18%. Esfahan Oil Refining Co (PNES) advanced 7.2% and Tabriz Oil Refin­ing Co (PNTB) added 8.6%. Tehran Oil Refining Co (PTEH), which was hit by a fire, gained 3.2%. The company said the fire had no operational or financial impact. Refineries generally benefit from an increase in the official dollar rate and higher oil prices. The four refineries were the most traded stocks by value on the TSE.

 

Car makers also rose this week. Iran Khodro Co (IKCO) and SAIPA (SIPA), Iran’s two largest auto manufacturers, climbed 11% and 8.6% respectively. Both are still around 20% down over 12 months based on share prices adjusted for dividends and corporate actions.

 

MAPNA Group (MAPN), the main producer and manager of power generating plants, rose 6.5%. MAPN is the main constituent of the engineering index. The minister of energy has raised the issue of cheap electricity prices, prompting speculation about possible price increases in the near future.

 

HiWeb (HWEB) made headlines this week when it said it had acquired Pars Online, the private sector’s largest internet service provider. HiWeb, which held its IPO on September 13, rose 4.4% this week, taking its post-IPO gain to 68%. After its statement on Pars Online, the ICT ministry mentioned Asia Tech Co. as HiWeb’s next possible “acquisition target”. Comments by Asia Tech suggested they were holding negotiations but were not close to agreement. Asia Tech also said it was working on its own planned IPO.

 

Telecommunication Company of Iran (MKBT) rose 1.2%. HiWeb aims to be a rival and the ICT ministry said it hoped that its new acquisition may help to reduce MKBT’s market pow­er. HiWeb says it has an exclusive right to provide rural areas with 4G internet.

 

Iran Fara Bourse

The IFB Overall Index rose 3% to 975, increasing its return since March 20 to 11.4%. IFB-listed refineries also climbed. Shiraz Oil Refining Co (PRZZ) gained 12% while Lavan Oil Refining Co, a small refinery, added 2.4%. Asaluyeh Power Plant Co (BMAZ), a subsidiary of MAPNA Group, rose 11.5% after it published its full-year projections based on its first-half performance and resumed trading. BMAZ traded at a forward P/E ratio of 5.5 on the last trading day of the week. Its unaudited reports show that it has already covered 62% of its projected revenues and 88% of its own EPS estimate. Marun Petrochemical Co. (PMRZ), a main olefin producer, rose 5.4% and was the main driver behind the IFB’s gains over the week. Methanol exporter Zagros Petrochemical Co. (PZGZ) added 5.6%.

 

Foreign Exchange Market

On the FX market, the CBI continued to raise the official dollar rate and at a faster pace. The official rial-dollar exchange rate rose 1.3% to IRR 34,950, while the free market rate rose 0.7% to IRR 40,469. The gap between the two rates has narrowed to 15.7% from 16.5%. This week Russian President Vladimir Putin visited Tehran for a three-way summit with Iran and Azerbaijan. The trip was interpreted by the media as a show of opposition to Trump’s new approach on the nuclear deal. In a joint statement the summit participants said the deal is “working effectively”.

 

Economic Development

Producer prices rose 1.3% in October from September and are up 11.6% year-on-year, the Central Bank of Iran reported this week. Prices had risen 1.4% in September for a year-on-year increase of 10.7%. The monthly Producer Prices Index report is not very de­tailed, however the construction and manufacturing sub-index posted its biggest increase in two months. The CBI also reported last week that the Consumer Price Index gained 0.4% in October from September, while the year-on-year inflation rate was unchanged at 8.4%.

 

A CBI housing market report shows sales and prices are rising in Tehran compared to last year. More than 13,800 apartments were purchased in October, up 34.4% from the same year-ago period. Purchases were 11% down from September but this is a normal season­al fluctuation. Average prices in October were up 0.7% from September and 8.7% higher than a year earlier.

FX Information

Description

2 November 2017

26 October 2017

% Change

Official USD - IRR

34,950

34,489

1.3

Market USD - IRR

40,469

40,184

0.7

Official EUR - IRR

40,737

40,787

(0.1)

Market EUR - IRR

47,458

47,284

0.4

Official GBP - IRR

46,411

45,755

1.4

Market GBP - IRR

54,000

53,550

0.8

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

87,844

1,208

1.4

14.5

TSE30 Index

3,653

64

1.8

18.7

Iran Fara Bourse Overall Index

974

28

3.0

11.4

Description

This Period

Last Period

Market P/E

7.0

6.9

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

53

54

(2)

IFB Average Daily Traded Val­ue (Million USD) **

42

33

27

Industry Index Information

Description

Close

% Change

Oil Drilling & Services

479

9.7

Oil Products

298,785

9.1

Automotive

16,809

7.8

Engineering Services

710

6.6

IT & Communications

177

4.4

Machinery & Electric Equipment

497,006

2.4

Insurance

4,914

1.9

Industrial Conglomerates

8,077

1.9

Chemicals

5,232

1.7

TSE All-Share Index

87,845

1.4

Utility Service Providers

213

1.1

Telecommunication

1,088

0.5

Printing & Publishing

188,464

0.2

Mining

12,416

0.2

Investment

1,928

0.2

Banking

562

0.1

Transportation & Logistics

4,166

0.1

Metallic Products

31,259

0.1

Medical & Measurement Products

10,244

0.0

Leather Production & Products

2,075

(0.0)

Machinery & Equipment

15,831

(0.1)

Textile

1,277

(0.5)

Base Metals

48,173

(0.5)

Sugar

8,967

(0.5)

IT

12,357

(0.7)

Agriculture

6,461

(0.8)

Non-Metallic Ores

2,177

(0.8)

Other Financial Services

2,165

(1.2)

Foods excluding Sugar

3,449

(1.2)

Cement

640

(1.3)

Pharmaceuticals

8,833

(1.3)

Coal Mining

1,245

(2.3)

Metallic Ore

15,809

(2.4)

Rubber & Plastics

20,121

(3.1)

Paper Products

12,767

(3.2)

Construction

660

(3.9)

Ceramics & Tiles

2,079

(4.3)

Wooden Products

45,209

(5.6)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

TKIN

Techinco Co.

28.2

18.9

CRBN

Iran Carbon Co.

10.4

16.2

BDAN

Dana Insurance Co.

8.5

15.5

SZPO

Sazeh Pouyesh Co.

62.4

13.0

SWIC

Pars Switch Co.

21.7

12.6

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

PNBA

Bandar Abbas Oil Refining Co.

15.4

15.3

PNES

Esfahan Oil Refining Co.

9.0

11.5

PTEH

Tehran Oil Refining Co.

9.3

10.2

FOLD

Esfahan Mobarakeh Steel Co.

5.8

9.3

SIPA

SAIPA Group

2.7

7.6

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

Turquoise Partners - Firouzeh Asia Brokerage

All Rights Reserved - 2017

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