Weekly Market Report

Trading Week: 6 –10 Jan, 2018

Summary

Main Topics

· TEDPIX rises 0.3% on lower volumes

· Parliament raises debt target, resists higher fuel prices

· FX rates remain volatile ahead of Trump’s decision on sanctions waivers

· Non-oil trade deficit widens on higher imports and falling exports

 

Tehran Stock Exchange

The TSE Overall Index (TEDPIX) rose 0.3% over the week to close at 96,185. The aver­age daily trading value slipped 18% to USD 59 million. The TSE30 index lost 0.1% but remains 36% up since March, against 25.3% for the TEDPIX.

 

Two Iranian insurers with exposure to the stricken Iranian tanker Sanchi fell this week. Alborz Insurance Co. (BALB), which shares 20% of liabilities for the tanker’s hull and equipment, fell 4.3% and closed with a market cap of USD 95 million. BALB said its maxi­mum loss on this incident would be USD 400,000 and the effect on net income would be “insignificant”. BALB collected USD 435 million from insurance premiums last year (ending March 2017) and paid out USD 315 million in claims. BALB’s net income was USD 13 mil­lion. Mellat Insurance Co. (BMEL), with 10% exposure to liabilities for the tanker, declined 0.2% and closed with a market cap of USD 119 million. Sanchi was shipping a cargo of about USD 60 million of condensate, equivalent to about one million barrels of oil, to South Korea when it collided with a freighter off China. Sanchi was burning for several days and so far no survivors have been found among its 30 Iranian and 2 Bangladeshi crew. 

 

MAPNA Group (MAPN), Iran’s main power plants builder and manager with a market cap of USD 1.76 billion, rose 1.9%. MAPN is by far the largest constituent of the Engineering Services sector. One of MAPN’s subsidiaries, Asaluyeh Power Plant – MAPNA LLP (BMAZ), is listed on the IFB and rose 1.9%. BMAZ published its audited interim report for the first half of the current fiscal year (ending March 2018) showing revenue increased 9% to USD 48 million while net income rose 141% to USD 40 million, due to non-operating items. BMAZ produced and sold 15.25% more electricity during the six-month period. MAPN expects some USD 14 million of dividend income from BMAZ, which would account for about 11% of its total net income of USD 125 million (based on its own estimate) for the fiscal year ending March 2018. MAPN’s consolidated net income attributed to share­holders was estimated at USD 413 million.

 

Esfahan Mobarakeh Steel Co. (FOLD), the largest hot and cold rolled steel producer, fell 2.7% although its audited results for the first half of the current fiscal year (ending March 2018) showed that its EPS rose fourfold compared to the same period last year. FOLD’s sales of flat products rose 53% to USD 1.96 billion, with growth almost entirely due to higher prices. Production increased 29% to 3.8 million tonnes while sales volume rose only 1.5% to 3.2 million tonnes for the six-month period ending September 2017.

 

Among other major sectors, Automotive, Banking, Oil Products and Chemicals advanced, while Metallic Ore and Base Metals ended slightly lower. Oil Products added 0.6% this week. Oil prices have increased and the WTI benchmark for crude has advanced above USD 63 per barrel, its highest in nearly three years. The dollar’s steady gains against the Iranian rial also raises the profitability of refineries in rial terms.

 

Iran Fara Bourse

The IFB Overall Index climbed 2% for the week, having fallen 2.5% last week. The index is up 23% since March. The IFB is usually more volatile as companies are generally small­er and the limits on daily fluctuations are wider than the TSE.

 

Ghasem Iran Co. (GASZ), a distributor of foods and pharmaceutical products with a mar­ket cap of USD 40 million, rose 7.5%. GASZ was suspended from trading just before dis­closure of important information. GASZ announced that it has decided to sell some assets at an estimated value of USD 376 million, and a net income of only USD 115,000 (published before the new disclosure). GASZ’s debt costs have exceeded its operating profit over the last two years.

 

Esfahan Steel Co. (ZOBZ) rose 2.8% after a 2.5% decline last week. ZOBZ’s sales and marketing deputy manager implicitly rejected claims that their rail profiles still do not meet the requirements set by railway officials. IFB-listed chemicals were mixed. Marun Petro­chemical Co. (PRMZ), a main olefin producer and the largest IFB-listed company, rose 1.7%. Zagros Petrochemical Co. (PZGZ), a main methanol exporter, gained 5%.

 

Foreign Exchange Market

The US dollar rose 0.3% on the market to IRR 43,532. Trading was volatile and the dollar touched IRR 44,000 during the week. US President Donald Trump was scheduled to an­nounce his decision to Congress regarding the international nuclear agreement with Iran later this week. There was growing speculation over whether he would renew the sanc­tions waivers, with the latest news suggesting that he was likely to renew them. The dol­lar’s official exchange rate increased 0.8% to IRR 36,374.

 

 

Economic Development

Parliament increased the target for selling government bonds by about 2.6% to IRR 395,000 billion (approx. USD 9.1 billion) for the next fiscal year starting in March 2018. The proceeds will be used for strengthening schools and old buildings. Lawmakers boost­ed expenditures last year and financed part of the higher costs by issuing new debt. Iran’s debt to GDP ratio is not ringing alarm bells, but the debt market is growing rapidly and the costs of borrowing are high at around 15%.

 

Government plans to raise the price of fuel also faced some resistance in parliament. A member of the energy commission rejected the government’s proposal of a 50% hike in gasoline prices. Parliament may instead decide to revive the quota and two-tier pricing scheme, or increase the price by just 15%.

 

Iran’s non-oil trade deficit widened in the first three-quarters of the current year as imports grew and exports fell. Imports increased 18% to USD 33.7 billion in the nine months to December, 2017, while non-oil exports, which include condensates, fell 2.4% to USD 31.5 billion. Automotive parts, cars and cereals were the top three imports by value while ex­ports were led by condensates, propane and methanol.

FX Information

Description

11 January 2018

4 January 2018

% Change

Official USD - IRR

36,374

36,091

0.8

Market USD - IRR

43,532

43,382

0.3

Official EUR - IRR

43,453

43,372

0.2

Market EUR - IRR

52,384

52,916

(1.0)

Official GBP - IRR

49,062

48,798

0.5

Market GBP - IRR

60,177

57,852

4.0

Market Information

Index Info

Close

Unit Change

% Change

%  Change from March 20, 2017

TSE Overall Index - TEDPIX

96,185

256

0.3

25.3

TSE30 Index

4,191

5

(0.1)

36.2

Iran Fara Bourse Overall Index

1,076

21

2.0

23.0

Description

This Period

Last Period

Market P/E

7.3

7.3

Trade Statistics

Description

This Period

Last Period

% Change

TSE Average Daily Trade Vol­ume (Million USD) **

59

72

(18)

IFB Average Daily Traded Val­ue (Million USD) **

34

34

0

Industry Index Information

Description

Close

% Change

Coal Mining

1,387

8.5

Construction

688

4.9

Non-Metallic Ores

2,275

3.8

Machinery & Equipment

15,254

3.5

Sugar

8,903

3.0

Rubber & Plastics

19,938

2.9

Engineering Services

750

2.0

Ceramics & Tiles

1,870

1.9

IT

12,109

1.8

Automotive

16,725

1.4

Machinery & Electric Equipment

481,026

1.4

Cement

601

1.2

Banking

586

1.1

Financial Markets Management

72

0.7

Investment

2,042

0.6

Oil Products

349,280

0.6

Chemicals

5,982

0.4

Metallic Products

23,540

0.3

TSE All-Share Index

96,186

0.3

Paper Products

10,670

0.2

IT & Communications

231

0.0

Medical & Measurement Products

10,244

0.0

Mining

12,058

0.0

Textile

1,266

0.0

Leather Production & Products

2,018

(0.0)

Pharmaceuticals

8,638

(0.1)

Telecommunication

1,102

(0.2)

Utility Service Providers

241

(0.3)

Metallic Ore

19,536

(0.3)

Insurance

4,591

(0.3)

Wooden Products

54,505

(0.3)

Foods excluding Sugar

3,338

(0.7)

Oil Drilling & Services

407

(0.8)

Industrial Conglomerates

9,251

(0.8)

Base Metals

57,401

(0.8)

Other Financial Services

2,194

(0.9)

Transportation & Logistics

3,793

(1.6)

Agriculture

6,166

(2.0)

Printing & Publishing

203,545

(2.3)

TSE Top 5 Gainers

Company

Close **

(USD Cents)

% Change

SORB

National Iranian Lead & Zinc Co. 

7.2

16.1

BAFG

Bafgh Mining Co.

40.3

14.4

FRVR

Iran Mineral Processing Co.

34.6

12.1

IAGM

Iran Argham Co.

8.8

10.9

LEAB

Loabiran Co.

7.3

10.0

TSE Top 5 Value Leaders

Company

Close **
(USD Cents)

Trade Value **

(Million USD)

FOLD

Esfahan Mobarakeh Steel Co.

6.5

9.8

ROOI

Iran Zinc Mines Development Co.

7.6

6.9

PNES

Esfahan Oil Refining Co. 

10.7

5.9

KSIM

Calcimine Co.

13.2

5.8

RSAP

Rayan Saipa Leasing Co.

2.7

3.1

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

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