Summer Getting Hotter in Iran’s Capital Market

Market News

* With the season of AGMs going on, the Metals space lies among those with an apparently promising future such that out of the 18 companies publishing their Q1 performances, only 1 has registered negative adjustment while 8 have reported positive changes to their projections. In early 2017, the decline in global prices, mostly arising from concerns over China’s economy, had prevented the liquidity from moving towards the metals space; the later decline in dollar index accompanied by positive data coming out of China’s economic fundamentals in the past few weeks, fortunately, pushed steel and iron ore prices upwards. All in all, steel companies started to release positive news on their performances. Khuzestan Steel applied a 29% rise to its estimates, increasing it from IRR 475 to IRR 614, realizing IRR 267 over its Q1. Esfahan’s Mobarake Steel also made IRR 121 in its 3-month period (40%), having raised its projections by 19% to reach IRR 302. With the zinc price hitting $2,800 per ton, Calsimine applied a 5% growth to its previous prediction to reach its the EPS to IRR 168, having covered 34% in the first quarter; Iran Mineral Processing also increased its estimates by 6% and covered 32%, i.e. IRR 303 in the first chapter. However, Iran Zinc and Lead was the only company applying negative adjustment by 6% to fall to IRR 154. With Copper prices previously falling behind $5,500 in London Metal Exchange, the past weeks have witnessed a rise in copper prices to exceed $6,000; as the result, National Iranian Copper Industries rose its estimates by 33% to reach IRR 272 while covering 33% in the first quarter.

Iranian Banks Waiting for CBI Approval

Market News

* Banks, awaiting the approval of the CBI over their financial statements, are heard to postpone holding their general annual meetings. The CBI had obliged banks and credit institutions to publish their IFRS-based statements and footnotes for the FY ended 20 March 2017, seeking the complete implementation of other banking requirements like the Basel Accords as well; any failure to meet the CBI demands will lie with the banks’ CEOs and board members, not allowing them to hold their annual meetings. In this regard, however, Bank Hekmat-e Iranian and Bank Ayande received the said permission, having met the requirements.

* As the first company returning into Iran after the lifting of sanctions in the insurance space, German Munich Re formally entered into business with Saman Insurance Company, having signed the contract, which will cover variety of risks, including life insurance and capital formation categories up to 1 million euro.

* China is to finance the to be constructed Tehran-Qom-Esfahan high speed railroad project, which was signed in 2015 worth about 1.8 billion euro, although the value might increase.

In the Market

The market experienced proper conditions within the past week mostly due to the Q1 company reports exceeding investors’ expectations, the adjustments in the oil products space (mainly oil refinery companies) intensified with the growth in metals prices and the injection of fresh money, pushing the All-Share index 653 points up (equal to 0.8%) to enter the 80,000-point area.

This positive atmosphere spread to the Construction sector, led by Iran Construction Investment and the Cement industry led by Sharq Cement, pushing the majority of their tickers into the green zone.

In the Computer space, half symbols went through positive trades, largely influenced by the newly entered ticker Beh Pardakht-e Mellat, which faced a heavy buy queue at IRR 19,293. Iran Kish Credit Card also faced a buy queue after the issuance of the 53% capital raise plan based on shareholders’ paid-in capital and claims.

The majority of the active symbols in the Oil Products group settled with modest gains, although Oil Industry Investment lost more than 3%. In their general annual meetings, Lavan Oil Refining and Esfahan Oil Refining approved the distribution of IRR 520 and IRR 250 DPS among shareholders.

Among symbols in the Iron Ore sector, Gol-e Gohar Industrial & Mining ticker was reopened 15% higher at IRR 2300.

A rather positive trend was also observed in the Metals space with Navard Aluminum and Zangan Zinc Industry closing with buy queues. Besides, Shahid Bahonar Copper Industries ticker was reopened at +27% at IRR 5399.

The positive atmosphere in Saipa general annual meeting (distributing IRR 25 DPS) was reflected in Rena Investment facing a buy queue at IRR 113 after 11 mn shares changed hands; putting an end to Pride production within 1 year and starting to sell Quick in the next 2 months along with lowering the interest expenses are of the major plans in Saipa Company. Iran Khodro also held its annual general meeting. All in all, demand rose in the Automotive space.

DISCLAIMER:  This report has been prepared and issued by Agah Brokerage Firm on the basis of publicly available information, internally developed data and other sources believed to be reliable. The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. Agah does not assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. Any expressions of opinions are subject to change without notice. 

To contact reporters: Inter@agah.com

Attempts to Produce More Reliable Data

Market News

* The Central Bank of Iran announced that the inflation rate for Mordad month, July-August 2017, will be quantified with 2016/17 as the base year; this is mostly done to provide policy makers and researchers with more accurate and precise information and access to major indices, qualitatively and quantitatively improving the data.

Beh Pardakht-e Mellat Went Public

Market News

It has been a few months without any IPOs, despite there are some large companies waiting in the line; the reason to such withholding has said to be the unsatisfactory conditions in the market. The All-Share Index so far has been 7% with equity investment funds registering less than 3% return; to this, the low value and volume of trades must also be added. Although some specific shares catch investors’ eyes every now and then, a steady ascending trend is still not observed in the market.

Iran Eyeing Investment Opportunities

Market News

– An MoU was signed between Iran’s Minister of Industry, Mine and Trade and the Iraqi Deputy Minister of Mines, Industries and Social Affairs on the renovation and reconstruction of Iraq relying on the Iranians’ technical knowledge and expertise. Referring to the presence of 5 Iranian banks in Iraq and Iraqi Rasheed Bank application to open a branch in Iran, the re-establishment of banking relations was also stressed; this has the potential to move sectors like cement, engineering as well as metals among some other.

– Aimed at improving competition and taking the most out of the international potentials, Bank Sina has opened accounts in 13 active foreign banks, including a few located in Switzerland, Italy, Austria, Russia and Spain. To facilitate Iranian’s access to money-transfer services, it has established correspondent relations with 25 banks.

– Stressing on the necessity of lowering the current interest rate, an official announced the private banks’ agreement to lower their interest rate in harmony with state-owned banks.

Corporate Earnings

• Shiraz Oil Refining has made IRR 1,993 EPS for the FY ended 20 March 2017; proving a 625% rise, the company has managed to cover 198% of its last predictions.
• Pegah-e Fars Dairy has made IRR 160 EPS for the 3-month period ended 21 June 2017, registering a 78% growth and covering 23% of its projections.
• Asan Pardakht-e Persian has recognized IRR 610 EPS for the quarter ended 21 June 2017; covering 26% of its estimates over this period, it has made a 54% growth compared to the same period last year.

In the Market

A rather negative atmosphere was seen in the Automotive industry with a few tickers, i.e. Motorsazan Iran Tractor (4.9%), Nirou Mohareke (3.95%) gaining the most. The CEO of the IME said that those automakers who offer their products in the exchange market will benefit a 10% tax exempt; this is aimed at pulling this sector out of recession. Iran Khodro Investment Development ticker was reopened at IRR 3,300, shedding 1% after holding its general annual meeting and distributing a IRR 70 dividend. Mehrkam Pars ticker was also reopened at IRR 1,420, with not much tangible changes.

The news broke out again on the upcoming settlement of the government debt to the sugar producing companies; this pushed most tickers in the Sugar space towards facing a buy queue.

Metals prices have faced a growth in international markets, mostly led by zinc. A large number of companies listed on the Metals group, except from Iran Pipe & Machinery and Alumrad which lost more than 4%, settled with modest gains. Arfa’ Metal & Steel faced a buy queue.

Abadgaran-e Iran Tourist and Welfare Corporation in the Construction sector faced a buy queue for the third consecutive session while the rest of the group went through negative trades.

A 3.4% growth was seen in iron ore prices in Futures Contracts in Chinese Exchanges; this translated into positive trades in the Iron Ores sector, except from Iran Manganese Mines (-3.61%). In its annual general meeting, Gol-e Gohar Mining & Industrial distributed IRR 280 dividend per share; the company was placed first in producing iron ore concentrates; it has also proved a 38%, 35% and 42% rise in concentrate production, sales figures and production and efficiency per capita in the first quarter of the FY ending 20 March 2018.

DISCLAIMER:  This report has been prepared and issued by Agah Brokerage Firm on the basis of publicly available information, internally developed data and other sources believed to be reliable. The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. Agah does not assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. Any expressions of opinions are subject to change without notice. 

To contact reporters: Inter@agah.com

Interest Rate to Set Lower

Market News

Based on an understanding between the policy makers and banks’ CEOs, the floating interest rate will be paid on account and the certain interest rate will be calculated at the end of the fiscal year. Being originally based on the usury-free banking law, this was respected in our banking system only on surface while in fact, a part of interest on deposits paid used to be provided from other revenues or even shareholders’ equity within the past years. As the result, high and low interest rates will stand at 15% and 12%. In fact, the Money and Credit Council, as the body in charge, has attempted to prevent banks from resorting to non-operating income and recognizing unreal returns to cover their high interest rates to depositors; this is done to align the banking sector in line with the acting administration macroeconomic policies. In this regard, the Minister of Economy and Financial Affairs has demanded Bank Melli, as the biggest lender in the country, to act as the leader in implementing reforms in the banking space, including lowering the interest rate.

Fighting the Correct Cause

Market News

Dragging the inflation rate down from 40% to 10% by the current administration is regarded as a major accomplishment, which was supposed to lower the interest rate as well. However, the current credit crunch and high demand for facilities have neutralized such great steps.

CBI Reporting Growth in Liquidity Volume

Market News

The latest report on the banking system’s total assets and liabilities released by the CBI proves a 23.2% growth in liquidity volume for the period ended 20 March 2017. Comparisons show that the liquidity volume has reached from IRR 4,600,000 bn in 2102 to IRR 12,500,000 bn in 2017.

Market Officials Targeting More Dynamism

Market News

Over the past few years, serious steps have been taken towards increasing transparency, liquidity and eliminating limitations in the stock market. The other day, the Head of the Securities and Exchange Organization of Iran reported the taken measures within the past year as well as those to be implemented in the current year, aimed at creating a safer, healthier and more dynamic market.