News and Views
- In an interview, President’s chief advisor emphasized on the money market as the main rival to the capital market and stated that offering a high return ratio and zero tax, the money market is the reason of the ongoing money flight from the capital market. Mr. Turkan continued to say that the exchange market success lies in inflation fighting and bank interest reduction. Answering to a question on whether banks will resist against interest reduction, he mentioned that banks are faced with some liquidity problems; however, the new package introduced by the President is supposed to boost the banking network and their capital raise. In this regard, he went on and said that after the implementation of the JCPOA and the lifting of sanctions, banks will be able to open LCs for Iranian producers with less difficulty. Besides, in replying the question on the probable rise of inflation after conducting attempts to increase demands, he remarked that the CBI will monitor and control the inflation rate per week to curb any deviation from their desired point. He also expressed hopes that the economic growth package will bring about two important results; civil projects will be boosted and the newly offered debt issues will finance a part of government’s debt to the contractors which, as a whole, will eventually exert its positive effects on the economy and the exchange market.
News and Views
Western diplomatic sources have announced that the European Union will officially end the economic sanctions against Iran on Sunday. According to a well-informed source, the EU will adopt the legislative framework for lifting all nuclear-related economic and financial sanctions; its implementation, however, will become operational only after the International Atomic Energy Agency certifies that Iran has met its commitments under the July 14th accord with the major powers.
The import of tires from China accompanied by the recession dominating the economy has resulted in the unsatisfactory situation of tire manufacturing companies listed in the market. Recently, some news has been heard on the new limitations imposed on tire import to the country which can exert positive impacts on domestic companies active in this field. As a result, any registration for importing different types of tire will be merely allowed for the official agencies which offer after sales services.
Zahravi Pharmaceutical Company released its Q2 financials for the period ending September 22, 2015. Holding $2.3 mn capital, this company made $41.99 mn out of sales, leading to $16.83 mn gross profit. Subtracting the administrative and general costs plus the operating costs, it ended in $15.23 mn operating profit. Eventually, the subtraction of financial costs and taxes along the addition of non-operating revenues resulted in $7.38 mn net income, recognizing $0.09 EPS.
Fars Chemical Industries Company released its Q2 reports for the period ending September 21, 2015. Possessing $2.32 mn capital, this company earned $9.09 mn sales revenue which led to $0.98 mn operating profit after the subtraction of SGA costs. After the removal of financial costs and taxes plus the addition of non-operating revenues, $0.29 mn net profit was made, leading to $0.003 EPS.
Rumors in the Market
It has been heard that Iran Khodro Company’s ticker might be halted as a result of the anticipated negative adjustment in the Q2 financial reports.
Lavan Oil Company’s positive adjustment might not be materialized.
Gol-e Gohar Iron Ore Company’s right is faced with speculation, excessive growth and price manipulation which might lead to the formation of more sell queues.
It has been heard that Amir Kabir Petrochemical Company has managed to increase its sales and reduce its retained loss to a great extent.
As a result of market recession and the reduction of price and sales ratio, Nirouchlor Company might negatively adjust its EPS.
In the Market
A positive atmosphere has been created in TSE market since last week after the approval of the JCPOA by Majlis and President Rouhani’s addressing the nation. President Rouhani made remarks on the attempts, including banks’ legal reserve ratio reduction, to be conducted in order to inject liquidity to the economy and increase demand, relying on expansionary policies. Such a positive climate was also more boosted by the news announced on the removal of international sanctions from Sunday and the implementation of the agreement from Monday.
Despite issues such as recession and sales problems, difficulties in export, high inventory levels, and production capacity reduction, a bullish trend was seen in the Cement sector; the reason might be the fact that the prices in this sector has dropped by 50% which has made this sector a perfect choice for long-term investments. Besides, the news on the $33,000 construction loan (transferable to buyers) by the Ministry of Roads and Urban Development has also exerted its own positive impact. Most symbols faced buy queues, including Fars Cement Company ending with a 5.7 million buy queue.
Symbols such as Mellat Bank, Pasargad Bank, and Day Bank in the Banking sector were traded in the +4% volatility zone; other symbols except from Middle East Bank were positively traded. In addition to the overall positive atmosphere, the new package of economic policies by the government has been mentioned as the main reason to keep this sector in the green territory, since the government has considered the adoption of a new approach towards the banking sector in order to root out recession and switch from its contractionary policies in the post-sanctions era. One of the most important policies is the banks’ legal reserve ratio reduction by 3% which can inject new liquidity into the society and help banks offer less expensive provisions.
In the Oil Products sector, Bandar Abbas Oil Refining Company became the leader. The reason to this growth has been stated to be the rumor of the 10% discount on gas feed prices, despite the fact that any changes at this level of importance will be merely allowed by the parliament. Experts believe that the price growth in this sector was more due to technical reasons, rather than fundamental ones.
And a positive trend was also observed in the Automotive sector after President’s promises on the legal reserve ratio reduction and injecting new capitals to the market which can increase demand. Besides, the rumor has it that the Q2 financial statements will not be as bad as predicted; consequently, investors have regained hope in this sector’s growth.
At the end of today’s trading session, tickers of Iran E’tebar Investment Company and the Rights of Iran Tractor Mfg. Company were halted in order to approve financial statements and as a result of underwriting period termination, respectively.
TSE at a Glance[caption id="attachment_4869" align="aligncenter" width="762"] TSE at a Glance[/caption]
Summary of Trades[caption id="attachment_4870" align="aligncenter" width="740"] Summary of Trades[/caption]
IFB at a Glance[caption id="attachment_4871" align="aligncenter" width="712"] IFB at a Glance[/caption]
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.
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News and Views
- In a national television interview, President Rouhani talked about the special economic package aiming to increase demand and the removal of credit shortages. Such policies have been announced as a result of recession deepening in the economy with the aim of adopting more influential strategies in the second half of the current year. He predicted that the process of lifting sanctions will start within a few weeks after the JCPOA implementation and its results will be seen early in the following year. Regarding the issue of foreign investment, he also stressed out that joint ventures are required to move the economy forward. However, he insisted that the government will continue its support to the Iranian business people and commercial activists, relying more on expansionary policies. Referring to the fact that the exchange market is not controlled by the government, he expressed hopes about the capital market’s bright prospect in the near future, promising the government support by removing the existing barriers and obstacles ahead of industries.
- Shomal-e Qarb Housing Investment Company was selected as one of the superior constructors in the country in the Mass Housing Production annual conference. This conference hosted the vice president of Roads and Urban Development Ministry and the vice president of Iran Chamber of Commerce, Industries and Mines plus the board members of Mass Production Association of Housing and Construction.
- Euromoney Indices Company’s officials attended Iran aiming to discuss and negotiate the issue of designing and publishing TSE’s international indices. Rumors have it that suggestions have also been made by Bloomberg and Reuters in order to publish TSE’s data through their platforms. As experts have stated, introducing TSE’s indices by well-known index-providers, including Euromoney and S&P can contribute a lot to gaining foreign investors’ trust and interest in our market.
- The approval of the JCPOA at the final moments of today’s trading session contributed to a positive shock in the market, resulting in the price hike of some shares. As financial analysts believe, this agreement has the potential to exert a positive impact on the TEDPIX, leading to a 15-20% rise in prices in the short run and if accompanied by the gradual removal and modification of economic challenges in the society, including the inflation and bank interest rates, it can promise long-term positive changes in the market climate.
- At the end of the week ending October 7, 2015, the overall index registered 109 point decline to stand at 61,390. The first market index reached 42,534 after shedding 231 points or 0.54% while the second market benchmark gained 631 points or 0.46% to end the week at 136,701. In this week, the value of the trades and transactions touched 3,023 IRR bn, remaining the same as that of the last week. Furthermore, 1,724 million shares and rights changed hands in 133,000 times, showing a 9.5% decline and a 5% rise, compared to the week before. In addition, 319,535 bonds and sukuks worth 319 IRR bn were transferred, posting a 21% decrease, in relation with the previous week. In conclusion, sectors such as Tire and Plastic, Tannery, Base Metals, and Iron Ore registered the most positive impact on the industry index by 10.2%, 5.30%, 2.85% and 2.69%, respectively.
SEO announced its agreement for issuance of two different sukuks, namely Istisna’, a contract of exchange with deferred delivery, applied to specified made-to-order items and Ijarah, quite similar to financial leasing in Fara Bourse of Iran. National Industrial and Mining Company will publish Istinsa’ sukuks, amounting to 1,620 IRR bn to construct industrial structures of its concentrate and pellet factories, each having production capacity of 5.2 million annually. These are bearer papers, with yield rate of 23% (payable every quarterly) and 3-year maturity date.