The CEO of Persian Gulf Petrochemical Holding Co. (FARS) announced the one billion Euro investments in development projects of the company in 2015-16. Regarding to strategic plans, he also added, the company will reach its 100% capacity in 3 years. By emphasizing on current challenges he hoped the company would reach 80% capacity (20 Million tons production) in 2015. Persian Gulf holding has a nominal capacity of 22 Million tons. Last year, 35% of reduction in production was due to lack of raw materials and feed in all company’s subsidiaries. The company’s subsidiaries have increased from 15 to 60 companies, exporting 8 to 9 billion dollars annually. Having 11 percent of total market cap and diversity of activities in its subsidiaries is a privilege of Fars in Iran’s capital market.
Zangan Zinc Industry Co. reduced its forecasted EPS for FY2014 by 21.5% from 241 to 189 IRR. However, the company predicted 177 IRR for FY2015 and 142IRR cash dividend is suggested by the board member. It’s noteworthy to mention that the company’s realized EPS for FY2013 was 308IRR. The company predicted the sale and cost of sale to increase by 40 and 55 percent respectively compared with FY2014 performance, while the company’s operating income decreased by 16 percent. Although the company’s sale was forecasted to improve by 40% in FY2015, the gross profit decreased from 23 to 14 percent compared with FY2014 which no explanation is given for that.
Negotiations with companies from Germany, Netherland and Italy have commenced for participating in petrochemical projects, the deputy of Iran’s Oil ministry said. He mentioned that after the recent nuclear negotiations and the higher possibility of lifting sanctions, many foreign companies have contacted for mutual partnership in new petrochemical projects. He declared that some of them have even Americans partners. He also added that there is no restriction for US companies to invest in petrochemical industries. These companies have assured to start their partnership with Iran’ petrochemical industries if the sanctions are lifted. Besides having cheap resources of natural oil and gas, Iran has the privilege of having educated and young human resources. Furthermore, having more than 2000 km maritime border in Persian Gulf and Oman Sea is another advantage for polymer and petrochemical industries in Iran.
While closing the oil refinery shares during the last year led to the virulent experience for their shareholders, halting the share trades of Bandar Abbas, Tehran and Isfahan Oil Refinery companies during the last two trading sessions brought more concerns to this sector again. Adjusting the forecasted EPS and releasing their 2015 budget reports are announced as their closing reason. Although in general circulation there is rumor of over 20 percent positive EPS adjustment for Isfahan, the oil product sector is still the biggest loser among others. This sector recorded 32 percent loss during the last month.
The state bankers agreed to cut the interest of the one-year deposit accounts to 20% and decline the interest rate of banks mutual contracts by 2 or 3 % due to lower inflation rate. However this decision needs to be approved by the central bank’s Money and Credit Council. In case of the council’s approval this rates will be effective from May 2015. Lower interest rate will decrease their financial costs. Besides, the banks have already offered loans with current interest, there profit of which will be declared on 2015 financial reports. Although the final approval can have a short term positive effect on market, it must be noted that the private banks and the credit institutions have no willingness to follow this agreement due to their competition for absorbing more liquidity.
The possibility of interest rate changes are increasing. Besides influencing the money demand and supply, any changes in interest rate can act like a double edged sword for banks. Decline in cost of interest will lead to lower cost of money for banks. Moreover, deposit cash withdrawal will be likely to happen if the interest rates are cut by more than 2 percent. If any changes in interest rate associate with the final nuclear agreement, a huge liquidity will flow from banks to other capital market sectors.
A series of initiatives by the leading Iranian financial group, the Agah Group, and the London-based boutique investment bank, First Frontier Capital (FFCL), is demonstrating the growing international enthusiasm for investing in Iran.
They are working together to set up a sanctions-compliant investment opportunity. This will enable international investors to become involved in the equity market even before the boost that is expected to come from a final deal to remove economic sanctions.
Based on cement association reports, the request for a price increase has been submitted to the government. The capacity of Iran’s cement production is around 82 Million a year. Last year (ending 20 Mar 2015) the production and sale of 67 Million tons was recorded. Currently the cost of production has increased by 20 percent. At the present time the EXW price of cement is 1000 IRR per ton which is requested by the cement association to increase by 17 percent.
“It’s expected that the exchange prices turn to a single exchange rate in the Petrochemical Industry soon “The CEO of the National Petrochemical Co. said. Existence of two official and free float exchange rates has made so many problems for this industry. He mentioned that some of the petrochemical complexes have no willingness for selling their products to other domestic companies with official exchange rate since they are able to export with higher free rates. However, during the meeting between Seyf, the chief of central bank of Iran, and PMs ; last night, some issues of the exchange market were discussed in order to support the domestic producers, and Seyf clarified that “at this moment with regard to the nation’s economic situation, having a single exchange rate is not possible”.
“Transparency in the market could have an essential role in improving the nation’s economic productivity”, Fetanat, the chief of the Security and Exchange Organization of Iran said today. He added that not even the shareholders will benefit from the market transparency, the government and taxing system will also profit. He clarified that publishing only government circulars and bills will not be enough for this purpose. He mentioned that improving the transparency of financial statements is one of the main SEO’s objectives and soon the opaque sectors will be required to publish monthly financial reports.