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March 2021 No 169, Volume 15

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March 2021 No 169, Volume 15 Summary Equity Markets The TEDPIX index and junior Farabourse (IFB) declined 5% and 6% in IRR terms during this month ending February 2021. Based on the unofficial exchange rate, the month-on- month loss in dollar terms was 8% and 9% in TSE and Farabourse market, respectively. This was partly due to 3% depreciation of IRR per USD over the month.h. Debt Markets For the start of the Iranian calendar year 1399 (March 2020) to the end of February 2021, total issuance on the fixed income market reached 8 billion US$ based on the unofficial exchange rate. Yield to maturity (YTM) remained stable at 21% at the end of February Economic Review This issue reviews the latest GDP growth statistics published by Central Bank of Iran. In addition, we have included a separate report covering the latest macroeconomic data Mar 2021 - Volume 15, No 169 published by relevant organizations and senior macroeconomic strategists in a fact-sheet summary, as well as an economic calendar released by local and international statistics centers. 1 Iran Investment Monthly Table of Contents 3 Market Overview 6 Performance & Updates 7 Historic Trends & Sector Insight 8 Industry at a Glance 9 Market Snapshot 10 TSE & Junior Market Performance 11 Top Ranked Companies 12 Iran’s Fixed Income Market 14 Economic Review 14 Latest Updates 16 Macroeconomic Data 17 News & Views 17 Recent Brokerage Reports 17 Turquoise News 2 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Market Review The TSE had its third consecutive negative month in February as the overall index fell by 7 percent in Euro terms and average daily trade volumes shrank by more than 33% percent compared to the previous month. The downtrend continued despite relative stability in the strength of the currency (the market declined 5% in Iranian Rial terms). One of the measures that the policy makers took in February in order to slow down the pace of decline was to change the daily fluctuation range from +/- 5% to +6% and -2%. Market participants did not welcome the move and the decision led to an oversupply of shares offered at the minimum daily price level, resulting in what is regularly called a “selling queue” in the Iranian market. This also adversely impacted market liquidity and was one of the main contributing factors to the declining volumes this past month. The authorities have clarified that they will examine the impact of such decisions on a monthly basis. We do not believe that they will maintain the current measures for any longer than a couple of months. Shervin Shahriari Chief Inves tment Officer Valuation multiples have carried on their journey toward more sustainable levels. This is due to falling equity prices and increasing earnings of the listed companies for the last twelve months. The charts below show how the valuation metrics have changed over the course of the past year: P/E Source: TSE 3 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 P/B Source: TSE P/S Source: TSE Global commodity prices also continued to soar in February. We have worked out a customized commodity index for the Iranian market which takes into account the weighting of each related commodity in a sales basket of listed companies. In other words, the index is designed to follow the impact of global commodity price movements on the profitability of the relevant TSE companies. 4 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Below is the trend line of this index in USD terms, normalized at 100 over the past 10 years: Turquoise Commodity Index Source: Turquoise Partners Since February 2011, average commodity prices have hit a record high; this is a promising sign for the commodity-heavy Iranian stock market. It is estimated that more than 50% of the total weighting of the Iranian market capitalization is related to a basket of commodities covered by the index above. On the currency side, we remain confident that the Iranian Rial (IRR) stability will remain over the short to medium term, namely the next 12 to 18 months. Iranian crude oil exports reached more than 800,000 bpd in February 2021 according to a recent piece by Reuters, beating the daily record of 790,000 bpd set in April 2019. Iranian oil was delivered mainly to China, a sign that the end of Donald Trump’s term may be changing buyer behavior. In addition to this, we believe that the fundamentals remain solid for the IRR in the short run. One way of looking at the IRR is through the lens of monetary measures. 5 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Performance & Updates 11 - Year Average (2008-2021)1 Market Capitalization (billion US$) 120 TSE & Farabourse Junior Market P/E 7.5 x TSE Dividend Yield (%) 3 10% TSE Market Cap / GDP 53% TSE & Farabourse Total Turnover (billion US$),Average Annual 29 TSE TSE Overall Index Average Annual Growth (US$) 26% TSE 1 Annual data from 2008 to Feb 2021 2 Calculated based on unofficial IRR per US$ exchange rates. Summary - Feb 2021 Market Capitalization (billion US$) 285 TSE & Farabourse Junior Market Free Float 22% TSE & Farabourse Junior Market Number of Listed Companies1 680 TSE & Farabourse Junior Market TSE Index Performance (US$)2,4 -8.1% (MTD) -13.8% (YTD) TSE Total Turnover (million US$)2 5,659 m$ TSE & Farabourse Junior Market Dividend Yield (%) 3 5.8% TSE P/E 13.9 x 1 171 companies are listed in Over-The-Counter (OTC) or off-exchange market named as “Base Market” in Farabourse junior market which trading of these companies are done directly between two parties. 2 Calculated based on unofficial IRR per US$ exchange rates. 3 Calculated based on the latest market data 4 TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index) Tehran Stock Exchange & Junior Market Trade by Value1 - Feb 2021 Iran Farabourse (Junior Market) Trade Volume (million US$) Tehran Stock Exchange (Main Market)Trade Volume (million US$) Since the beginning 2021, the market has recorded losses as the YTD performance of the TSE and IFB reached to 15% and 14% in IRR terms respectively. The loss in hard currency terms was 14% on the TSE and 13% on the IFB on a year-to-date basis. In February 2021, the TSE equity trade value declined to 4,552 million US$ from the 9,341 million US$ last twelve- month average. The total number of shares traded on the TSE decreased by 19% compared to a twelve-month average of 189 billion shares. US$ Million Source: Tehran Stock Exchange Iran Farabourse Company All figures in US$ are converted from IRR at the free market rate 1 Trading volume month on month in US$ term - TSE includes mainly equity while Farabourse has more fixed income instruments and smaller equities. 6 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Historic Trends & Sector Insight Long-Term Overall Index (Normalized in USD) Long-Term Iranian Market Cap ( Normalized in USD) Historic Average: 196 Historic Average: 181 Feb 2021 : 408 Feb 2021 :402 TSE Best Performing Sectors & Overall Index (Normalized in USD) 92 84 Overall USD Diversified Industrial (Holdings) Refined Petroleum Products Computer TSE Large Sectors (% Market Capitalization) 20% 14% 9% 8% 7% 5% 5% 4% 28% Other Metals* Monetary Diversified Chemicals Investment Companies Source: TSE, Bonbast, as of Feb 2021 Motor Vehicles Motor Vehicles And Auto Parts *Metals sector includes steel, copper and aluminum Metal Ores Mining Refined Petroleum 7 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Industry at a Glance - Feb 2021 YTD 1-Year Return 5-Year Return Top Performing Companies Market Cap Sector Trailing (%) Trailing (%) Trailing (%) in Feb 2021 (MOM %) (Million USD) in USD in USD in USD Kimia Zanjan Gostaran Co 77 -52% -69% 67% Metals* Asia Zarin Madan Co 120 43% 11% -31% Petroleum Equipment Industries Company (PEIC) 58 69% 9% NA Opal Kani Pars 1,409 NA NA NA Mining Golgohar Mining and Industrial Company 4,636 -11% -8% NA Bafgh Mining Company 249 -11% -11% 153% Shiraz Oil Refining Company 472 -8% 1% 72% Petroleum Bandar Abbas Oil Refining co 3,287 -8% 19% -32% Tajhiz Niroo Zangan 26 -2% 231% 2162% Loabiran Company 56 84% -50% 27% Chemical Ranguin Industrial and Chemical Co. 43 62% 37% 2037% Fars Chemical Industries 132 -17% 172% 168% Parsian Bank 1,927 -88% -59% -68% Banks Sarmayeh Bank 100 -87% 92% NA Iran Zamin Bank 217 -84% 181% NA TSE Large Sectors 5 -Year Performance (Normalized in USD) Metals Mining Petroleum Chemical Banks 312, Feb 2021 236, Feb 2021 172, Feb 2021 155, Feb 2021 127, Feb 2021 Source: TSE, Bonbast, as of ending Feb 2021 *Metals sector includes steel, copper and aluminum 8 Iran Investment Monthly Market Overview Mar 2021 Volume 15 No 169 Market Snapshot -Feb 2021 Iran & Regional Markets Iran: A 26-Year Snapshot, Asset Class Annualized Return in US$ (%) P/E Multiple Comparison MSCI Morocco 26.3 Kuwait 32.9 Qatar 18.7 12% MSCI Arabian Markets 21.4 MSCI GCC Countries 21.9 MSCI Egypt 8.5 6% 5% Saudi Arabia 35.7 UAE 21.8 Iran 13.9 % Turquoise Iran Fund 13.5 Sub Fund B/C, as of ending Feb 2021 Note: Annual data from 1995 to Feb 2021 Source: CBI, TSE, IFB All figures in US$ are converted from IRR at the free market rate Iran & International Markets 3 4 Tehran Stock Exchange MSCI Emerging Markets MSCI Frontier Markets Average P/E Average P/E Average P/E 13.9 23.3 14.6 1 1-Year Performance in $ 1-Year Performance in $ 1-Year Performance in $ 40.1% 37.1% 8.6% Annualized 10 Year in $ 2 Annualized 10 Year in $ Annualized 10 Year in $ 7.8% 4.7% 4.4% 20.0 Chemicals 20.8 Information Technology 33.7 Financials 13.7 Basic Metals 18.0 Consumer Discretionary 15.3 Communication Services 9.2 Refined Petroleum 16.8 Financials 14.2 Real Estate 7.6 Metal Ores Mining 11.3 Communication Services 11.7 Consumer Staples 7.3 Monetary Intermediation 8.2 Materials 8.7 Materials Sector Breakdown (%) 42.2 Others Sector Breakdown (%) 24.9 Others Sector Breakdown (%) 16.4 Others 1.TEDPIX Tehran Exchange Dividend Price Index (Dividend & Price Index) performance calculated in US$ for the Period of Feb 2020 to Feb 2021 2.Overall Tehran Stock Exchange Index 10 year annualized performance calculated in US$ 3.MSCI Emerging Markets Index (US$) - Feb 2021 4.MSCI Frontier Markets Index (US$) - Feb 2021 Source: Tehran Stock Exchange - Central Bank of Iran - MSCI Inc., Kamcoonline.
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