IRAN Sleeping Giant at Giant aSleeping Turning Point IRAN Sleeping Giant at a Turning Point Perspective On The Iranian

Mofid Securities No. 1, Ziba Alley, Negin St, Ghaem Magham Ave, Haft-e Tir, 15899 33491, / Iran Tel: +98 (21) 8190 1165 Email: [email protected] Web: en.emofid.com Mofid Securities President Statement

Hello from the financial center of Iran, and a very warm welcome to you at anywhere around the globe. On behalf of everyone on staff at Mofid Securities, let me thank you for your interest in Iranian . We all hope that the information provided here help you better evaluate Iranian stock market and also more precisely locate the of the country, as a whole, in a universe of opportunities. Mofid Securities is a leading brokerage firm in Iran. For years, Mofid played a key role in developing and improving services offered in the brokerage industry. Developing the first generation of online trading in Iran is only one of steps it has taken to increase the standards of investment and trading. And nothing would grow from a land not seeded. This is why Mofid has a strategy of continues investment on its business. And the most important part of this investment has always been on human resources; the people whose primary task is to make Mofid a reliable partner for its clients. After reading this report, questions might arise about different aspects of the Iranian capital market. So please feel free to contact Mofid for elaboration and further details that might help you find the best answers. This is the way we think the primary task is fulfilled.

Sincerely Yours, HAMID AZARAKHSH

President Mofid Securities

IRAN—Sleeping Giant at a Turning Point 1 Content Chapter 1 The Iranian Economy...... 4 Demography and Geography...... 6 Economy...... 8 GDP...... 8 Exports & Imports...... 10 Iran; A Key Energy Player...... 12 Currency...... 14 Inflation...... 15 Ecomomic Outlook...... 16 20 Interesting Facts about Iran...... 17

This Report is Created in March 2014. All the data provided are up to the end of 2013.

2 IRAN—Sleeping Giant at a Turning Point Chapter 2 Chapter 3

The Iranian Stock Market...... 18 Mofid Securities...... 46 Tehran ...... 20 Introduction...... 48 20 Largest Companies...... 21 Key Numbers...... 49 Returns & P/Es...... 22 Leadership...... 50 3 Key Industries...... 23 Key Persons...... 51 Stock Market Outlook...... 24 Timeline...... 52 Iran Capital Market Structure...... 25 Mofid’s Performance in 2013...... 54 Sectors Summary...... 26 Services...... 55 Oil, Gas and Chemicals ...... 26 Partners...... 56 Metals and Minerals ...... 28 Financials...... 30 Holding Companies...... 32 Industrial...... 34 Telecommunication...... 36 Consumer Cyclical...... 38 Other Materials...... 40 Pharmaceuticals...... 42 Consumer Non-Cyclical...... 44

IRAN—Sleeping Giant at a Turning Point 3 01 Chapter One The Iranian Economy Demography and Geography

Geography Transport System Iran is one of the largest countries in the Transportation in Iran is inexpensive ; the country of mountains because of the government’s and deserts. Eastern Iran is dominated subsidization of the price of gasoline. by a high plateau, with large salt flats More than one million people work in and vast sand deserts. The plateau is the transportation sector. surrounded by even higher mountains, Dozens of cities have airports that serve 77,270,287 including the Zagros to the west and Population passenger and cargo planes. Iran Air, the the Alborz to the north. Its neighbors oldest airline, was founded in 1962 and are Turkmenistan, Azerbaijan and operates domestic and international Armenia on the north, Afghanistan and flights. All large cities have mass transit Pakistan on the east, and Turkey and systems using buses, and several private 29.86 Iraq on the west. Average Age companies provide bus service between cities. Population Iran’s population increased dramatically Economy 1.24% during the late half of the 20th century, Iran’s economy is a mixture of central Population growth rate reaching about 75 million, according planning, private ownership, village to the 2011 population census. By the agriculture, and small-scale private end of 2013, Iran’s Population is about trading and service ventures. 77,270,287. Iran is ranked as an upper-middle 10,498,675 income economy by the . In Climate University Educated the early 21st century the service sector Iran’s climate ranges from arid or contributed the largest percentage semiarid, to subtropical along the of the GDP, followed by oil industry, Caspian coast and the northern forests. manufacturing and agriculture. The 1,648,195 Central Bank of the Islamic Republic 2 Area (km ) is responsible for the stability Recent archaeological studies indicate of , which serves as the that as early as 10,000 BC, people lived country’s currency. 2,440 on the southern shores of the Caspian, Iran has a broad range of manufacturing one of the few regions of the world industries including oil, petrochemicals, Southern Coastline (km) which according to scientists escaped auto manufacturing, transportation, the Ice Age. They were probably the construction materials, home first men in the history of mankind to appliances, food and agricultural goods, 740 engage in agriculture. pharmaceuticals and information technology. Northern Coastline (km) Language Official language of Iran is Persian. Persian serves as a lingua franca 11,106 in Iran and most publications and broadcastings are in this language. Railway length (km)

6 IRAN—Sleeping Giant at a Turning Point Demography and Geography

Population Comparison (Million)

Countries Population

1. Egypt 84.6

2. Iran 77.4

3. Turkey 75.6

4. Algeria 37.9

5. Morocco 32.9

6. Iraq 31.1

7. Saudi Arabia 29.2

8. Yemen 23.8

9. Tunisia 10.7

10. Azerbaijan 9.4

11. UAE 8.3

12. Jordan 6.5

13. Libya 5.7

14. Lebanon 4.2

15. Kuwait 2.8

16. Oman 2.8

17. Qatar 1.9

18. Bahrain 1.2

Note: MENA (including Turkey & Azerbaijan) Syria and Palestinian National Authority are excluded on lack of data. Source: Wikipedia

Iran has one of the highest urban growth rates in the world. From 1950 to 2002, the urban proportion of the population increased from 27% to 60%. The United Nations predicts that by 2030, 80% of the population will be urban. Most internal migrants have settled near the cities of Tehran, Isfahan, Ahvaz, and Qom.

The Iranian Economy 7 Economy

GDP Comparison (2012, Billion USD)

Countries GDP 2012

1. Turkey 788

2. Saudi Arabia 711

3. Iran 549

4. UAE 384

5. Egypt 257

6. Iraq 213

7. Algeria 209

8. Qatar 192

9. Kuwait 185

10. Morocoo 96

11. Libiya 82

12. Oman 78

13. Azerbaijan 69

14. Tunisia 45

15. Lebanon 41

16. Yemen 35

17. Jordan 31

18. Bahrain 27

Note: MENA (including Turkey & Azerbaijan) Syria and Palestinian National Authority are excluded on lack of data. Source: IMF

8 IRAN—Sleeping Giant at a Turning Point Economy

GDP Composition by end use (%) GDP Composition by sector (%)

51% Service 45% Houshold 21% Industry 11% 33% Investment 9% 17% Oil & Gas 13% Goverment 13% 17% 11% Agriculture 51% 9% Net Export 45%

21% 33%

Service is the largest segment of the economy that accounts for 51% of GDP

Iran's GDP (Billion USD) 600 549 514 Since 2004, Iran’s GDP almost tripled from $163 500 billion to $549 billion. It makes Iran the third largest 423 economy of the region (MENA plus Turkey and 400 356 363 286 Azerbaijan). 300 223 192 200 163

100

0 2004 2005 2006 2007 2008 2009 2010 2011 2012

Iran's Real GDP Annual Growth Rate (%) 10.0 7.8 From 2004 to 2010, the growth rate has fluctuated 8.0 between 4 to 7.8% except in 2008 when it fell to 5.8 5.9 5.1 0.6% due to the global financial crisis. In 2011 and 6.0 4.7 4.0 2012, the growth rate started to fall as a result of the 4.0 economic distress. Since many parts of the economy 2.0 0.6 are still underinvested, Iran has the potential to 2.0 0.4 experience even double-digit growth rate for several 0.0 years. 2004 2005 2006 2007 2008 2009 2010 2011 2012

The Iranian Economy 9 Economy

Iran's Exports & Imports (Billion USD) 160 145 140

120 113 98 100 88 76 78 80 69 67 60

40

20 Exports 0 Imports 2009 2010 2011 2012

Trade Balance (Billion USD) 80

Iran’s trade balance has experienced surplus over the 70 67 past several years. The trade surplus rose from $19 60 billion in 2009 to $67 billion in 2011 before falling to $31 billion in 2012. We expect further easing of 50 banking will result in currency 40 37 stability and trade surplus in forseeable future. 31 30 19 20

10

0 2009 2010 2011 2012

10 IRAN—Sleeping Giant at a Turning Point Economy

Iran Export Compositon (Billion USD) 160 145 140 Although crude oil accounts for more than 70% 27 of Iran's exports, non-oil exports (including 120 113 118 petrochemical products) have grown significantly 23 98 100 88 over the past several years. Reduction in exports 30 in 2012 was largely driven by sanctions that have 80 18 90 recently been somewhat alleviated. Even in 2012 the 70 non-oil exports grew about 10%. 60 68 40

20

Exports (Non-Oil) 0 Exports (Oil) 2009 2010 2011 2012

Export of Petrochemical Products (Billion USD) 16.0 15.0 14.0 Production of petrochemical products has grown significantly and currently account for approximately 12.0 11.6 33% of non-oil exports. 10.1 10.0 9.3 7.8 8.0 6.1 6.0

4.0 3.3 2.3 2.0

0.0 2005 2006 2007 2008 2009 2010 2011 2012

The Iranian Economy 11 Economy

Iran; A Key Energy Player Iran holds the fourth-largest proven oil reserves in the world after Venezuela, Saudi Arabia and Canada. Furthermore Iran holds the second largest proven natural gas reserves after Russia. The vast majority of these reserves must be developed which would requires significant in infrastructure. Iran also holds the longest coastline along the Persian Gulf where almost 35% of all seaborne traded oil finds its way USA toward the Indian Ocean via the Strait of Hormoz. Furthermore, around 20% of global LNG passes through this narrow water way. Source: US Energy Information Administration. MEXICO

2% COLOMBIA Panama Canal

BRAZIL

World’s Natural Gas Reserves 17%

25% Russia 25% 17% Iran 13% Qatar 45% 45% Others 17%

13% Iran holds more than 1.1 trillion cubic feet of proven Natural Gas reserve, the second only to Russia. (2013 estimates)

12 IRAN—Sleeping Giant at a Turning Point RUSSIA NORWAY 8% Danish Straits 7% KAZAKHSTAN Bosporus JAPAN TURKEY IRAQ IRAN

SAUDI EGYPT ARABIA 5% OMAN Suez Canal 35% Strait of Hormoz 7% Strait of Bab el-Mandab INDONESIA 31% Strait of Malacca

AUSTRALIA

World’s Crude Oil Reserves 10%

18% Saudi Arabia 18% 14% Venezuela 11% Canada 38% 14% 10% Iran 9% Iraq 38% Others 11% 9% 10% Iran holds more than 151 billion barrels of proven crude oil reserves, the fourth-largest in the world. (2012 estimates)

The Iranian Economy 13 Economy

Currency Iranian local currency (Rial) had been stable for about a that further easing of sanctions is likely to result in stabe local decade before losing 65% of its value in 2012-2013 largely due currency. to economic conditions. Policies of the new government in Iran and partial resolution of the nuclear issues has resulted in 25% increase in the value of Rial against US dollar. We expect

USD Against Local Currency (Rial)

45,000

40,000

35,000 Currency Weakening 30,000 due to economic conditions 25,000

Rial per USD 25% increase in value of 20,000 Rial due to new policies Currency Stability and partial resolution of 15,000 nuclear issues 10,000

5,000

0 2008/01/01 2009/01/01 2010/01/01 2011/01/01 2012/01/01 2013/01/01 2014/01/01

14 IRAN—Sleeping Giant at a Turning Point Economy

Inflation Year-on-year inflation that had increased to 45% in mid 2013, had declined to 23% in February of 2014 CPI monthly changes in recent months, indicates that inflation could be as low of 15% in late 2014. Lower inflation is driven by stronger local currency and tighter monetary policy.

Iran's Consumer Inflation (Year-over-Year, %)

50

40

30 23% 20

10

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014

CPI Monthly Change, Annualized (%)

100.0

10.0 4.9% % (Logarithmic Scale) % (Logarithmic

1.0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014

The Iranian Economy 15 Economic Outlook Improvements in Key Economic Indices

Easing of Sanctions Currency Stability Lower Inflation All recent political developments and Strong Trade Surplus Inflation has declined from a high indicate that both the Iranian Iranian currency (Rial) has of 45% to less than 25%. Monthly government and P5+1 countries strengthened approximately 25% CPI figures indicate that inflation understand the mutual benefits (from recent lows of last year) due could reach as low as 15% or of a nuclear deal and are willing to partial alleviations of sanctions, less over the next few months. to strive for a final agreement. tight monetary policies, strong Even with expected reductions In case we reach a negotiated trade balance and favorable in energy subsidies, inflation rate agreement (that we believe is expectations regarding policies of less than 20% over the next likely), economic sanctions should of the new government. We couple of years is likely. be significantly reduced over a expect that Rial will be stable over reasonable period. foreseeable future.

16 IRAN—Sleeping Giant at a Turning Point 20 Interesting Facts about Iran

1. Iran’s capital and largest city, Tehran, has a population of 8 11. Iran is one of the world’s largest producers of caviar, millions at night and 12 millions during the day. pistachios, and saffron. 2. Nearly half of Iran has an arid desert climate. It receives 12. In 2007, Iran produced the world’s largest handmade less than 4 inches (10 centimeters) of precipitation each carpet. It was the size of a soccer field. year. 13. Iran is the 18th largest country in the world, with a total of 3. The Persian Gulf holds 60% of the world’s oil reserves. 1,648,195 sq km. Iran alone has reserves of 151 billion barrels of oil, or 10% 14. Poetry holds a special place in Iranian culture. All Iranians of the world’s total reserves. Iran pumps nearly 4 million can recite lines of famous Persian poems, such as barrels of oil each day. Shahnameh or The Epic of Kings. 4. Iran controls 50% of the caviar market. The 15. The first day of spring in Iran (first day of the New Year) is a eggs of the Caspian beluga sturgeon can fetch up to $160 festive day. According to Persian ritual, the table is set with per ounce ($6 per gram). seven items, each beginning with the letter “s” in Farsi: 5. Iran is one of the world’s oldest continuous civilizations, such as apples (sib), green grass (sabze), vinegar (serkey), with settlements dating back to 4000 B.C. berries (senjed), ground wheat (samanoo), a gold coin 6. Approximately 65% of Iran’s population is under the age (sekke) and garlic (sir). of 35. 16. Persian culture is famous for beautiful poetry, luxurious 7. Since ancient times, people in Iran have used a water rugs, and lush gardens. In fact, the English word “paradise” supply system called a qanat (or kanat). It collects comes from a Persian word meaning “enclosed garden.” underground water and moves it through tunnels to 17. The most popular sport in Iran is soccer (football). The places where people need it. national team has won the Asian Cup three times and 8. Iranians have woven beautiful rugs for over 2,500 years. played in three World Cups. When creating rugs, Iranian weavers often make a mistake 18. Persians make up the most of Iran (61%), followed by intentionally. They want to show their belief that “only Azeri (16%), Kurd (10%), Lur (6%), Baloch (2%), Arab (2%), God is perfect.” Turkmen and Turkic tribes (2%), and other (1%). 9. Persian cat is one of the world’s oldest breeds. It 19. In 2012, Iran was the 18th most populated country in the originated in the high plateaus of Iran where their world. silky fur protected them from the cold. Italian traders 20. Approximately 14.2% of Iranians are obese, making it the brought the breed to in the 17th century, where it 41st most obese country in the world. became an exotic status symbol. 10. Iran has experienced one of the highest urban growth rates in the world, jumping from 27% to 60% between 1950 and 2002.

The Iranian Economy 17 02 Chapter Two The Iranian Stock Market

Tehran Stock Exchange (TSE) and Iran Farabourse are the two The pie chart shows of each sector or industry as a stock exchanges of Iran. Total of TSE percentage of the total market. As one can see, the Oil, Gas and Farabourse are $167 billion (as of 31 December 2013) on & Chemicals is by far the largest sector followed by Metals & combined basis. Minerals and Financials. These three sectors together make up These two exchanges together will be called Tehran Stock almost 74% of the market. Exchange throughout this report. All are grouped in 10 sectors and 28 industries.

Market Cap Mix By Sector 2%1% 38% Oil, Gas and Chemicals 20% Metals and Minerals 3% 16% Financials 3% 6% Holding Companies 5% 6% Industrial 5% Telecommunication 6% 3% Consumer Cyclical 38% 3% Other Materials 6% 2% Pharmaceuticals 1% Consumer Non-Cyclical

16%

20%

Total Market Cap = 167 Billion USD

Notes on This Chapter • All returns are expressed in USD term. The effective exchange rate is 30000 Iranian Rials per USD (as of 31 December 2013). • Only P/Es that are greater than 0 and less than 50 are shown in the tables. • Only companies that make up at least 1% of their respective sectors are listed in the tables. • All companies that have at least 1 trade in 2013 are included in calculations. • All market cap values and P/E ratios are as of 31 December 2013

20 IRAN—Sleeping Giant at a Turning Point 20 Largest Companies

Largest companies on the Tehran Stock Exchange have market caps in excess of several billion dollars. 53% Top-20 The 20 largest Iranian companies make up more than 50% of 47% Others total market capitalization. 47% 53%

Top 20 Largest Companies Market Cap (Billion USD)

Company B USD

1. Khalij Fars 13.8

2. B.A Oil Refinie 6.6

3. Mobarakeh Steel 5.8

4. I. N. C. Ind. 5.5

5. Iran Tele. Co. 5.3

6. Parsian Oil & Gas 5.1

7. Tamin Petro. 4.8

8. Maroon Petro. 4.7

9. Gol-E-Gohar. 4.3

10. Chadormalu 4.1

11. MAPNA 4.0

12. Ghadir Inv. 4.0

13. Isf. Oil Ref. Co. 3.9

14. Iran Mobil Tele 3.8

15. Omid Inv. Mng. 3.8

16. Khouz. Steel 3.4

17. Jam Petrochemical 3.3

18. Mellat Bank 3.3

19. Pasargad Bank 3.2

20. Khavarmiane Mine 3.0

The Iranian Stock Market 21 Returns & P/Es

Over the past 15 years, annual market return of 31% in local currency and 18% in US dollars has been attractive.

TEDPIX 15 Years Compound Return 1998=100

5712 10000 Compund annual return in local currency (Rial) is 31% 1000 1228 Compund annual return in USD is 100 18% Logarithmic Scale Logarithmic 10

1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

P/E of Largest Industries The Largest industries have a relatively low P/E ratio of 4 to 8

Industry Market Cap (Billion USD) 2013 P/E

Chemicals 47 7.6 Basic Metals 22 7.0 Banks 19 7.9 Petroleum Products 19 6.1 Metallic Ores 12 8.4 Holding Companies 11 6.5 Telecom 9 5.9

22 IRAN—Sleeping Giant at a Turning Point 3 Key Industries Basic Characteristics

Position Competitive Advantages Projects/Plans

Petrochemical • Fourth largest exporter of • Access to cheap energy & Need to invest $70 billion in Petrochemical products in feedstock new projects & infrastructure the world. • Close proximity to Plan to increase production • 25% of middle east & 4% customers in India & capacity to 100 Mllion tons of world market share China • Petrochemical product • Access to transportation capacity of 51 million routes & free waterways tons, including 4.4 million tons of Urea & 5 million tons of Methanol

Mining • 3% of world’s mineral • Access to vast mineral Production will increase 50% reserves including 1.4% of reserves & cheap energy over the next few years. world Iron ore reserves • Strong domestic demand • Major producer of copper from the steel industry (9th in the world) and iron & other producers of ore (11th in the world) non-cyclical products • Considerable production • Access to cheap energy & of zinc, lead and coal feedstocks

Steel • Annual production of • Access to cheap domestic Need investments to increase 16 million tons of steel iron ore production to 35 million tons (ranked 15th in the world) • Access to cheap energy over the next 5 years • 6.6% growth in 2013 • High domestic demand production

The Iranian Stock Market 23 Stock Market Outlook

Current Market Conditions: Recent Economic & Political Developments: • Diverse set of companies including petrochemicals, • Decline in inflation from 40% to 22%. Recent banks, steel, minerals, real estate, etc. monthly rates indicates that inflation could be as • Relatively low P/E ratio of 4 to 8 for largest low as 15% next year. industries. • Currency that was unstable last year has • High payout ratio of about 80% strengthened 25% versus USD and has been • Favorable tax position on dividend and capital relatively stable. gains. • Expectation of further reduction in economic sanctions & better relations with industrialized countries

Will Lead to

• Increased market participation • Higher P/E ratios & favorable market performance • Better funding for projects, technology investments, and improved efficiencies

24 IRAN—Sleeping Giant at a Turning Point Iran Capital Market Structure

Supreme Bourse Council

Tehran Securities Exchange Central Securities Technology Management Securities & Exchanges Depository of Iran Co. Co. (TSETMC) Organization (CSDI) www.tsetmc.com (SEO) en.csdiran.com www.seo.ir

Trade Supervison Post Trade

Exchanges

Tehran Securities Iran Mercantile Iran Farabourse Iran Energy Exchange Exchange Exchange (IFB) (IRENEX) (TSE) (IME) www.ifb.ir en.irenex.ir www.tse.ir/en www.ime.co.ir

Financial Institutions

Financial Data Investment Investment Processing Banks Funds Companies

Securities & Exchange Iranian Institutional Brokers Association Association Individual and (SEBA) (IIIA) Institutional Investors en.seba.ir www.iiia.ir

The Iranian Stock Market 25 Sectors Summary

1. Oil, Gas and Chemicals Oil, Gas & Chemicals (OGC) is the largest sector of the sector includes three main industries: Chemicals, Petroleum Tehran Stock Exchange. With 52 companies and total market Products and Drilling. capitalization of $66 billion, the OGC makes up 38% of total market capitalization. Among 20 largest companies which make up 50% of the market, seven come from the OGC. The

Composition of Stock Exchange 2% 1% Sectors 3% 38% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Oil, Gas and 100% Oil, Gas and Chemicals 1% Chemicals ...... Sector 71% Chemicals 28% Petroleum Products 1% Drilling 28%

71%

26 IRAN—Sleeping Giant at a Turning Point Return of Oil, Gas and Chemicals Sector (%)

TEDPIX Chemicals 300 Petroleum Products Drilling 250 200

150

100

50

0

-50 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

PKLJ Khalij Fars 13,839 Chemicals 20.9 18.2 PNBA B.A Oil Refinie 6,590 Petroleum Products 10.0 6.3 PASN Parsian Oil&Gas 5,125 Chemicals 7.8 5.0 PTAP Tamin Petro. 4,842 Chemicals 7.3 4.9 PMRZ Maroon Petro. 4,679 Chemicals 7.1 5.4 PNES Isf. Oil Ref. Co. 3,910 Petroleum Products 5.9 5.9 PJMZ Jam Petrochemical 3,323 Chemicals 5.0 6.2 PRDZ Pardis Petr. 2,205 Chemicals 3.3 4.9 PZGZ Zagros Petro. 2,197 Chemicals 3.3 4.6 PTRZ Palayesh Tehran 1,848 Petroleum Products 2.8 15.4 PNTB .Oil.Refine 1,739 Petroleum Products 2.6 7.5 IPTP Iranian Inv. Petr. 1,580 Chemicals 2.4 46.0 PKHA Khark Petr. 1,303 Chemicals 2.0 6.8 PNLZ Lavan Oil Ref. 1,197 Petroleum Products 1.8 10.4 PARK Shazand Petr. 1,156 Chemicals 1.7 6.8 PFAN Fanavaran Petr. 1,083 Chemicals 1.6 6.2 PKBP Amir Kabir Co. 1,075 Chemicals 1.6 8.7 PSHZ Shiraz Petr. 977 Chemicals 1.5 7.9 NBEH Behran Oil 888 Petroleum Products 1.3 5.5 SSIN Iran Chem. Ind. 842 Chemicals 1.3 4.4 NPSZ NPSZ 711 Petroleum Products 1.1 7.3 PRZZ Palayesh Naft 698 Petroleum Products 1.1 5.6 HSHM 679 Drilling 1.0 8.7 NOLZ Iranol 631 Petroleum Products 1.0 6.9

The Iranian Stock Market 27 Sectors Summary

2. Metals and Minerals Metals & Minerals includes manufacturers of steel products, iron ore and non-ferrous metals like copper, zine and aluminum. Main iron ore producers are also here. These companies are listed under two main industries: basic metals & metallic ores which make up 64 and 34% of the sector respectively.

Composition of Stock Exchange 2% 1% Sectors 3% 20% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Metals and 100% Metals and Minerals Minerals Sector ...... 2% 64% Basic Metals 34% Metallic Ores 2% Non-Metallic Ores

34% 64%

28 IRAN—Sleeping Giant at a Turning Point Return of Metals and Minerals Sector (%)

TEDPIX Basic Metals Metallic Ores Non-Metallic Ores 750 600

450

300

150

0

-150 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

FOLD Mobarakeh Steel 5,772 Basic Metals 16.8 6.0 MSMI I. N. C. Ind. 5,499 Basic Metals 16.0 8.6 GOLG Gol-E-Gohar. 4,302 Metallic Ores 12.5 9.3 CHML Chadormalu 4,066 Metallic Ores 11.8 9.2 FKHZ Khouz. Steel 3,352 Basic Metals 9.8 5.9 KHMZ Khavarmiane Mine 3,048 Basic Metals 8.9 43.5 MADN Metals & Min. 2,200 Metallic Ores 6.4 8.4 FKAS Khorasan Steel Co. 1,430 Basic Metals 4.2 16.0 ZOBZ Isfahan Steel 1,233 Basic Metals 3.6 9.7 KNRZ Saba Noor 776 Metallic Ores 2.3 17.9 KSIM Calcimine 340 Basic Metals 1.0 6.6

The Iranian Stock Market 29 Sectors Summary

3. Financials Banks, investment companies, construction, leasing, and insurance industries all are included in the financial sector. The sector makes up 16% of the market, making it the third largest sector after OGC (Oil, Gas and Chemicals) and Metals and Minerals.

Composition of Stock Exchange 2% 1% Sectors 3% 16% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Financials 100% Financials Sector ...... 1% 71% Banks 5% 16% Investment 7% 7% Construction 5% Insurance 1% Leasing 16%

71%

30 IRAN—Sleeping Giant at a Turning Point Return of Financials Sector (%)

TEDPIX Banks Investment Construction 250 Insurance 200 Leasing 150

100

50

0

-50 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

BMLT Mellat Bank 3,299 Banks 12.2 7.3 BPAS Pasargad Bank 3,237 Banks 12.0 8.5 BTEJ 2,229 Banks 8.2 8.2 BSDR Saderat Bank 2,183 Banks 8.1 10.4 BPAR 1,993 Banks 7.4 7.4 NOVN EN Bank 1,385 Banks 5.1 9.3 KRAF 834 Banks 3.1 7.9 ZF09 Arian 735 Investment 2.7 9.7 VSIN Sina Fin. Ins. 703 Banks 2.6 11.0 BANS Ansar Bank 641 Banks 2.4 7.4 IKHR Kharazmy Invest 538 Investment 2.0 9.2 NIKI Iran N. Inv. 533 Investment 2.0 17.5 BSAP 502 Banks 1.9 N/A IBKZ Investment Bank 427 Banks 1.6 7.9 SPAH Sepah Inv. 397 Investment 1.5 14.5 BDYZ Day Bank 392 Banks 1.5 8.7 SSAP Saipa Inv. 374 Investment 1.4 5.0 TMEL Tosee Melli Inv 352 Investment 1.3 15.9 BKHP Bank of M.E 333 Banks 1.2 N/A BSTE Int. Const. 324 Construction 1.2 6.5 ZF68 267 Banks 1.0 N/A SAKH Iran Const. Inv 266 Construction 1.0 48.6 MSKN Housing Inv. 263 Construction 1.0 5.3

The Iranian Stock Market 31 Sectors Summary

4. Holding Companies Holding Companies is the fourth largest sector with market capitalization of $11 billion, equal to 6.4% of total market.

Composition of Stock Exchange 2% 1% Sectors 3% 6% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

32 IRAN—Sleeping Giant at a Turning Point Return of Holding Companies Sector (%)

TEDPIX Holding Companies

200

160

120

80

40

0

-40 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

GDIR Ghadir Inv. 4,011 Conglomerates 36.4 5.6 OIMC Omid Inv. Mng. 3,799 Conglomerates 34.4 8.2 SAND Pension Fund 2,067 Conglomerates 18.7 6.8 BANK Bank Melli Inv. 1,153 Conglomerates 10.5 9.1

The Iranian Stock Market 33 Sectors Summary

5. Industrial Industrial sector includes a number of large companies in engineering, transportation and information technology (IT) in addition to some small companies involved in manufacturing of industrial machines.

Composition of Stock Exchange 2% 1% Sectors 3% 6% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Industrial 100% Industrial Sector ...... 2% 40% Engineering 4% 27% Transportation 5% 15% IT 7% 7% Electrical Machines 5% Metallic Machines 40% 4% Machines and Tools 15% 2% Industrial Subcontractor

27%

34 IRAN—Sleeping Giant at a Turning Point Return of Industrial Sector (%)

TEDPIX Engineering IT Electrical Machines 500 Machines and Tools 400

300

200

100

0

-100 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

MAPN MAPNA 4,014 Engineering 39.7 24.4 KSHJ IRI Marine Co. 2,168 Transportation 21.5 N/A INFO Inf. Services 697 IT 6.9 7.0 TRNS Iran Transfo 365 Electrial Machines 3.6 15.9 EPRS Parsian Ecommerc 342 IT 3.4 9.6 MARK Arak M. Mfg. 279 Metallic Machines 2.8 20.8 TORZ Toucaril Co. 229 Transportation 2.3 21.4 RKSH Etebari Iran Co 175 IT 1.7 10.6 SDRP SADRA 156 Industrial Subcontractor 1.5 N/A TRIR Iran Tractor 153 Machines & Tools 1.5 24.0 MOTJ Motogen 129 Electrial Machines 1.3 8.7 SAMA Ama 114 Metallic Machines 1.1 13.2 AZAB Azarab Ind. 110 Metallic Machines 1.1 27.1 TAYD Tidewater 109 Transportation 1.1 4.6 NIRO Nirou Trans 104 Electrial Machines 1.0 21.2

Note: of Transportation more than tripled in November and recorded an astonishing return of 2131% at the end of 2013. The index is excluded from the chart for convenience in visualization only.

The Iranian Stock Market 35 Sectors Summary

6. Telecommunication Telecommunication is the sixth largest sector that makes up 5.3% of total market capitalization. The sector however contains only two companies. These companies operate fixed and mobile communication networks. The sector is regarded as low-risk investment with stable cash flow.

Composition of Stock Exchange 2% 1% Sectors 3% 5% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

36 IRAN—Sleeping Giant at a Turning Point Return of Telecommunication Sector (%)

TEDPIX Telecom

200

160

120

80

40

0

-40 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

MKBT Iran Tele. Co. 5,269 Telecom 58.1 7.4 HMRZ Iran Mobil Tele 3,800 Telecom 41.9 5.3

The Iranian Stock Market 37 Sectors Summary

7. Consumer Cyclical Consumer Cyclical includes two main industries, vehicles and as investors bet that difficult period of almost two-year deep tire manufacturers, which together make up 2.6% of total recession would come to its end when giant carmakers, market capitalization. like the French Renault and Peugeot, return and supply the Index of vehicle industry, in which large car makers like IKCO industry with parts and technology again. and Saipa are included, rose as much as 200% during 2013

Composition of Stock Exchange 2% 1% Sectors 3% 3% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Consumer 100% Consumer Cyclical Cyclical Sector ...... 86% Vehicles 14% 14% Tire and Rubber

86%

38 IRAN—Sleeping Giant at a Turning Point Return of Consumer Cyclical Sector (%)

TEDPIX Vehicle 450 Tire and Rubber 375

300

225

150

75

0

-75 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

IKCO 1,059 Vehicles 24.0 N/A SIPA Saipa 810 Vehicles 18.3 N/A BHMN 551 Vehicles 12.5 7.7 BARZ Kerman Tire 274 Tire & Rubber 6.2 6.9 GOST Iran Kh. Inv. 253 Vehicles 5.7 9.9 RENA Rena Investment 174 Vehicles 3.9 N/A ZMYD Zamyad 174 Vehicles 3.9 N/A PKOD 156 Vehicles 3.5 N/A KAVR Iran Khodro D. 120 Vehicles 2.7 N/A KVRZ Kavit Tire 110 Tire & Rubber 2.5 6 SZPO Sazeh Pouyesh 109 Vehicles 2.5 11.8 SPDZ Saipa Diesel 94 Vehicles 2.1 N/A SHND Rubber 70 Tire & Rubber 1.6 4.9 YASA Iran Yasa Tire 69 Tire & Rubber 1.6 9.5

The Iranian Stock Market 39 Sectors Summary

8. Other Materials Cement industry makes up 89% of the Other Material sector Access to cheap energy is a competitive advantage for all of and only 2.3% of total market capitalization. Cement plants are them. The index of cement producers rose 273% in 2013 on rising located in different parts of the country. Some of them are near volume of export and increase in domestic prices. The index of the borders and have better access to foreign markets. Others tile and ceramics industry, which makes up almost 10% of the are in center and tend to supply the domestic market. sector, experienced a six-fold increase in 2013, making it the third best industry after transportation and non-metallic ores.

Composition of Stock Exchange 2% 1% Sectors 3% 3% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Other Materials 100% Other Materials 1% Sectors ...... 89% Cement 10% 10% Tile and Ceramic 1% Coal

89%

40 IRAN—Sleeping Giant at a Turning Point Return of Other Materials Sector (%)

TEDPIX Cement 600 Tile and Ceramic Coal 500 400

300

200

100

0

-100 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

SFKZ F. & Kh. Cement 676 Cement 15.3 8.8 STEH Tehran Cement 400 Cement 9.1 7.7 SMAZ Mazandaran Cem. 204 Cement 4.6 6.9 SSEP Sepahan Cement 193 Cement 4.4 9.2 SURO Oroumiyeh Cem. 154 Cement 3.5 7.8 SHZG Hormozgan Cem. 152 Cement 3.4 6.7 SHGN Hegmatan Cement 150 Cement 3.4 8.7 SEIL Ilam Cement 149 Cement 3.4 6.6 SINA Sina Tile 131 Tile & Ceramic 3.0 10.2 SSHR Shargh Cement 126 Cement 2.9 13.4 SIMS Shomal Cement 118 Cement 2.7 8.4 SEFH Isfahan Cement 114 Cement 2.6 15.6 SROD Shahroud Cement 109 Cement 2.5 8.1 SSOF Soufian Cement 97 Cement 2.2 9.6 SBOJ Bojnourd Cement 97 Cement 2.2 6.9 SGEN Qayen Cement 95 Cement 2.1 11 SADB Ardebil Cement 94 Cement 2.1 7.6 SGRB Gharb Cement. 92 Cement 2.1 6.5 SBHN Behbahan Cement 92 Cement 2.1 5.4 SKER Kerman Cement 90 Cement 2.0 8.3 SKOR Kordesta Ce. Co. 90 Cement 2.0 6.6 SDAB Darab Cement 89 Cement 2.0 7.8 SFNO Siman Fars Noe 84 Cement 1.9 6.2 SKRN Karoon Cement 67 Cement 1.5 5.9 CHIR Irana Tile 67 Tile & Ceramic 1.5 13.1 SDST Dashtestan Ce. 64 Cement 1.5 5.6 ALVN Alvand Tile 62 Tile & Ceramic 1.4 21.7 SASP Asia Cement 54 Cement 1.2 0 SKHS Khash Cement 54 Cement 1.2 7.8 SDOR Doroud Cement 52 Cement 1.2 8.7 SKAZ Khazar Cement 51 Cement 1.2 8.8 The Iranian Stock Market 41 Sectors Summary

9. Pharmaceuticals Pharmaceuticals is an industry of 30 companies makes up foreign currencies for imported raw materials. just below 2% of total market capitalization. The index of drug makers listed in the TSE rose 334% in 2013 mostly due to price increase and introduction of new products. At the same time the industry enjoyed access to government-subsidized

Composition of Stock Exchange 2% 1% Sectors 3% 2% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

42 IRAN—Sleeping Giant at a Turning Point Return of Pharmaceuticals Sector (%)

TEDPIX Pharmaceuticals

375

300

220

150

75

0

-75 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

ALBZ Alborz Inv. 412 Pharmaceuticals 12.5 12.8 DARO Daroupakhsh 393 Pharmaceuticals 11.9 8.2 DSOB Sobhan Pharm. 194 Pharmaceuticals 5.9 12.7 DFRB Farabi Pharm. 175 Pharmaceuticals 5.3 12.3 DJBR Jaber Hayan P. 163 Pharmaceuticals 4.9 10.6 DALZ Alborz Darou 150 Pharmaceuticals 4.5 8.9 DRZK Razak Lab. 147 Pharmaceuticals 4.5 8.6 DOSE Osvah Pharm. 138 Pharmaceuticals 4.2 10.4 DPAK Daroupakhsh P. 135 Pharmaceuticals 4.1 7 DSIN Sina Darou Lab. 133 Pharmaceuticals 4.0 8.4 EXIR Exir Pharm. 127 Pharmaceuticals 3.8 11.2 DSOZ Sobhan Pharm 112 Pharmaceuticals 3.4 9.8 PDRO Pars Darou 111 Pharmaceuticals 3.3 10.8 TMVD Daroupakhash I. 96 Pharmaceuticals 2.9 8.9 KIMI Chimidarou 95 Pharmaceuticals 2.9 12.5 DABO Abouraihan P. 82 Pharmaceuticals 2.5 11.8 PKSH Pakhsh Alborz 81 Pharmaceuticals 2.5 8.6 DTDZ Tolid Daroo 81 Pharmaceuticals 2.4 10.9 DZAH Zahravi Phar. 79 Pharmaceuticals 2.4 4.8 DLGM Loghman Pharm. 52 Pharmaceuticals 1.6 32.6 ABDI Dr. Abidi Lab. 48 Pharmaceuticals 1.5 12.4 AMIN Amin Pharm. 48 Pharmaceuticals 1.4 9.9 THSH Tehran Chemical 47 Pharmaceuticals 1.4 9.2 DKSR Kowsar Pharm. 46 Pharmaceuticals 1.4 14.3 FTIR Iran Parenteral 46 Pharmaceuticals 1.4 6.4 IRDR Iran Darou 37 Pharmaceuticals 1.1 12.2 DAML Damloran Pharm. 33 Pharmaceuticals 1.0 11.6

The Iranian Stock Market 43 Sectors Summary

10. Consumer Non-Cyclical Consumer Non-Cyclical is the smallest sector in Iran as 303% in 2013. The largest companies, which are involved composite exchanges. Food and sugar producers make up 82 in processing of cooking oil, raised prices several times while and 18% of this sector respectively. Foods’ products include a imported raw oil at government-backed lower exchange rate. wide range from dairies and cooking oil to beverages, cookies, Sugar producers rose only 85% in the same period. and packaged foods. Index of food ex. Sugar rose as much

Composition of Stock Exchange 2% 1% Sectors 3% 1% 3% 5% 38% Oil, Gas and Chemicals 20% Metals and Minerals 6% 16% Financials 6% 38% 6% Holding Companies 6% Industrial 5% Telecommunication 16% 3% Consumer Cyclical 3% Other Materials 20% 2% Pharmaceuticals 1% Consumer Non-Cyclical

Composition of Consumer 100% Consumer Non-Cyclical Non-Cyclical ...... Sector 82% Food ex. Sugar 18% Sugar 18%

82%

44 IRAN—Sleeping Giant at a Turning Point Return of Consumer Non-Cyclical Sector (%)

TEDPIX Food ex. Sugar Sugar 375

300

225

150

75

0

-75 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

TICKER COMPANY Market Cap. INDUSTRY % OF SECTOR P/E (Million USD)

TSBE Behshahr Inv. 574 Food ex. Sugar 22.0 10.9 SBEH Behshahr Ind. 534 Food ex. Sugar 20.4 5.4 MINP Minoo Industry 355 Food ex. Sugar 13.6 28.3 MRGN Margarin 126 Food ex. Sugar 4.8 5.5 MINO Pars Minoo 124 Food ex. Sugar 4.8 10.9 BENN Behnoush Iran 78 Food ex. Sugar 3.0 11.9 GESF Isfahan Sugar 72 Sugar 2.8 16.6 GPSH Piranshahr S. 66 Sugar 2.5 11.9 LPAK Pak Dairy 49 Food ex. Sugar 1.9 37.5 GCOZ Glucosan 47 Food ex. Sugar 1.8 7.5 GHEG Hegmatan Sugar 45 Sugar 1.7 16.4 GLOR Lorestan Sugar 41 Sugar 1.6 16.6 SHPZ W. Azar. Pegah 37 Food ex. Sugar 1.4 N/A KLBR Kalber Dairy 37 Food ex. Sugar 1.4 27.8 CHRZ ChaharMahal 35 Sugar 1.3 17.5 GGAZ Ghazvin Sugar 34 Sugar 1.3 17.4 GNJN Naghsh Jahan S. 34 Sugar 1.3 9.3 SLMN Salemin Factory 32 Food ex. Sugar 1.2 22.7 GHND Khoy Sugar Co. 29 Sugar 1.1 9.8 SPKH Kh. Pegah Dairy 29 Food ex. Sugar 1.1 16.5 GMRO Marvdasht Sugar 29 Sugar 1.1 14.8 SPPE I. Pegah Dairy 26 Food ex. Sugar 1.0 14.3

The Iranian Stock Market 45 03 Chapter Three Mofid Securities Introduction

Mofid Securities is a leading privately-owned investment Mission advisory and largest full service stock brokerage firm in Iran Mofid aims to be a trusted investment and wealth that was established in 1994. Mofid has a powerful advisory management services company supported by the strength and professional trader teams servicing institutional and retail and heritage of its firm and the knowledge, concern, and investors. experience of its employees. Mofid’s ambition is to give the These teams are supported by an experienced equities clients objective and individualized advice and services to research team that develops high quality analysis on the help them achieve their long-term financial goals and to assist market trends. In addition, Mofid manages an expanding them in creating wealth, ethically, in financial markets. funds and asset management division servicing its clients. The firm has more than 250 employees in more than 25 major Vision cities throughout Iran. Mofid’s vision is to go beyond the expectations of the clients Value through offering the highest quality as the Mofid success has been built on a highly individualized and leading financial intermediary and asset management firm in quality services. Mofid is focused on developing a long-term Iran. relationship with both clients and employees. As a financial intermediary, Mofid’s aim is to increase the number of its retail clients by 100% and institutional clients by People 70% by end of 2017. Mofid regards the human capital as the main asset of the As an asset manager, we aim to have $100 million asset under company. In order to continuously improve its methods and management by 2016. Growing interest of international managerial systems, the company tries to equip its staff with investors and liquidity pools on the Iranian capital market and the best and modern technical knowledge. Mofid attempts to improvement in the Iranian economy are the main external recruit proficient people, and invests considerable amounts driving forces for this expansion. of money to hold on-the-job-training courses for its staff. Mofid will reach its aims with learning more, focusing and The team is equipped with the most recent techniques and improving services with the usage of new technologies. Knowledge in finance and securities markets. Social Responsibility Growth Pellekan—a loyalty community of Mofid customers—is Mofid is the number one ranked brokerage firm among 108 donating monthly amount to selected charities to support brokers in the Iranian capital market since 2007. The rankings patients suffering from cancer. MAHAK Institute and are based on the Securities and Exchange Organization MEHRANEH charity are among these charity groups. (SEO), Iranian capital market regulator, criteria. The criteria Mofid is playing an effective role in development of include volume of transactions, number of staff with higher shareholdership culture by conducting several seminars and level education, number of branches, number of regulatory workshops throughout Iran, especially in less developed parts licenses to provide financial services, and quality of its of the country.Also, translating and publishing top financial services. resources to provide students and researchers with suitable contents.

48 IRAN—Sleeping Giant at a Turning Point Key Numbers

The Mofid’s rank amongst 108 brokerage firm sinces 2007 1 (Ranked by Securities and Exchange Organzation) 5 Mutual Funds under Mofid management 5 Billion USD volume of Mofid’s trade in 2013 20 Years of honorable background 25 Percent Mofid’s market share in online trading 35 Branches all over the country 50 Million USD managing by Mofid 250 Number of Mofid’s staff 100,000 Number of Mofid’s new customers in 2013 250,000 Number of Mofid’s customers 2,000,000 Number of Mofid Online transaction in 2013

Mofid Securities 49 Leadership

Mr. Hamid Azarakhsh President

Mr. Hadi Mehri Mr. Hassan Azarakhsh Mr. Mahdi Azarakhsh Managing Director Vice President Deputy Managing Director

50 IRAN—Sleeping Giant at a Turning Point Key Persons

Mr. Mahdi Zamanifar Mr. Majid Arab Mr. Ali Azarakhsh Trading Manager Senior Consultant Administrative Manager

Mr. Ramin Partovi Mr. Morteza Estahri Mr. Hani Shahri Branches and Sales Manager Asset Manager E-Trade Services Manager

Mr. Rasoul Vafaie Mr. Mahdi Seifollahi Mr. Davoud Ghasimi Financial Manager Market Development Manager Global Markets Studies Manager

Mofid Securities 51 Timeline

From a modest background of a small office in 1994, Mofid has grown to become the largest stock brokerage firm in Iran.

Electronic Order Booking System The new web based system, helped customers place Central Securities orders electronically. Depository of Iran It revolutionized the Mofid cofounded customer access to CSDIran as a share- Tehran Metal the market. holder and active Exchange member. Mofid co-founded Tadbir Pardaz the Tehran Metal Tadbir Pardaz was Exchange which established to was later merged Mofid provide proprietary into Iran Mercantile technology to the Exchange. Establishment Iranian capital markets 2005 2001 2004 1994 1999

52 IRAN—Sleeping Giant at a Turning Point Pellekan; Mofid Customer Club Pellekan took off on May 7 to provide the wide range of Mofid customers with a Pouya Finance new set of services. Information Online Trading dissemination firm First ETF Initiation was founded. Atlas the first ETF by Introducing the first Mofid , founded on Mofid Trader 5 online trading system Energy Exchange December 2nd. In collaboration to Iranian Investors. Inception Mofid Online helped with Metaquotes investors have direct and Tadbir Pardaz, access to the market. Mofid introduced MofidTrader5, a world class trading platform, to Pishtaz Fund the professional First investors . was founded and managed by Mofid 2012 2013 2010 2011 2008

Mofid Securities 53 Mofid's Performance in 2013

Mofid's Market Share (%) Mofid's Trading Value (Billion TSE Trading Value (Billion USD) USD)

7.0 6.5 3.5 2.9 6.0 3.0 60 4.9 5.0 2.4 49 5.0 2.5 50 45

4.0 3.5 2.0 40 31

3.0 1.5 30 1.0 2.0 1.0 20 0.4 8 1.0 0.5 10

0.0 0 0 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013

As the stock market has expanded through the last four years in term of trade value, Mofid has been successfully increased its market share from 4.9 to 6.5%. Holding 6.5% of the total trade value of the market amongst108 brokerage firms, made Mofid the largest of 2013.

Mofid Online Trading Value Mofid Number of Newly Mofid Spot (Billion USD) Added Customer (thousands) Trading Value (Billion USD) Market Mofid

9 8.4 120 1.8 1.7 99 7.5 100 1.5 1.3 1.2 1.2 6 80 1.2

4.5 60 0.9

3 2.2 2.2 40 0.6 20 20 21 1.5 25% 20 0.3 0.1 0 0 0 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013

Mofid has always provided high-quality services to individual investors. As a result, Mofid is now holding the largest market share of online trading market. By the end of 2013, Mofid holds 25% of total online trading market with about two billion dollars. As the market expanded in 2013, more individual investors has started using Mofid’s brokerage services. By the end of 2013, total number of customers is exceeding 250,000.

54 IRAN—Sleeping Giant at a Turning Point Services

Trading Services Asset Management Having 35 branches across the country has made Mofid the largest full service brokerage firm in Iran. All branches offer a Funds wide range of services to the customers in addition to online Mofid funds rank among the best in the industry with assets services. of $50 million. Mofid has consistently out-performed the Brokerage services and transaction processing through a Iranian benchmark. range of personalized and remote channels are the keys to our success in the business. Portfolio Management Mofid provides portfolio management services (PMS ) to a Trading Tools diverse group of institutional and inindividual clients. Mofid has been a pioneer in developing trading platforms for Mofid’s investment philosophy adheres to the Business Iranian financial markets. Valuation Approach, which seeks to identify attractive investment opportunities using a broad definition of value, Mofid Online: Our basic trading platform for every client uncovering securities often overlooked by other investors. Mofid refers to its management style as “value with a growth M-Trader: M-Trader is a mobile trading application designed overlay.” This approach allows Mofid to find values in the for Android and IOS devices. This small app provides traders market at different points in the economic cycle. with almost all important features of Mofid Online, such as monitoring market, sending orders, and managing the Professional Management accounts The service provides professional management of equity portfolios designed to deliver consistent long-term Mofid Trader 5: A world-class trading terminal which works performance while identifying and controlling risks. with support and under license of MetaQuotes. In addition to basic functions of a standard trading platform, the MT5 Research Support provides clients with a wide variety of chart tools. Moreover, A research team responsible for establishing investment professional clients with knowledge of programming and strategy and providing Mofid real time information backs data modeling can use the powerful MQL5 language to Mofid’s portfolio managers. produce sophisticated programs for trading or analysis.

Mofid Securities 55 Partners

Tadbir Pardaz Customers Tadbir Pardaz IT Group is a leading provider of financial Mofid’s clients are coming from different industries ranging technology solutions in Iran. The company’s workforce is from oil and petrochemical producers to telecommunication highly experienced and knowledgeable within both finance service providers, including: and IT industries. • Siemens AG Tadbir Pardaz provides a complete portfolio of cutting-edge • National Iranian Oil Refining & Distribution Company solutions and services for the based on • Petrochemical Commercial Company international standards. • Iranian Privatization Organization • Esfahan Steel Company The company is now involved in the following activities: • National Iranian Copper Industries Co. • Developing and implementing solutions for various • Iran Khodro Industrial Group players in the financial market • Saipa Automotive Manufacturing Group • Designing databases • Telecommunication Company of Iran • Providing web solutions • Iranian Aluminum Company • Offering consultancy services for provision of IT solutions • Copper World Company and network design • Almahdi Aluminum Company Total Brokerage Solution • Hormozgan Aluminum Company The Total Brokerage Solution is a complete front office and back office which includes accounting, online trading application, mobile trading, customer database, reports, and settlement, order management system, and call center module for telephone ordering.

Mutual Fund Solution Tadbir Mutual Fund Solution is a fund administration and management software. The solution has been approved by Securities and Exchange Organization (SEO) of Iran to be used by mutual funds which have SEO’s certification.

Portfolio Management Solution Tadbir Portfolio Management Solution has a complete set of features for portfolio management. Based on its configuration, this web-based solution can be used by individual and institutional investors and certified portfolio managers. Pouya Finance Pouya is an information dissemination firm providing , issuers’ information, news, and other relevant information for investing in the Iranian financial market. The company is founded by Mofid to disseminate and process market data for investors.

56 IRAN—Sleeping Giant at a Turning Point IRAN IRAN Sleeping Giant at Giant aSleeping Turning Point IRAN Sleeping Giant at a Turning Point Perspective On The Iranian Stock Market

Mofid Securities No. 1, Ziba Alley, Negin St, Ghaem Magham Ave, Haft-e Tir, 15899 33491, Tehran / Iran Tel: +98 (21) 8190 1165 Email: [email protected] Web: en.emofid.com Mofid Securities