Iran Market Reporter 21

IranMarketReporter

Overview:In January 2013, Tehran Stock Exchange went through a slight correction as stock prices fell for the first time in six months. TSE All Share Index (TEDPIX) fell 3.4 percent after climbing as much as 17.1 percent in the latest month of 2012. Quarterly reports, which many see too conservative, are one the reasons behind January decline. Investors also took a breath after rapid and significant increase in prices in the second half of the year.

Funds:Last month, the index of all funds decreased by 5 percent compared to the last month of 2012. Only few funds could do better than zero percent and two were more than 1 percent.

Stock:TSE total value of trades (Daily Average) increased by 30 percent in the month that TEDPIX declined for 3.5 percent. Other major indices also decreased in the first month of 2013.

News:The Omid fund, latest fund to be offered publically in Iranian Capital Market, will start taking subscription on February 2nd.

Commodity:The first month of 2013 was a stellar for the commodity market with the value of traded commodities rising by 150 percent. Agricultural ring started trading after two month break.

21Volume 3Issue 1October 2013

ADDRESSING THE NEEDS OF INVESTORS

IRAN MARKET REPORTER Is produced by Mofid Securities Co.Distributed electronically via email.

009821 8190 1165 009821 8190 1154 [email protected]

Mofid Securities Co.Member of TSE (Tehran Stock Exchange)Member of IME (Iran Mercantile Exchange)Member of Farabourse

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Iran Market Reporter No. 21, Jan 2013 ( Issue 1, Vol. 3) en.emofid.com

Overview

1

In January 2013, Tehran Stock Exchange went through a slight correction as stock prices fell for the first time in six months. TSE All Share Index (TEDPIX) fell 3.4 percent after climbing as much as 17.1 percent in the latest month of 2012. Quarterly reports, which many see too conservative, are one the reasons behind January decline. Investors also took a breath after rapid and significant increase in prices in the second half of the year.

Global Markets Positively Start 2013 Revenue for half of TSE companies is directly

related to global prices of commodities, making profits sensitive to developments beyond the borders. Fortunately, the world economy showed signs of improvement especially since the fourth quarter of last year.

China manufacturing sector expanded for fourth consecutive months and Q4 GDP increased at better-than-estimate rate of 7.9 percent after expanding at three-year low rate of 7.4 percent in the prior three months.

In Europe, authorities including ECB chairman say the worst for debt crisis is over and the dark clouds over the European sky are becoming thinner. German indices of business confidence, IFO and ZEW, both suggest that businesses are now more optimistic about the future.

In the US, manufacturing activities and industrial production increased while the end of the year agreement between rival parties helped the world largest economy pass the so-called fiscal cliff. Finally in Japan, the newly elected Prime Minister Shinzo Abe promised to implement aggressive fiscal policies and he might also force the central bank to follow him by similar policies at monetary side.

The chart shows performance of Mofid Commodity Index (MCI) in the year ended in January 2013. MCI tracks prices of key commodities important to revenue of Iranian commodity stocks. The index increased 26.9 percent in January, reaching to an all time high at the end of the month, as a stronger USD amplified the increase in global prices of commodities like copper, methanol, ethylene, and crude oil.

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Overview

2

Basic Metals Fall, Metallic Ores ResistThe index of basic metals producers fell 8.5

percent in January as quarterly reports fell short of market expectations. However, the fundamentals of the sector are very strong and it is why many believe the reports and guidance from companies are too conservative.

The sector, which is the largest industry in TSE, is in expansion mode. Mobarke Steel, a main steel producer, announced 2.5$ billion development plan aimed to increase production from 7.7 to 11.8 million tons. According to the world steel association, Iranian crude steel production increased by 9.6 percent to 14.5 million tons during 2012; making Iran the fifteenth largest steel producer in the world.

TSE Main Sectors ( Jan 2013 )

31-JanMonthlyChange

(%)

Metallic Ores 13,109.80 4.4

Petro. Products 107,469.50 0.4

Chemicals 2,624.60 -0.5

Conglomerates 3,660.70 -0.7

Cement 301.30 -1.1

Pharmaceuticals 1,328.30 -1.2

Financial intermediation 680.80 -2.5

Real Estates 531.60 -2.6

TEDPIX 36,554.90 -3.4

Vehicles 4,861.00 -3.8

Banks 277.20 -5.5

Basic Metals 28,646.20 -8.5

Telecom 277.90 -9.4

Foods ex. Sugar 849.20 -11.5

Crude Oil (WTI) 97.45 6.8

Copper 8,148 3.0

EURUSD 1.3575 2.9

Global prices for comparison only.

Outlook for higher revenue is also unchanged on rising global prices and strengthening USD against home currency. BHP Billiton and Rio Tinto, the world two largest mining companies, both raised their estimates for production in 2013. Chinese steel producers announced increase in prices to compensate for higher costs from increase in iron ore prices.

Metallic ores producers rose for the seventh consecutive months as the price of iron ore and steel increased in Iran Mercantile Exchange (IME) and companies raised profit estimates. Saba Noor Steel, one of the three main iron ore producers, raised its EPS by as much as 30 percent because of stronger USD and rising global prices of iron ore.

Auto Industry Limits its Decline on Price Outlook

The index of car makers fell for the second months while the decline was limited because of possible increase in prices. Car makers, struggling with rising prices of imported materials, got a new approval from the government to set sales prices based on an exchange rate 100 percent above the current official rate (12260 IRR per USD). Speculations about an imminent increase by main car makers along with lower supply caused an increase of more than 50 percent in market prices of popular models like Peguet 405, L90 (a model of Renault), and Pride.

The news however was not sufficient to stop decline in share prices as other challenges, like the prospect for higher wages and lower production, are difficult to address. Based on official figures, car production fell to 676 thousands in the nine months ended in December which is 46 percent lower from the same period last year. Furthermore, higher prices might start to affect demand. It is said that loans for car purchases might be doubled to support purchasing power.




Mofid Commodity Index

Overview

3

MCI Composition

MCIComposite

MCIMetals

MCIChemicals

MCIPetroleum

Weekly % 12.0 8.9 11.7 12.9

Monthly % 26.9 20.5 27.0 28.8

Yearly % 94.2 39.6 125.3 111.1

Other sectorsStocks of banks declined 5.5 percent after a

major bank announced that its plan to sell its stakes in an investment company has no effect on its EPS.

Home builders also declined even after the Maskan Bank, the responsible bank for implementing housing policies, agreed to give home purchasing loans to buildings older than 12 years. Prices of home loans also jumped as speculators spot signs of activities in the housing market. Some experts still see no end for the recession in the housing market as they believe recent increase in prices further reduced purchasing power. Increase in construction activities, especially in major cities like Tehran, might just add to the inventory and make the recession even deeper.

MCI Changes

Recent changes of Mofid Commodity Index (MCI) and the index composition are shown in the following table and pie chart. MCI is developed to track global prices of a number of key commodities to which the revenue of Iranian commodity stocks are sensitive to. For more information please visit our website: en.emofid.com

Chemicals, Refineries Raise EPS EstimatesChemicals producers declined just 0.5

percent which is negligible considering 28.5 percent increase in the prior month. The index of refineries and petroleum products rose for the sixth consecutive months. Quarterly reports support positive outlook for both sectors. Kermanshah Petrochemicals, a main urea

Cement Industry Gets a Discount for Energy

Cement producers reached to an agreement with the government to reduce cost of fuel oil (mazut) by 65 percent. Stock prices are lower in January as the sector still faces higher cost of maintenance for higher exchange rates and recently a possibility of decline in domestic demand. Official figures shows that rate of growth of domestic cement consumption unexpectedly became negative though the production is still 2.8 percent higher than last year. The good news is that export increased by as much as 39 percent to 9.3 million tons in the same period, suggesting cement producers successfully found new markets beyond the borders, mostly in neighboring Iraq and even Turkey.

producer, raised EPS forecast by 45 percent. Maroon Petrochemical, a main ethylene producer, raised its EPS forecast while the exchange rate used for calculation is still below the market rates. Shazand Petrochemicals, another ethylene producer, also raised its EPS not only on higher exchange rate but also for increase in production.




Stock Market Summary

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Trade Value (M USD)

Trade Volume (M)

Number of Trades

Number of Trading Days

TSE ¹ 1,888 6,188 501,459 19Farabourse ² 510 1,357 127,229 19¹: Tehran Stock Exchange ²: OTC Market

Tehran Stock ExchangeValue of

IndexHigh Low Averange

Compared to Last Month%

Compared to Last Year (%)

TEDPIX1 36,555 38,344 36,555 37,424 -3.45% 41.26%TEDPIX (FM) 28,992 30,540 28,992 29,744 -4.39% 32.28%TEDPIX (SM) 59,419 61,535 59,126 60,369 -0.07% 86.29%FFI2 43,414 45,719 43,414 44,598 -3.89% 30.37%Industry Index 31,674 33,350 31,663 32,446 -3.21% 57.24%TEDFIX 30 2,037 2,171 2,037 2,103 -4.68% 28.60%1 TSE Dividend & Price Index (All-share Index) 2 Free Float Index

TEDPIX All-Share IndexJanuary 2013




Stock

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Average P/E

Highest P/E

Sector P/E Percent of Total Market Cap

Metal Ores Mining 7.61 13.23%Refined Petroleum Products 6.93 7.04%Basic Metals 5.90 22.17%Post and telecommunications 5.57 6.57%Chemicals & By-products 5.37 15.16%

Lowest P/E

Sector P/E Percent of Total Market Cap

Banking 3.93 11.78%Cement, Lime & plaster 4.25 2.34%Technical & Engineering Services 4.29 1.31%Real Estate And Construction 4.64 1.01%Motor Vehicles And Auto Parts 4.91 1.22%

P/E Ratio of Major Sectors




Fund

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All Funds Overview

Top 10 Best Mutual Funds of Month

Working Days

NAV (Rials)Asset Under

Management (USD1)

Last Month (%)

Last 6 Month (%)

Last 12 Month (%)

Since Inception (Compound Return)

Tosee Saderat 630 1,910,655 970,310 1.80 48.20 70.50 45.50

Yekom Iranian 1,461 2,393,003 27,923,573 1.80 10.40 20.20 24.40

Atieh Mellat 538 1,240,183 27,469,821 0.90 11.70 19.90 15.70

Yekom Dana 206 1,799,136 1,391,354 0.80 79.90 — 79.90

Tajrobeh 577 6,315,334 0.30 15.00 26.80 27.20

Arian 1,706 3,545,176 997,879 0.20 54.20 75.20 31.10

Omid Iranian 922 1,813,076 1,176,835 0.20 25.90 28.40 26.60

Rahnama 766 1,948,841 857,259 0.10 74.40 62.90 37.40

Naghsh-e Jahan 844 1,960,979 808,401 0.10 44.60 35.30 33.80

Kharazmi 537 1,436,638 2,263,377 0.10 53.30 45.20 27.90

All Funds Index2 -5.00 27.10 19.70

1USD to Rial exchange rate: 2Including 64 Mutual Funds12,260

Last month, the index of all funds decreased by 5 percent compared to the last month of 2012. Only few funds could do better than zero percent and two were more than 1 percent.

All Funds Overview




Fund

7

Mofid Mutual Funds

Although TEDPIX set a new life time record of 38,344 in January, by the month end, it had a decline of 3.45% compared to the last month of 2012.

Compared to last month, the average daily trading val-ue increased by 30% to USD 100 million per day. In Janu-ary, All Funds Index had a de-cline of 5% and there were only few funds with positive rate of change.

Our three mutual funds could not be on the list of top ten of the month but they did relatively good considering their size. However, on the life time basis we are among the top best.

Pishtaz was our best fund in January with 0.9 percent fall but in the last 12 months it could not catch up with Pishro.

Our other two mutual funds fell by 1.5% due to the market conditions. All three are standing higher than TSE indices and All Funds Index (AFI).

We are positive about or positions in Chemicals & By-products and Metal Ores Mining as we be-lieve these sectors have the capacity to rise in the next two months.

Commentary

NAV Change (12 Months)

Mofid Mutual Funds

Pishtaz Momtaz Pishro Omid

Inception date May 9, 2008

February 16, 2010

April 20, 2011

Co

mm

ing So

on...

Working Days 1,730 1082 654

Asset under management M Rials 70,019 176,193 146,939

1 Month -0.90% -1.50% -1.50%

3 Month 31.30% 22.70% 31.80%

6 Months 63.20% 61.70% 64.20%

12 Months 55.00% 51.80% 61.80%

Life (Compound Return) 49.10% 49.50% 34.10%

NAV (Rial) 6,632,336 3,290,814 1,691,620

12 MonthHigh 6,974,827 3,475,180 1,783,382

Low 4,027,793 2,003,596 1,007,371




Commodity

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The first month of 2013 was a stellar for the commodity market with the value of traded commodities rising by 150 percent.

Agricultural ring started trading after two month break by trading some wheat, corn and sugar. Although the total amount was only USD 1.5M it seems we will hear more about this ring in near future.

Export ring was relatively active in January. Totally, USD 230M were traded in this ring which was for the first time more than 8 percent of total amount of trades.

The value of export trades for the month of January is 100 times more than last December. This significant change is mostly due to the 162,000 MT bitumen exported from this ring in the last month.

Groups of Products Type Value (Rials) Value (USD) Volume (MT)

Industrial and MineralExport Ring 326,859,750,000 26,660,665 100,000

Domestic Ring 19,566,851,593,000 1,595,991,158 1,131,413

Total 19,893,711,343,000 1,622,651,822 1,231,413

AgriculturalExport Ring 0 0 0

Domestic Ring 18,838,350,000 1,536,570 2,560

Total 18,838,350,000 1,536,570 2,560

Oil & PetrochemicalExport Ring 2,507,761,864,000 204,548,276 162,080

Domestic Ring 12,940,289,579,000 1,055,488,546 617,456

Total 15,448,051,443,000 1,260,036,822 779,536

Total 35,360,601,136,000 2,884,225,215 2,013,509




News

9

Omid Mutual Fund to start operationSource: Emofid.com 2013 January 31

The Omid fund, latest fund to be offered publically in Iranian Capital Market, will start taking subscription on February 2nd. The fund will be managed by Mofid along with the company’s three other mutual funds, Pishtaz, Momtaz and Pishro.

Omid Mutual fund is the first of its kind. It is going to divide 1 percent of the basic value of units monthly. Mofid has designed this fund due to the demand of its customers who need a fix regular monthly income from their investment.

Other features of the fund are as below:

Type of Scheme Open EndedNature EquityManagement Strategy Active Management Investment Currency Iranian RialsFace Value (Rials/Unit) 1,000,000 Rials (approx. 100 US $)Fund Size in Rials 50 billion RialsFund Manager Mofid Securities Co. Liquidity Guarantor Mofid Securities Co. Minimum Investment (Unit) One UnitPurchase Redemption Daily (working days)NAV Calculation Daily (working days)






About MofidMofid Securities Company is the leading brokerage firm mainly active in Iranian Capital Market. Mofid creates financial products and offers financial services to its clients and investors. Having a qualified and diverse management team enables Mofid to benefit from coupling local knowledge and presence with global expertise.Mofid publishes this newsletter, Iran Market Reporter (IMR), in order to keep its readers updated on the latest news and events of Iran capital market, especially Tehran Stock Exchange (TSE), as well as valuable information for individual and institutional investors.Iran Market Reporter is distributed exclusively via email or hard copy amongst Iranian analysts and potential investors who have worked closely or have been in contact with Mofid Securities Company. Subscription to this newsletter is by referral only or through an online request sent to: [email protected].

Important NoticeThe contents of this newsletter are for the sole use of the addressee. All content in this file is owned and operated by MOFID SECURITIES COMPANY, and the copying or distribution of this newsletter, internally or externally, is strictly prohibited without the prior written permission and consent of MOFID SECURITIES COMPANY If you wish to distribute the file, please email the Subscriptions Department at [email protected], providing details of your subscription and the number of recipients you wish to forward or distribute this information to.

DisclaimerThis material is for information purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any specific securities.All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, MOFID SECURITIES COMPANY accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and MOFID SECURITIES COMPANY makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.This publication does not provide individually tailored investment advice and may not match the financial circumstances of some of its recipients. The securities discussed in this publication may not be suitable for all investors. The value of an investment can go down as well as up. Past performance is no guarantee of future success.

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Iran Market Reporter 21

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