Griffon Capital

15/05/2018

Part two: Iran’s dual structure and it’s recent seasonal trends
The more recent seasonal patterns of Iranian rial weakness in Q4s and subsequent strength in Q1s as of the last few years is notable – see Figure.
Seasonal factors include foreign travel (Arbaeen pilgrimage, ~2.4m people), the end-of-year business cycle (e.g. restocking/import demand), balancing of the state budget, and slower/delayed repatriation of hard from exports (mainly oil and petrochemicals). It is worth noting that, aside from the petrochemical sector (Iran’s largest non-oil export, at ~12bn last Iranian fiscal year), the government is still the main supplier of FX in Iran, receiving the large majority of the nation’s foreign currency through oil sales; this stood at ~$56bn for the Iranian year ending March 2017, with 2.2mbpd of exports.

13/05/2018

Part one: Iran’s FX dual structure and it’s recent seasonal trends
Iran has had two main rates for prolonged periods: the official/CBI exchange rate and the free market exchange rate. The vast majority of the economy operates at the free market exchange rate. The stronger official rate has been used for imports to benefit strategic industries and core staples.
As shown in the Figure, the spread (i.e. the spread between the official and free market exchange rates) narrowed for most of 2016, hitting 13% as the official rate gradually weakened whilst the free market rate strengthened. However, in Q4 2016 the seasonal demand for foreign currency briefly drove the spread to as high as 27%, before it settled back down to a range of 15-20% in 2017. Hence in recent years the free market rate was managed by the CBI at approximately 13-20% above the official rate. However, the rapid fall in the free market exchange rate in 2018 caused significant divergence from this range – the FX spread broke out and approached ~60%, just before the two-tier system was officially unified at USD/IRR 42,000.

13/05/2018

Helps Build Thriving in Iran
https://financialtribune.com/articles/economy-sci-tech/86151/technovation-helps-build-thriving-startups-in-iran

Since its inception three years ago, Innovation Acceleration Center (Technovation) based in the Pardis Technology Park has supported 200 startups, out of which 118 have matured into relatively successful firms. According to Technovation's director, using one of "the most economical methods", the cen...

12/05/2018

Part two: Jam , one of the largest producers in the world
As Iran’s gas production in the South Pars field increases (located in the Persian Gulf, the South Pars field is the largest gas field in the world, with ownership shared between Iran and Qatar), JPC’s capacity utilization is expected to increase to 100% from 85% in the last fiscal Iranian year. The company also has plans to increase nominal capacity by adding a new ethane furnace.
Important variables for JPC’s profitability are operational leverage (obtained from increasing capacity utilization) and weakness in the local currency (which increases exports and drives top line growth). The main reasons for a likely fall in net profits in the short term are the CBI’s recent FX unification and the expiration of a 10-year tax-exemption period which commenced in 2008.

09/05/2018

Part one: Jam , one of the largest producers in the world
In terms of production capacity, Petrochemical Company (JPC) ranks first in Iran and is one of the largest petrochemical producers in the world. JPC’s annual production capacity of ethylene and propylene is 1,320,000 tonnes and 306,000 tonnes, respectively. A unique advantage of its facilities is their ability to use both gas and liquid feedstock in dual furnaces. Its HDPE unit, whose annual capacity is 300,000 tonnes, can produce 26 grades of polymer, far surpassing competitors in this regard; these include black, yellow, blue and normal grades.
After initially listing and trading in the second market of the Iran Fara Bourse in 2013, JPC transferred to the TSE in 2015. It is one of the largest exporters of polymeric products in Iran, with HDPE products being its largest export. About 70% of its products are exported to around 20 countries globally – mainly but also , , and countries in the Commonwealth of Independent States (CIS), the Union, and South America. It is also expected that the company will export to African countries soon.

08/05/2018

Iran to sign seven new upstream contracts by October: NIOC official
https://www.platts.com/latest-news/oil/tehran/iran-to-sign-seven-new-upstream-contracts-by-10406438

Iran to sign seven new upstream contracts by October: NIOC official - Read this Platts oil news article here. Plus discover more oil market news, products & services.

07/05/2018

United Engine Corporation presents its latest gas compressor and power generating equipment in Tehran
https://www.zawya.com/mena/en/story/United_Engine_Corporation_presents_its_latest_gas_compressor_and_power_generating_equipment_in_Tehran-ZAWYA20180506101142/

UEC firmly considers Iran with its booming oil & gas industry as one of the most promising future partners

06/05/2018

CII Ready to Promote Cyber Insurance
https://financialtribune.com/articles/economy-business-and-markets/85851/cii-ready-to-promote-cyber-insurance

The Central Insurance of Iran, the industry’s regulator, welcomes offers by Iranian insurers to provide coverage against cyber assaults, CII’s president said. “The insurance industry considers any product or service insurable. [The process only involves] risk assessment to set the premium rate...

06/05/2018

CII reported; Iran's insurance pe*******on rate at 2.3% of
Central Insurance of Iran (CII), the insurance industry’s regulatory body, reported that insurance premiums reached $8.3bn for Iranian fiscal year 1396 (March 2017 to March 2018), equating to an annual growth of 21%. Industry pe*******on stands at 2.3% of GDP, which compares to a 3-6% (of GDP) range for global markets.

06/05/2018

April 2018 Griffon Monthly, https://lnkd.in/dryWE82 : in this issue:* CBI announces the unification of the dual FX structure

05/05/2018

Iran increasing its share of Southeast Asian markets
https://www.azernews.az/region/131489.html

Iran’s official trade statistics indicate that the country is increasing its non-oil exports to Southeast Asian countries.