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Sahmino callsFarabourse

ZagrosPZGZNeutral

One session, the whole range: Zagros went from a low of 158,800 to 168,200 rial, and the neutral range support moved higher

Horizon: Short-term (about 14 trading sessions, to 25 Mehr 1405)

Price when published

168,600 rials

That dayup3.0%

Support

163,500 rials

Resistance

173,200 rials

Invalidation

177,700 rials

The levels on the chart

Since writtendown2.7%

Conclusion

I remain neutral and raise the range support from 155,190 to 163,500 rial, because the 5 Mehr low was reclaimed in a single session: I put roughly 55 percent probability that the closing price stays below 177,700 rial through 25 Mehr. The risk is two-sided: a 2.3x group multiple and winter feed gas weigh on the ceiling, while institutional buying could break the 173,200 ceiling before then.

The evidence

  • The 30 Shahrivar neutral view stands and the 177,700 rial invalidation level has not been touched. Change: on 5 Mehr Zagros traversed its entire range from 158,800 to 168,600 rial and closed at 168,200 rial (+2.75 percent).
  • Volume of 2.03 million shares matched the monthly average, and buyer strength was 1.79; but the main buyer was institutional, and net retail turned negative by about 564 thousand shares. The confirmation triad does not hold, and we do not call this smart buying.
  • The price is above the 20-day average (159,525 rial) and 2.89 percent below the 52-week high (closing price 173,200 rial, 25 Shahrivar). Zagros trades on Iran Fara Bourse (IFB), not the Tehran Stock Exchange.
  • The valuation remains rich: P/E of 18.24 versus 7.9 for the chemical products group (5 Mehr 1405), i.e., about 2.3x. Zagros's advantage is cheap feed gas, and any revision of the feed gas pricing formula hits margins directly.
  • Calendar risk: cuts to petrochemical feed gas during winter cold for residential heating are recurrent and draw closer as Mehr passes; export revenue is converted at the agreed rate, not the free market dollar rate.

If it holds

If the closing price stays below 177,700 rial, the base scenario is fluctuation between 163,500 and 173,200 rial through 25 Mehr; a close below 163,500 rial opens the way to the 20-day average.

If it breaks

If the closing price is recorded above 177,700 rial, this view is invalidated and the market has accepted the 2.3x group multiple; in that case we will rewrite the view as bullish.

What to watch

What to watch: any official announcement regarding restrictions on petrochemical feed gas for the cold season, the Shahrivar activity report on Codal (export sales volume and rate), and whether institutional buying continues or not.

Every call on this symbol

28 calls; the move to the next call from the prices when written

  1. 28 September 08:41NeutralOne session, the whole range: Zagros went from a low of 158,800 to 168,200 rial, and the neutral range support moved higher168,600 rialsdown2.7%
  2. 21 September 13:54NeutralZagros locked at the range ceiling and my invalidator stayed only 100 rial further out; I'm closing the bearish call right here168,400 rialsup0.1%
  3. 20 September 13:50BearishTarget of 163,400 rial hit, staying bearish: Zagros trades at a P/E of 17.73 versus the group's 7.31, two and a half times its group's price163,500 rialsup3.0%
  4. 19 September 11:37BearishThis time I'm watching the earnings anchor: methanol 49.7 percent above last year, but the symbol has 416 shares of demand at the floor of the range168,100 rialsdown2.7%
  5. 15 September 11:00NeutralNew record on a book with 6,173 shares of demand below it and 221,812 shares of supply above it174,200 rialsdown3.5%
  6. 13 September 13:02NeutralOur target was hit in one session, not in two weeks; so we go neutral and we don't renew it168,300 rialsup3.5%
  7. 12 September 11:32BullishZagros one percent below its 52-week high with a buy queue and no supply; P/E of 17.7 is backward-looking, not today's picture163,400 rialsup3.0%
  8. 9 September 10:51BullishOne quarter earned more than the entire prior year: EPS of 7,518 rial in spring versus 6,744 rial for the whole of 1404159,000 rialsup2.8%
  9. 8 September 13:15BullishThe volume issue was resolved yesterday, but we need to correct ourselves: methanol has no series at all in our price feed155,700 rialsup2.1%
  10. 7 September 10:53BullishChina methanol rose 31.7 percent in a month, and Zagros today hit a buy queue at its highest price since the resumption of trading151,300 rialsup2.9%
  11. 6 September 12:42BullishZagros: the resistance we had published ourselves broke, but on 47% of average volume147,100 rialsup2.9%
  12. 5 September 11:39BullishZagros broke above the resistance of 141,800 rial; global methanol up 31 percent in one month, view turns bullish143,000 rialsup2.9%