Arak Machine Building's nine-month profit rose 165% while gross profit stalled: the Chabahar crane contract and Sahmino's 3,808-rial target (18 October 2026)

Arak Machine Building (MARK) reported standalone, unaudited net profit of 14,972 billion rials for the nine months ended 21 June 2026, up from 5,640 billion rials in the restated comparable period, a 165% rise. But gross profit was 10,409 billion rials, down 0.7% year on year. The jump came largely from other operating income rather than the margin on customer sales. What keeps this share worth examining is an 89.96 million-euro order for cranes at the port of Chabahar, alongside customer advances already present before the order was signed.

Background

The company's fiscal year ends on 22 September. Its monthly filings separate revenue from boilers, pressure vessels, forging and casting, wellhead equipment and steel structures. Financial-statement figures below are those of the standalone company, not a consolidated group; monetary figures are in billions of rials unless otherwise labelled. The nine-month filing was published on 21 July 2026 under Codal tracing number 1571402.

The numbers: what drove profit?

Revenue was up 7.6% and gross profit fell 0.7%, taking gross margin from 27.0% to 25.0%. Subtracting 4,561 billion rials in selling and administrative expenses from gross profit leaves 5,848 billion rials (31.6% of operating profit). Subtracting other operating expenses of 5,362 billion from other income of 18,003 billion yields another 12,641 billion rials, or 68.4% of the 18,489 billion-rial operating profit. The comparable share last year was 32.8%. The income statement does not specify what produced the other-income line, and we do not assign it a cause: it cannot responsibly be described as recurring manufacturing margin.

Drivers

Chabahar. In its corrected material disclosure published on 9 August 2026, tracing number 1582295, the company reported a contract with Arya Banader Iranian Chabahar for four ship-to-shore container cranes and ten rubber-tyred gantry cranes. Its price was 89,958,000 euros, equivalent to 159,308 billion rials at the disclosed conversion rate of 1,770,914 rials per euro, excluding VAT. That is 3.2 times the unaudited 49,982 billion rials of revenue recognised in the fiscal year ended 22 September 2026, a figure taken from the September monthly filing rather than from audited annual accounts. Management's preliminary expected profit on the whole contract was approximately 10.5 million euros, 11.7% of its contract price, expressly under current conditions. Execution runs for 20 months starting when a letter of credit opens and the 10% advance is paid, not from the date the order was signed.

Advances, not recognised sales. At 21 June 2026, a month before the 21 July signing, the balance-sheet line for customer advances stood at 44,740 billion rials, up 92% from 23,285 billion at the preceding fiscal year end. Nine-month operating cash flow was 16,734 billion rials, compared with 2,863 billion in the corresponding period; cash stood at 14,235 billion rials, up from 223 billion. Customer advances are a liability tied to delivery, not automatically recognised revenue. The contract includes procurement and fabrication, and the corrected filing says negotiations with the equipment supplier were still ongoing when it was released.

Earlier dividend. At the 29 January 2026 assembly, shareholders approved a dividend of 180 rials per share for the fiscal year to September 2025, a 64.1% payout ratio. Dividing that past payout by the 18 October close of 3,210 rials gives a historical 5.6% yield, not a promised dividend for the next year. A separate 9% capital increase from retained earnings approved at that assembly did not require a cash subscription.

Outlook and counterevidence

Counterevidence follows the attractive nine-month print: the September 2026 monthly report puts full-year revenue at 49,982 billion rials against 52,336 billion rials in the prior fiscal year, a 4.5% decline. Subtracting nine-month revenue of 41,702 billion from the full-year total yields 8,279 billion rials for the three months to 22 September 2026; the equivalent calculation on the prior year gives 13,596 billion, a fall of approximately 39%. The 7.6% nine-month revenue growth did not persist to year end. Receivables in the June balance sheet were up 39% from the prior year end to 61,995 billion rials and financial borrowings rose 88% to 9,158 billion: cash conversion and the cost of delivering the new order matter.

The share's 18 October closing price was 3,210 rials, against 3,130 rials on 17 October, and a buy queue stood at the 3,220-rial band ceiling in the 17:28 Tehran board reading. The exchange-sourced P/E was 7.59 using its 423-rial EPS, against a sector P/E of 8.65 on the 18 October profile, about 12% below the sector benchmark (base: the sector figure). Sahmino's separate trailing P/E, built from filed earnings, was 5.16 at the 3,130-rial close of 17 October. Those two multiples use different earnings bases and price sessions; neither is an audited fiscal-2026 annual P/E.

Sahmino's dated call. On the 17 October session Sahmino marked MARK a buy at a 3,130-rial reference, with a 3,808-rial target, 3,062-rial invalidation and a 20-session horizon. The target stands 18.6% above the 18 October close (base 3,210); that close is 4.8% above invalidation (base 3,062). This call type reached its target 474 times in a sample of 731, and the open range-breakout signal of 10 October carries a 70.3% target chance. The record across all of Sahmino's settled stances is weaker: 765 of 1,560 reached target (49.0%) and 712 were invalidated. An earlier buy on MARK dated 12 September (target 3,462 rials) was invalidated.

Conclusion

MARK's nine-month profit did not come from sales: the other-income line did the lifting, and full-year sales later contracted. The Chabahar contract is a forward order, not realised profit, and its advance and delivery timetable are the test; customer advances of 44,740 billion rials and the 89.96 million-euro order put real orders behind the share. Our reading, quoting Sahmino's call from the 17 October session: “MARK reaches 3,808 rials within 20 sessions if it stays above 3,062 rials.” Its condition is a daily close above 3,062 rials, and a close below 3,062 rials invalidates it.

What to follow

• When the accounts for the year ended 22 September 2026 arrive (last year's unaudited annual filing came on 10 November 2025), compare their other operating income and final-quarter sales with the nine-month report.
• Look for confirmation of the letter of credit opening and receipt of the crane contract advance. That event starts the stated 20-month delivery clock.
• Check the 3,808-rial target and 3,062-rial invalidation beside the latest price on MARK's Sahmino page. The PGOP case study shows the same dated target-and-invalidation framework.
• For the sector-multiple comparison method, see the FSAZ earnings comparison.