NGFO six-month profit rose 10.2-fold and P/E of 5.12 is below half its sector, but October scrap rose 27% versus 14% for sheet; Sahmino target 14,014 rials (November 3, 2026)

Standalone net profit at steel-sheet maker NGFO reached 9,437 billion rials for the six months to September 22, 2026, 10.2 times the restated 925 billion rials a year earlier. The question is whether the margin that produced it can last: October's monthly return shows the scrap it bought cost 27.1% more, while the steel sheet it sold fetched 14.1% more, both against September. The answer has two parts: the shares look cheap on reported earnings, but their apparent value depends on the spread between those rates when November's activity is filed.

The statements are denominated in millions of rials; amounts here are expressed in billions of rials (1,000 million rials equals 1 billion rials).

Background

NGFO sells steel sheet and a second, lower-priced sheet line; its raw materials are slabs, scrap iron and ferroalloys. It trades on the Tehran Stock Exchange's second market and its financial year ends on 29 Esfand (around March 20). Registered capital is 6,336 billion rials, or 6.336 billion shares; the exchange card as read on November 3 shows a 20% free float. On May 20, 2026, shareholders doubled registered capital from 3,168 to 6,336 billion rials using retained earnings alone, which did not dilute holders. On July 12, the annual meeting approved a dividend of 550 rials per share, around 48.2% of earnings, a 4.3% cash yield against the 12,720-rial November 2 close. The interim standalone report is unaudited (Codal tracking 1617512, published October 22); its year-earlier comparative column is restated and audited.

Numbers

• Sales and gross margin: six-month operating revenue of 50,648 billion rials versus 23,996 billion rials, up 111%; cost of sales of 41,169 billion versus 22,220 billion, up 85%. Gross profit reached 9,479 billion versus 1,776 billion, raising gross margin to 18.7% from 7.4%.
• Earnings: operating profit was 9,151 billion rials versus 1,504 billion, up 6.1-fold. Net non-operating items contributed 1,537 billion versus negative 107 billion, about 14.7% of the new 10,422-billion pre-tax profit. Tax expense of 986 billion was 9.5% of pre-tax profit versus 17.4% a year earlier. Net profit was 9,437 billion versus 925 billion; EPS was 1,489 versus 146 rials.
• Volume and pricing: total domestic and export tonnes sold to September 22 were 66,290 versus 68,969 a year before, a 3.9% drop, per the corrected September monthly letter (tracking 1618134). Dividing income-statement amounts by tonnes (Sahmino calculation), revenue per tonne was 764 million rials versus 348 million, up 119.6%; cost per tonne was 621 million versus 322 million, up 92.8%; gross profit per tonne reached 143 million versus 25.7 million, about 5.5-fold.
• Cash: six-month net operating cash was 7,786 billion rials versus negative 13 billion, equal to 82.5% of net profit. Spending on fixed assets was 3,158 billion versus 91 billion; cash on September 22 was 3,828 billion versus 912 billion on March 20. Sahmino's latest rebuild puts trailing-year cash conversion at 61.5%.
• Balance sheet on September 22 versus March 20: inventory was 25,087 billion versus 13,761 billion rials, up 82%; receivables 6,196 billion versus 4,369 billion, up 42%; trade payables 10,164 billion versus 5,342 billion, up 90%. Dividend payable was 4,467 billion versus 1,001 billion, whereas only 19 billion rials of dividends were paid in cash during the six months.

Drivers and risks

The mechanism: revenue equals the selling price multiplied by volume. Tonnes sold fell while revenue more than doubled, so pricing accounts for the divergence. Per-tonne cost rose less than per-tonne revenue (92.8% against 119.6%), and the gross-margin expansion comes from that gap. The accounts alone do not establish why the gap opened.

The first risk is October's input spread. In the October monthly letter (tracking 1621419, published October 27), domestic sheet sold for 956.2 million rials per tonne, up 14.1% from 837.7 million in September; purchased scrap cost 677.7 million rials per tonne, up 27.1% from 533.1 million. The ratio of the reported sheet selling rate to the reported scrap purchase rate (our calculation from the two monthly returns) narrowed from 1.76 for the first five months to 1.57 in September and 1.41 in October. This is a partial proxy, not the company's gross margin: it excludes slab costs, and the same ratio was 1.77 for the six months a year earlier even while reported gross margin stood at 7.4%. If October's scrap costs pass through to cost of sales, the 18.7% margin faces pressure; that is a condition, not a forecast. Production was 9,806 tonnes in October versus 14,845 in September, about 34% lower; domestic sales value was down 7% at 14,874 billion versus 15,990 billion rials (September had 31 days, October 30). In the energy schedule of the same filing, the company writes that industrial power restrictions and the purchase of green electricity pushed its electricity cost above average.

The second risk is the comparison base. Net profit a year earlier was just 3.9% of revenue; a 10-fold increase off a low base does not itself establish durable earnings, and the margin decides how long it lasts. Inventory and payables have climbed 82% and 90% since March 20.

The third is shareholder flow. Across 20 sessions from October 4 to November 3 (today's session read at 17:34 Tehran time), individual investors were net sellers in 16 sessions and net sold about 55 million shares in aggregate, roughly 723 billion rials (some daily values are estimated); institutions were on the other side. The printed close went from 14,010 rials on October 21 to 12,720 rials on November 2, down 9.2% using October 21 as its base; it is 11.7% below the 52-week high of 14,400 rials set on October 26, using that high as the base.

Outlook

Valuation: trailing EPS of 2,486 rials is assembled from current six-month EPS of 1,489 plus prior annual EPS of 1,143 minus the restated year-earlier six-month EPS of 146 (our combination of printed columns). On the 12,720-rial November 2 close, that is a P/E of 5.12 against the basic-metals sector's exchange-card reading of 10.86 as of the November 3 overnight update, roughly 53% below the sector multiple using 10.86 as the base. Sahmino's overnight valuation rebuild on that same November 2 close puts price-to-sales at 0.90, price-to-book at 3.80, enterprise value to EBITDA at 4.65, and return on equity at 74%. If the second half delivered no earnings at all, dividing that same price by first-half EPS alone gives 8.54, still below 10.86; this is only an arithmetic scenario. The price has also risen 2.1-fold from the 6,050-rial close printed on November 19, 2025 to 12,720 rials; the relative cheapness comes from earnings growth, not from a price that has stood still. In Sahmino's screener, 38 basic-metals names have positive P/E and year-on-year net-profit growth above 100%; NGFO is sixth cheapest by P/E among them. Of the six lowest-P/E names, only KSIM has higher trailing operating cash relative to earnings than NGFO (88.1% against 61.5%).

The desk call: Sahmino's buy stance for the session of November 2, 2026 uses a 12,720-rial reference, a 14,014-rial target, a 12,473-rial invalidation and a 15-session horizon in a falling, volatile regime. The desk estimates an expected move of 8.9% and downside of 3.2%. This class of stance hit its target 8 times in a measured sample of 16, a small sample with no separate probability estimate. Across 3,036 settled stances, 1,349 (44.4%) hit, 1,479 were invalidated and 208 expired. The October 31 flow-turn signal behind the same target assigns it a 83.7% chance, with a 66.3% lower bound; a random entry in the same regime has a 51.6% chance of reaching the same target. Of 6,469 settled signals overall, 3,682 (56.9%) hit their targets. The desk's avoid stances on NGFO from September 20 to 22 were invalidated as the price rose.

Entry test: the November 2 close of 12,720 rials was 9.2% below the 14,014 target (base: target) and 2.0% above the 12,473 invalidation (base: invalidation); the reward-to-risk ratio was 5.24. Reward and risk become equal at the midpoint: (14,014 plus 12,473) divided by two is approximately 13,243 rials. At or below 13,243 rials, potential reward is greater than downside to the stated stop (our calculation from the desk's levels). At 17:34 on November 3, the last trade was 12,720 and the exchange's still-revisable closing-price reading was 12,800 rials (reward-to-risk around 3.7). The session's low was 12,430 rials, momentarily below the invalidation; the closing-price reading is above it. The exchange can revise a day's close until roughly 22:00 Tehran time.

Repeat the test in the Sahmino screener: basic-metals industry, P/E greater than zero and year-on-year net-profit growth above 100%, sorted by ascending P/E. In the November 3 reading, which uses derived fields rebuilt overnight, 38 names met those filters. The NGFO instrument page carries the price, individual versus institutional flow and the desk stance (the stance, invalidation and track record open with a free account). Compare a different retail-selling versus desk-call test in the Mobarakeh Steel report, and another metals earnings jump in the IZIZ report.

Conclusion

NGFO looks cheap on reported earnings, but that cheapness is tied to the sheet-to-scrap price gap, which narrowed in October. Sahmino desk (call of November 2, 2026): NGFO stays above 12,473 rials and reaches 14,014 rials in 15 sessions; entry up to 13,243 rials; above that, reward is smaller than risk; invalidation: a daily close below 12,473 rials. Reading dated November 3, 2026.

What to follow

• November activity report: the sheet selling rate against 956.2 million and the scrap purchase rate against 677.7 million rials per tonne. Does October's ratio of 1.41 rise or fall?
• Nine-month accounts for the period ending December 21, 2026: gross margin against 18.7% and operating cash against 82.5% of six-month profit.
• Daily close against 12,473 rials, and individual versus institutional flows on the instrument page.
• Payment of the 550-rial dividend and a reduction in the 4,467-billion-rial dividend payable.