FLASHNEWS:

AKD Securities Limited – AKD Daily (May 17, 2022)

Karachi, May 17, 2022 (PPI-OT): Pakistan Textile: 10MFY22 textile exports up 26.0%YoY

As per the data released by PBS, textile exports for the month of Apr’22 registered a growth of 31%YoY to stand at US$1.74bn. Segment–wise, value and non-value added exports posted a growth of 34/16.8%YoY in Apr’22 and 25.9/26.3%YoY in 10MFY22, respectively.

In the value added segment, knitwear and bed wear registered a growth of 43.5%/16.3%YoY while readymade garments outperformed the segment with 43.9%YoY in Apr’22. In 10MFY22, readymade garments/bedwear/knitwear posted a growth of 35%/19%/28%YoY respectively.

International cotton prices remained strong throughout May’22, hovering around USc164.2/Ib with an increase of 9.9%MoM and an increase of 70/29.1% FYTD/CYTD. Going forward, we expect prices to remain elevated due to severity of weather (drought in West Texas) putting further pressure on already tight global supply chain of cotton. Local cotton prices have remained elevated, up 5.0%MoM in May’22 to currently hover around PkR22,506/40kg and witnessing an increase of 64.3/16.7% in FYTD/CYTD.

Our top pick for the sector are NML (TP: PkR128/sh – 72.3% upside and currently trading at FY22/23F PE of 2.2/3.4x) and NCL (TP: PkR65/sh – 34.4% upside and currently trading at FY22/23F PE of 1.4/3.4x) based on diversified energy mix and soaring PkR depreciation (+6.0%MoM) against US$.