Karachi, November 16, 2021 (PPI-OT): Pakistan Textile – 4MFY22 textile exports up 26.5%YoY

As per the data released by PBS, textile exports for the month of Oct’21 registered a growth of 24.2%YoY to stand at US$1.6bn. Segment-wise value and non-value-added exports posted a growth of 23/28%YoY in Oct’21 and 25/34%YoY in 4MFY22.

In the value-added segment, readymade garments and bed wear registered a growth of 21.1%/16.0%YoY while knitwear outperformed the segment with 42.1%YoY in Oct’21. In 4MFY22 readymade garments/bedwear/knitwear posted a growth of 22.3%/21.3%/35.4%YoY respectively.

International cotton prices remained strong throughout the month, hovering around Usc127.3/Ib with an increase of 13.5% since Oct’21 and cumulative CYTD increase of 50.4%. On the local front, cotton prices currently hover around ~PkR17,233/maund – at about highest level since 2010 – or +19.7% since Oct’21.

With global textile dynamics continuing to remain favourable amid brewing trade war between US and China and as yarn margins remain downward sticky (Local yarn margins: currently 75% vs 60% CYTD avg.) we maintain our bullish stance on the sector where any dip in prices will provide an opportunity to take exposure in textiles. Our top pick for the sector is NML (TP: PkR132/sh – 54% upside) where the current price offers core operations virtually free.