Karachi, April 18, 2022 (PPI-OT): Pakistan Textile: 9MFY22 textile exports up 25.4%YoY

As per the data released by PBS, textile exports for the month of Mar’22 registered a growth of 19.9%YoY to stand at US$1.63bn. Segment-wise, value and non-value added exports posted a growth of 24.9/2.4%YoY in Mar’22 and 24.9/27.5%YoY in 9MFY22.

In the value added segment, readymade garments and bed wear registered a growth of 34.3%/11%YoY while knitwear outperformed the segment with 35.4%YoY in Mar’22. In 9MFY22, readymade garments/bedwear/knitwear posted a growth of 26.2%/19.3%/34.1%YoY respectively.

Low volumes and high prices in non-value added segment continued where cotton yarn volumes declined significantly (Mar’22: US$4.1K/MT compared to US$3.8K/MT in Feb’22, +7.3%MoM while volumes declined by 33%MoM to 22,804MT.

International cotton prices remained strong in the outgoing 3QFY22, hovering around USc159/Ib with an increase of 13%QoQ and an increase of 70/26% FYTD/CYTD. Local cotton prices have remained elevated, up 21.5%QoQ in 3QFY22 to currently hover around PkR22,000/40kg while witnessing an astounding increase of 60/14% FYTD/CYTD

Our top pick for the sector are NML (TP: PkR128/sh – 45.1% upside and currently trading at FY22/23F PE of 3.3/3.8x) and NCL (TP: PkR65/sh – 22% upside and currently trading at FY22/23F PE of 1.6/3.8x) based on diversified energy mix and attractive entry points.