Karachi, August 17, 2022 (PPI-OT): Pakistan Textile: Textile exports tumble in Jul’22 from a high base

Textile group exports were down 13%MoM to US$1,481mn in Jul’22, while remaining flat compared to the same period last year. The month’s reading was also lower by 8% when compared to FY22’s monthly average.

Value-added textile exports showed a dip of 13%MoM, while being higher by a meager 2% compared to the same period last year. Exports of knitwear products (29% of total) were down by 8%MoM, while higher by 11%YoY, whereas readymade garments (21% of total) were down by 17%MoM and higher by a meager 1% compared to the same period last year.

Non-value added exports were down by 14%MoM/5%YoY to US$257.8mn during Jul’22, largely driven by a 24%MoM/21%YoY dip in the exports of cotton yarn exports, along with a 9.5%MoM dip in cotton cloth.

International cotton prices have dropped 5.7% in Jul’22, while dipping by another 6.6%MTD to USc122.75/lb currently.

Woes being faced by the textile industry in India have led to opportunities for Pakistan’s textile exports. However, these seemed to be short-lived, with India’s cotton yarn exports rebounding to US$944.92mn in Jul’22, higher by 110%MoM, offsetting the 8%MoM dip in readymade garments during the period.

Currency depreciation would likely support the textile sector, which would offset a dip in textile exports. In the sector, we find NML and NCL to be trading at attractive valuations, at forward PER of 2.81x and 3.38x, respectively.