JS Securities Limited – Morning Briefing

Karachi, June 22, 2018 (PPI-OT): Textile exports up 28% YoY in May-18, Yarn exports up 41% YoY

Textile exports for the month of May-2018 registered 28% YoY growth, amounting to US$1.20bn, compared to US$0.94bn in the same month last year.

Double-digit growth was witnessed in Yarn exports (up 41% YoY), Knitwear (up 39% YoY), Bedwear (up 28% YoY), Readymade Garments (up 24% YoY) and Cotton Cloth (up 22% YoY).

Textile exports grew 10% YoY during 11MFY18 to US$12.34bn, primarily led by value-added goods.

We believe that May-2018 textile exports are positive for the sector, particularly for spinners since Yarn sales recorded highest YoY growth during the month.

Textile exports clocked in 28% YoY higher in May-2018

Textile exports data, released by the Pakistan Bureau of Statistics (PBS), showed that for the month of May-2018, textile exports registered 28% YoY growth, amounting to US$1.20bn, compared to US$0.94bn in the same month last year. Double-digit growth was witnessed in all sub-categories of textile exports, led by Yarn exports (up 41% YoY), Knitwear (up 39% YoY), Bedwear (up 28% YoY), Readymade Garments (up 24% YoY) and Cotton Cloth (up 22% YoY).

Analyzing the data, growth in all the above-mentioned categories was mainly due to higher volumes sold during the month, while price increases contributed significantly less to growth by comparison. We believe this indicates higher competitiveness of Pak Textile exports amid a weakening local currency against major currencies. On the other hand, due to weak global demand, we believe the data also suggests that the nation’s exporters were unable to boost margins significantly as a result of the depreciation of the local currency and had to pass on the benefits to their foreign customers.

Textile exports up 10% YoY during 11MFY18

Textile exports grew by 10% YoY during 11MFY18 to US$12.34bn, compared to US$11.23bn in the same period last year, primarily led by higher exports of value- added goods, i.e. Knitwear (up 17% YoY) and Readymade Garments (up 13% YoY), while Yarn exports (up 10% YoY) also helped boost overall exports. We believe textile exports will remain strong in the short to midterm, owing to key macro positives, such as the weakening Pak Rupee and the newly announced export package.

However, some key issues remain for the sector, such as the recently re-imposed duties and taxes on cotton import, particularly in wake of expected shortfall in cotton production during the next fiscal year. That said, overall, we believe that May-2018 textile exports are positive for the sector, particularly for spinners since Yarn sales recorded highest YoY growth during the month among all categories.

You May Also Like