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Karachi, December 24, 2012 (PPI-OT): Textile exports for 5MFY13 advanced by 8%YoY to US$5.4 billion.
According to AKD Securities, while this may appear subdued, selected sub-segments have posted marked outperformance. Amongst the major textile sub-categories, Yarn was the noticeable outperformer, with exports rising by 38%YoYto US$896 million, following a robust 52%YoY growth in export volumes. While overall textile exports in Nov’12 were down by 10%MoM to US$1 billion, yarn remained the contrarian outperformer. In this regard, after two consecutive months of declines, yarn imports in China bounced back, rising by 15%MoM to 146k tons in Nov’12. Similarly, Chinese yarn imports for the 5MFY13 have risen by 76%YoY to 698k tons, fueling Pakistani yarn exports. That said, potential reduction in cotton support prices in China going forward could result in significant decline in yarn import demand. At current levels, AKD Securities has a Reduce stance on NCL (TP: PKR 304/share) and an Accumulate stance on NML (TP: PKR 73.8/share).
5MFY13 textile exports up 8%YoY: Textile exports for 5MFY13 advanced by 8%YoY to US$5.4 billion. Amongst the major textile sub-categories, Yam was the noticeable outperformer, with yarn exports rising by 38%YoY to US$896 million, following a robust 52%YoY growth in export volumes. Cotton Cloth and Garments were also noticeable gainers, with exports in value terms rising by 12%YoY and 14%YoY, respectively. However, Average Unit Price (AUP) across most of the categories was down on a YoY basis due to a 27%YoY drop in cotton prices during 5MFY12.
Nov’12 exports down sequentially by 10%: Textile exports in Nov’12 were down by 1O%MoM to US$1 billion. With the exception of yarn, there was a decline in sequential exports of all the other major textile sub-categories. Yarn exports rose by 12%MoM to 643k tons, while the AUP remained fiat at US$2,992/ton. Compared to November’11, textile exports are up by 24%YoY largely due to strong growth in export volumes across all the major sub-categories.
Textile export performance breakup
| 5MFY13 | Nov’12 | |||||||
| QTY | YoY | AUP(US$) | YOY | QTY | MOM | AUP(US$) | MOM | |
| Cotton Yam (MT) |
301,226 |
52% |
2,976 |
-9% |
64,342 |
12% |
2,992 |
0% |
| Cotton Cloth (TH.SQM) |
781,727 |
2% |
1,400 |
10% |
140,143 |
-10% |
1,458 |
2% |
| Knitwear (TH.DOZ) |
43,189 |
0% |
20,414 |
-2% |
7,340 |
-18% |
19,793 |
-1% |
| Bed Wear (MT) |
107,569 |
-4% |
6,778 |
-6% |
19,167 |
-18% |
6,700 |
2% |
| R.M Garments (Th.Doz) |
11,283 |
12% |
66,176 |
2% |
2,127 |
-8% |
69,979 |
4% |
| Source: PBS and AKD Research | ||||||||
Chinese yam imports humming: After two consecutive months of declines, yarn imports in China bounced back, rising by 15%MoM to 146k torts in Nov’12. Similarly, imports for 5MFY13 have risen by 76%YoY to 698k tons, where the growing Chinese yarn import demand has helped drive yarn exports at home. Recall that expensive domestic cotton (high support price) has forced Chinese textile manufacturers to source cheaper yarn from the region, where a reduction in cotton support prices going forward could result in significant decline in yarn import demand. At current levels, AKD Securities has a Reduce stance on NCL (TP: PKR 30.4/share) and an Accumulate stance on NML (TP: PKR 73.8/share).