Pakistan Textile_ Local yarn margins to remain strong in FY22 , (AKD Daily, Nov 08, 2021)
AKD Daily
Pakistan Textile:Local yarn margins to remain strong in FY22
- Local yarn margins currently stand at PkR261.5/kg or +61% vs PkR214.4/kg or +55% FYTD due to robust demand of downstream players. Yarn export prices were trading at a discount of 26.1% to local yarn prices which clocked in at PkR661/kg vs export prices of PkR523/kg in 1QFY22).
- On the global front, decline in Vietnamese exports will help India and Pakistan to fulfill export order originating from robust apparel demand form US and EU where Pakistan’s 4MFY22 textile exports have reached an all-time high of US$6.04bn (+27%YoY) as per APTMA and PBS.
- Pakistan is currently engaged in talks with IMF for the revival of US$6.0bn support package with energy tariffs being the major sticky point. The local gas production (meeting 25%-30% of demand) has to be supplemented with expensive imports where the gas tariff currently in place requires government to give a major subsidy as the cost isn’t being passed on to the end customer.
- With global textile dynamics continuing to remain favorable amid brewing trade war between US and China and as yarn margins remain downward sticky, the local textile sector finds itself in a sweet spot. In this backdrop, we like textile players with a higher concentration of spinning segment sales in their topline together with lower dependency of gas in their energy mix such as NCL.
AKD Research
Nishat (Chunian) Limited. Nishat (Chunian) Limited is a Pakistan-based textile company. The Company is principally engaged in the business of spinning, weaving, dyeing, printing, stitching, processing, doubling, sizing, buying, selling and otherwise dealing in yarn, fabrics and made-ups made from raw cotton, synthetic fiber and cloth and to generate, accumulate, distribute, supply and sell electricity. The Company operates in four business segments, which include Spinning, which produces a range of yarn using natural and artificial fibers; Weaving, which produces a range of greige fabric using yarn; Processing and Home Textile, which is engaged in processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles, and Power Generation, which is engaged in generating and distributing power. The Company has a spinning production of approximately 75,000 tons of yarn, three million meters of greige fabric in weaving and four million meters of finished fabric per annum.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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