Pakistan Textile: Value addition is the ‘name of the game’, (AKD Daily, Jan 18, 2019)
Textile exports for the month of Dec’18 were recorded at US$1.14bn (+3.6%MoM/0.6%YoY), pulling up 1HFY19 exports to US$6.65mn, relatively flattish YoY.
Value-added exports continued their up-trend seen since Jul’17 on the back of export incentives, taking 1HFY19 export sales under the header to US$5.02bn (+3.7%YoY), while non-value added segment pulled down overall growth, (-9.3%YoY in 1HFY19 vs. +3.3%YoY in the same period last year)
Local cotton prices have inched up recently on the back of strong demand and crop shortage, however, prices are expected to come under pressure due to the abolition of customs duty and sales tax on import of cotton, expected to encourage imports
- i) Extension in export incentives for 3yrs, ii) tariff rationalization of utilities, and iii) reduction in import duties on certain raw materials, all indicate the favorable GoP policies for the sector to enhance exports.
With exports averaging 58% of our textile universe’s topline and every 1% devaluation in domestic currency in-turn raises our Textile Universe earnings by 0.85%, the sector is poised to continue exhibiting outperformance. We have an overweight stance on the sector with NML (TP:PkR158/sh) being the value added, diversified income play as our top pick.
Nishat Mills is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth, and to generate, accumulated, distribute and supply electricity.
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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