Report

Pakistan Textiles: Another Package on the cards; clarity on terms awaited

  • In a major positive for the textile sector, the GoP has reportedly approved an extension in Textiles Exports Package worth PRs65bn for FY19-21F, albeit with slight amendment. Duty drawbacks are expected to be on the same terms as applicable in FY18; however, they will now be applicable on value added textile exports only.
  • Conservatively assuming exports growth to remain below 10%YoY, and thus only 50% of the duty drawbacks on value added textile exports to be availed, we foresee positive EPS impact on NML and NCL to the tune of 11% and 10%, respectively.
  • Furthermore, another round of PKR depreciation could be a possible trigger, where the FYTD currency weakness has been offset by rising fuel and cotton prices. Every 1% PKR depreciation is expected to further lift IMS Textile Universe EPS estimates by 3-4%. NCL (TP: PRs63/sh) is our top pick from the sector amid rising yarn price scenario. 
Underlyings
Kohinoor Textile

Kohinoor Textile Mills Limited is engaged in manufacturing of yarn and cloth, processing and stitching the cloth, and trade of textile products. The Company's segments include Spinning, Weaving, Processing and home textile and Cement. Its Spinning segment produces yarn using various types of fibers. Its Weaving segment produces greige fabric using yarn. Its Processing and Home Textile segment is engaged in processing greige fabric for production of printed and dyed fabric, and manufacturing of home textile articles. Its production facilities consist of over 156,530 ring spindles capable of spinning a range of counts using cotton and man-made fibers. Its weaving facilities are located at Raiwind, which consists of over 252 looms and has a range of greige fabrics. Its processing facilities are located at the Rawalpindi unit, which are engaged in dyeing and printing fabrics for the home textile market. Its stitching facilities produce a range of home textiles for the export market.

Nishat Chunian

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.

Nishat Mills Ltd.

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.

Provider
Intermarket Securities Limited
Intermarket Securities Limited

​Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.

Analysts
Ailia Naeem

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