Report

Pakistan Textiles: Another round of PKR depreciation opens up valuation upside

  • In another round of PKR depreciation on 11th Jun’18, the currency weakened by 3.7%, taking cumulative FYTD PKR depreciation to 14%. Given the macroeconomic situation, we revise our USD PKR assumption in IMS Textile Earnings estimates. Our new USD/PKR assumptions for FY19-23F are 11% higher than previously.
  • Our top picks from the sector are NML (TP: PRs177/sh; upside: 15%) and NCL (TP: PRs68/sh; upside: 36%). Our current valuations for NML do not reflect its Auto venture, which may add another PRs13/sh to our TP.
  • We also revisit our investment case on KTML (TP: PRs70/sh; upside: 15%), which has witnessed a significant decline in one of its major revenue segments, Home Textiles. Note that, our TPs are not reflective of duty drawbacks in the extended Exports Package, as we await formal notification.
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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