Viet Dragon Securities - Vietnam’s TG sector – Remain cautious despite seeing glimmers of export recovery

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Viet Dragon Securities

Hoai Trinh

Vietnam’s T&G sector – Remain cautious despite seeing glimmers of export recovery

In the first two months of 2023, Vietnam's garment export turnover was USD 4,549 mn (-19.6% YoY), mainly due to high inventories and weak demand in main export markets which led brands to turn more conservative in placing orders for 1Q23. Yarn export turnover also plummeted, recording USD 565mn (-38.4 % YoY) due to a significant decrease in imports from China (-42.6% YoY).
The US is by far Vietnam's largest textile importer. We expect US apparel imports to recover after the strong imports in May 2022 (bullwhip effect), bolding bleak for downstream inventory digestion in 4Q22. Meanwhile, CAFTA-DR members gained market share primarily as a result of a sharper decline in US apparel imports from the rest of the world. However, we believe this trend will not last long.
We believe that 2023 could not be a rocky ride for Vietnam exporters when China reopens because US fashion companies continue to diversify their sourcing base. While there are some glimmers of hope, we still recommend investors wait on the sidelines for 2Q23 (after 1Q23 results are fully priced in) or stock prices drop further to provide some valuation support.

14/03/2023 7 EN

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Viet Dragon Securities

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Analysts

Hoai Trinh

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Vietnam’s T&G sector – Remain cautious despite seeing glimmers of export recovery

AWAITING THE BREAKOUT

Vietnam chilled-fresh meat market – Significant long-term potential but difficult to realize in

The decline has not come to a halt

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