INSIGHT

February23,2015

Textilesectorupdate
Textileexports(USDbn)
Textileexports(RHS)
Shareintotalexports(LHS)

65%

16
14
12
10
8
6
4
2

62%
59%
56%
53%

7MFY15

FY14

FY13

50%

FY12

AccordingtotherecenttextileexportnumbersofJan15releasedbyPBS,overalltex
tile exports have displayed a moderate growth of 10% YoY. Both value added and
spinningsegmentcontributedtotheexpansionandgrewby10%YoY.Valueadded
exports continue to grow as local industry strives to attain maximum benefit of the
GSP+ status and grab additional market share in Euro region, whereas, growth in
spinningsegmentsexportscanbeexplainedbythelowbaseeffect.Thehighertex
tileexportsareevenmoreencouragingconsideringthefactthatthePKRappreciated
byaround~5%toanaverageofPKR101/USD,thus,shiningalightupontheimprov
ingfundamentalsofPakistanstextilesector.

FY11

PersonalGoods

TextileexportsexhibitedencouraginggrowthduringJan15

Source: PBS

Onacumulativebasis,ValueAddedsegmentsexportspostedadecentgrowthof6%
YoY in 7MFY15. However, 8% YoY drop in spinning segments exports pulled down
500
cumulative textile export growth to 1%. Considering the excellent export perform
anceofValueAddedsegmentduring7MFY15andgovernmentplanstoboosttextile
450
exports according to recent announced textile policy, we expect overall textile ex
portsforFY15toremainencouraging.

Spinning(MnUSD)

Dec14

Jan15

Dec14

Jan15

Oct14

Nov14

Sep14

Aug14

Jun14

Jul14

Oct14

Nov14

Sep14

Aug14

Jul14

Jan14

TSLResearch

Weakspinningsegmentheldbacktextileexportperformanceduring7MFY15

Jun14

Valueaddedgoods(MnUSD)

GSP+continuestoupliftValueAddedexports
TextileexportsduringJan15haveexhibitedaremarkablegrowthof10%YoY.Thisgrowthof10%is 850
evenmoreprofoundgiventhefactthatPKRhasappreciatedfromanaverageofPKR105/USDdur
ing Jan14 to an average of PKR101/USD during Jan15. As far as segment wise exports are con 800
cerned,bothspinningandvalueaddedsegmentspostedahealthygrowthof10%YoY.Cottoncloth
exportsdroppedby2%YoY,mainlyasaresultof3%YoYloweraveragerealizedpricespersq.me 750
ter, which offset 1% YoY volumetric growth. Conversely, cotton yarn exports registered a robust
growthof28%YoY,mainlydueto50%highervolumetricsalesoffsettingtheimpactof15%decline 700
inaveragerealizedpricespermetricton.Onthevalueaddedfront,growthinthesegmentcame
650
mainlyduetoenhancedaccesstoEUmarketsmadepossiblebygrantingofGSP+status.Knitwear,
bedwear&readymadegarmentsshowedadecentgrowthof10%,10%and18%YoY,respectively,
600
whichwasprimarilyledbyvolumetricexpansionof12%,12%and11%YoY.

Apr14

28% 350
2%
10% 300
10%
18%
5%
10%

May14

167
207
204
184
203
242
1,207

Apr14

130
211
186
168
172
230
1,097

May14

4%
10%
10%
1%
10%
0%
1%

Mar14

1,145
1,446
1,446
1,246
1,229
1,604
8,116

Mar14

1,198
1,600
1,314
1,229
1,114
1,604
8,059

Jan14

CottonYarn
CottonCloth
Knitwear
Bedwear
ReadymadeGarments
Others
Total

Feb14

7MFY14 7MFY15 YoY Jan14 Jan15 YoY

Feb14

400

TextileExportsbreakup(USDmn)

Onacumulativebasis,spinningsegmentsexportsrecordedafallof8%during7MFY15,asaresult
ofongoingissuesinthespinningsegment.However,decentsurgeof6%invalueaddedexportson
the back of GSP+ status caused total textile exports to grow by 1% YoY. Exports of cotton yarn
dipped by 4% YoY, whereas, exports of cotton cloth fell by 10% YoY. On the contrary, exports of
knitwear,bedwearandreadymadegarmentsgrewby10%,1%and10%YoY,respectively.Thisin SyedKhurramMohiuddin
creaseisentirelyduetovolumetricupscaleofexportsthatoffsettheimpactofdeclineinaverage S.khurram@taurus.com.pk
Direct:+922135216403
realizedprices.
Continuedonpage2
DISCLAIMER:Theaboveinformationandadviceisgiveningoodfaith,withoutanylegalresponsibility.TaurusSecuritiesLimitedorindividualscon
nectedwithitmayhaveusedresearchmaterialbeforepublicationandmayhavepositionsinormaybeinterestedinthesecuritiesmentionedherein.

INSIGHT

TSLResearch

TextilePolicy20142019anotherpositive
ThemuchawaitedTextilePolicy201419hasbeenapprovedbyEconomicCoordinationCommit
tee with a budgeted outlay of ~PKR65bn. Some of the objectives of the policy are to; 1) double
textileexportstoUSD26bn,2)enhanceproportionofsyntheticfiberintextileindustryfrom14%to
30%,3)increaseratioofgarmentsexportsfrom28%to45%oftotaltextileexportsand4)facilitate
furtherinvestmentofUSD5bninnewplant&machineryandcreationof3mnjobs.Inaddition,tex
tileunitsinthevalueaddedsectorwouldbeprovidedwithLongTermFinancingFacility(LTFF)for
upgradationoftechnologyfromStateBankofPakistanattherateof4.56%.Furthermore,duty
drawbackonreadymadegarmentshasbeenincreasedfrom3%to4%on10%increaseinexports.

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