April 2024 textile exports: seasonal challenges remain
The latest report on textile exports highlights several important trends and changes within the industry for April 2024. Here’s a detailed breakdown of the key points:
Textile Exports Overview
In April 2024, textile group exports reached $1.24 billion, reflecting a 4.8% month-over-month decline, though the figure remained stable compared to the previous year. The monthly drop is primarily due to the high volume of exports in the preceding month, driven by summer season deliveries.
Cotton Prices and Production
International cotton prices have eased to 85 cents per pound, down from the average of 94 cents per pound this year, influenced by reduced demand from China and improved cotton production conditions in the USA. Similarly, local cotton prices in Pakistan have decreased to PKR 21,100 per maund.
Government Policy and Electricity Tariffs
The government is considering reducing the electricity tariff for the export-related industry by adjusting the cross-subsidy to the residential sector. This change is expected in the FY25 federal budget and would bring the tariff back to 9 cents per kWh.
Segment-wise Performance
- Value-Added Products: Despite a challenging market, the value-added textile segment saw a 3% year-over-year increase, driven by higher exports of ready-made garments.
- Non-Value-Added Products: There was a 5% annual increase in non-value-added exports, primarily due to better crop output this year..
Detailed Export Data
The breakdown of the performance of various textile segments for April 2024 compared to March 2024 and April 2023:
| Segment | Apr’24 (US$mn) | Mar’24 (US$mn) | MoM Change | Apr’23 (US$mn) | YoY Change | 10MFY24 (US$mn) | 10MFY23 (US$mn) | YoY Change |
|---|---|---|---|---|---|---|---|---|
| Raw Cotton | 0.0 | 0.3 | -100.0% | 0.4 | -100% | 56 | 13 | 320% |
| Cotton Yarn | 54.1 | 43.5 | 24.4% | 63.7 | -15% | 846 | 637 | 33% |
| Cotton Cloth | 135.0 | 163.0 | -17.2% | 146.7 | -8% | 1,558 | 1,685 | -8% |
| Cotton Carded Or Combed | 0.1 | 0.1 | -13.3% | 0.0 | n.m. | 1 | 1 | -16% |
| Yarn Other Than Cotton Yarn | 2.2 | 2.4 | -9.8% | 3.4 | -36% | 29 | 36 | -21% |
| Non-Value Added | 191.4 | 209.3 | -8.6% | 214.2 | -11% | 2,490 | 2,372 | 5% |
| Knitwear | 326.4 | 336.7 | -3.1% | 321.8 | 1% | 3,567 | 3,714 | -4% |
| Bed Wear | 202.5 | 215.3 | -5.9% | 218.0 | -7% | 2,291 | 2,250 | 2% |
| Towels | 80.7 | 93.1 | -13.2% | 79.6 | 1% | 865 | 825 | 5% |
| Tents, Canvas & Tarpaulin | 9.3 | 11.3 | -17.8% | 14.2 | -35% | 98 | 117 | -17% |
| Readymade Garments | 291.3 | 287.2 | 1.4% | 247.4 | 18% | 2,888 | 2,905 | -1% |
| Art, Silk & Synthetic Textile | 27.8 | 30.3 | -8.1% | 33.5 | -17% | 301 | 343 | -12% |
| Madeup Articles (Excl. Towels & Bedwear) | 53.4 | 58.7 | -9.2% | 50.3 | 6% | 589 | 584 | 1% |
| Other Textile Materials | 54.5 | 58.4 | -6.6% | 53.8 | 1% | 595 | 601 | -1% |
| Value Added | 1,045.9 | 1,091.0 | -4.1% | 1,018.6 | 3% | 11,194 | 11,338 | -1% |
| TOTAL TEXTILE GROUP | 1,237.3 | 1,300.3 | -4.8% | 1,232.8 | 0% | 13,683 | 13,710 | 0% |
Investment Perspective
ILP is favored in the textile sector due to its substantial order book and strong gross margins. The target price for December 2024 is PKR 102 per share, offering a potential capital upside of 22% and an FY25 dividend yield of 7%.
Conclusion
The textile industry faces both challenges and opportunities. While there are concerns about future cotton crop production and the impact of the wheat crisis, the overall outlook remains cautiously optimistic with strategic adjustments and government support.
Disclaimer:
The information in this article is based on research by AKD Securities Limited. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
Leave a Reply