Report
Team AKD Research
EUR 8.84 For Business Accounts Only

Pakistan Textiles: Sector update Jul'17

Following seasonal uptick in Jun'17, Pakistan's total exports during Jul'17 tread downward towards FY17 average monthly exports to finally settle at US$1.631bn (-14.7%MoM/+10.6%YoY). Group wise, both textile and food exports fell 12.3%/17.3%MoM to US$1.006bn and US$0.25bn, respectively (though standing higher 2.8%YoY/34.7%YoY). Sequentially, all key segments in the textile exports witnessed downward trend, where value added exports declined 21%MoM to clock in at US$735.3mn, while low value added exports shrank 5.40%MoM to US$271mn. However on a YoY basis, value added segment registered growth of 5.3%YoY backed by growing garment exports (+20.5%YoY) offsetting falling knitwear exports (down 5.8%YoY). Looking ahead, we expect textile exports to grow by 5-6%YoY in FY18 on account of expected currency depreciation (4.9% anticipated  in FY18) along-with likely support from payment of pending refunds alleviating sector liquidity crisis. However, challenges to export sector remain in the form of stagnant demand scenario, end of unconditional export subsidy, and EU GSP-PLUS status review. Our preferred play in the textile sector, NML, has seen sharp correction since Panama leaks case verdict (NML return: -11.13% vs. KSE-100 index: -6.5%), leaving 30.7% upside from our SOTP based TP of PkR185.3/share. Buy!

Underlying
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
AKD Securities Limited
AKD Securities Limited

AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.

AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.

Analysts
Team AKD Research

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