Market Topic: Vietnam'S Textile And Garment Industry'S Revenue Is Expected To Soar

 

        Affected by market demand and large-scale vaccination of new coronal vaccine in various countries, Vietnam's textile and garment industry shows a recovery trend in 2021. In the first four months of 2021, the export value of textile and clothing products increased by 9%, reaching 9.51 billion US dollars.

 

Export recovery has a great impact on the business income and profits of textile and garment enterprises. For example, the operating revenue of TNG investment and Trade Co., Ltd. in the first four months of 2021 reached 1.272 trillion dong, a year-on-year increase of 32%. The company's representative said the order had been scheduled until August 2021. According to the plan, TNG proposes that the operating revenue in 2021 will reach 4.798 trillion dong and the after tax profit will reach 175 billion Dong, increasing by 7% and 15% respectively compared with 2020.

 

The net income of century yarn company in the first quarter of 2021 is 567 billion Dong. Despite a slight decrease of 8.1% in revenue on a year-on-year basis, the net income of century yarn company reached 248 billion Dong, an increase of 35% due to the 20% increase in yarn price compared with the end of 2020. Based on the results, century yarn company proposed that the operating revenue of this year will reach 2.358 trillion dong, an increase of 34% compared with 2020.

 

In 2021, the business income of the successful trade investment textile and clothing company will reach 4.218 trillion dong, an increase of 20%; After tax profit is 290 billion Dong, an increase of 5% compared with 2020.

 

Affected by the new crown pneumonia epidemic, the business activities of Yuejin Garment Co., Ltd. (VGg) changed significantly in the first quarter of 2021 after one year of recession. The net revenue reached 1.453 trillion dong, a slight decrease of 1.4%, and the after tax profit reached 5.2 billion Dong, which was significantly improved from the loss level of after tax profit of 21 billion Dong in the first quarter of 2020. According to the evaluation of Fuxing Securities Co., Ltd., the operating revenue of Yuejin Garment Co., Ltd. will reach about 7.757 trillion dong in 2021, an increase of 8.9%, and the after tax profit will reach 187 billion Dong, an increase of 24.1% compared with 2020.

 

The reason why enterprises propose higher operating income and profits is that they think the market will recover. In addition, free trade agreements such as the comprehensive progress agreement of the trans Pacific Partnership, the Vietnam EU free trade agreement and the regional comprehensive economic partnership agreement are also the driving forces. Therefore, textile and garment enterprises have formulated strategies for the production of accessories to meet the above-mentioned FTA commitments.

 

Specifically, Deng Zhaohe, general manager of century yarn company, said that in the short term, the company will focus on the development of recycled yarn, in addition to producing high-quality, high value-added original products. In the long term, the company will increase production capacity through synthetic fiber production plant projects. Like century yarn company, Yuejin Garment Co., Ltd. plans to restart the Yuetai technology project with a total investment of 20 million US dollars to put into production of fabrics by establishing Yuetai Technology Co., Ltd. The project will help Yuejin Garment Co., Ltd. to meet the rules of origin of future free trade agreements. In 2020, more than 13% of the total operating revenue of Yuejin Garment Co., Ltd. comes from exports to the EU. Therefore, when the company can meet the rules of origin of Vietnam EU free trade agreement, the company is expected to export more to the EU. Moreover, since the "regional comprehensive economic partnership agreement" does not require cloth raw materials to be produced in Vietnam or countries in the region, as long as the tailoring work is carried out in Vietnam, they can enjoy the tax preference for Japanese exports. As the export to Japan accounts for 27% of the total revenue of Yuejin Garment Co., Ltd. in 2020, the regional comprehensive economic partnership agreement will inject impetus into the promotion of export to Japan.

 

Securities companies believe that with the above growth, textile and clothing industry stocks are expected to soar this year. Specifically, century yarn company stock is expected to grow by 25%; Yuejin will increase by 21%.