Fiber enterprises enjoy improved earning results
Earning results of fiber industry enterprises have shown signs of significant improvement in the first half of this year and are expected to grow more positively in the coming months as fiber demand recovers.
The earnings results of enterprises in the fibre industry have shown signs of significant improvement in the first half of this year and are expected to grow more positively in the coming months as demand recovers.
In the first half of this year, the business results have shown signs of improvement as the prices of raw materials - cotton - decreased significantly compared to the first half of 2022. Demand from the Chinese market has also rebounded.
Revenue in H1 of Damsan Joint Stock Company (ADS) increased by 14.1 per cent compared to the same period in 2022. In the second quarter of this year alone, revenue and net profit of this business increased 66.7 per cent and 13.4 per cent over the same period in 2022, and up by 129 per cent and 89 per cent compared to the first quarter of 2023, respectively.
Polyester yarn manufacturers have seen gradually recovering demand. In the second quarter of 2023, Century Fibre Joint Stock Company's (STK) revenue increased by 41.5 per cent compared to the first quarter of 2023 and net profit increased 22 times compared to the first quarter.
VNDIRECT Research said that the export value of Việt Nam's textile and garment products had improved over the months since May 2023, an early signal for the recovery of demand for textile products.
Fibre industry enterprises - the upstream segment of the textile and garment industry value chain - were expected to be the first segment to show recovery, said VNDIRECT.
Demand for textile and garment industry products would increase in the last quarter of this year to serve year-end festivals, so export activities of fibre enterprises were expected to be more vibrant from the third quarter of 2023.
In the first half of 2023, Damsan’s yarn and towel export output to the Chinese and Japanese markets reached about 5,600 tonnes, an increase of 2.6 times compared to the second half of 2022.
Damsan Textile said the current order volume was sufficient until the end of Q3 of 2023. Meanwhile, the export revenue of Century Fibre Joint Stock Company (STK) increased by 53 per cent in the first 6 months of this year, compared with a 52-per cent increase in 2022.
VNDIRECT Research said that domestic fibre enterprises were currently waiting for a turning point from the prospect of consumption in China - Việt Nam's largest fibre importer.
Việt Nam's fibre export turnover to China in the first half of this year only reached US$1.04 billion, down 20.7 per cent over the same period in 2022. However, in the second quarter of 2023 alone, export turnover reached $610.7 million, up 42 per cent compared to the first quarter of 2023 and slightly increased compared to the second quarter of 2022.
Retail sales of textiles and footwear as of May in China increased by 2.3 per cent compared to April, and increased by 12.3 per cent compared to May 2022, reaching 107, 6 billion yuan.
The People's Bank of China has continuously cut lending interest rates recently to promote production and consumption activities, as well as reduce savings interest rates to stimulate cash flow into consumption and investment.
Therefore, VNDIRECT Research expects that the demand for fibre products in the Chinese market will show clearer signs of recovery in the fourth quarter of 2023 - first quarter of 2024. Yarn manufacturers with a high proportion of exports to China, such as Damsan Textile, are expected to benefit greatly from this trend.
Regarding the business prospect of Damsan Joint Stock Company, the operation of An Ninh Yarn Factory in the second quarter of 2023 has helped this business enter the top 5 largest yarn and towel manufacturers in the country. The company currently owns three factories with a total designed capacity of 14,000 tonnes per year for CD32 yarn and 3,000 tonnes per year for towels.
Century Fibre Joint Stock Company, Unitex Fibre Factory phase 1 is expected to operate commercially in the first quarter of 2024, helping to increase the total capacity of the company to 96,000 tonnes per year. It is expected that when Unitex Factory is completed in 2025, the company will become the second largest yarn producer in the country. — VNS
