Textile and garment stocks anticipate rosy prospects this year

The last quarter is often the peak production season for textile and garment firms

Market observers assume that the rest of the year, also the sector’s peak production season, will be a golden time for these tickers to make breakthroughs.

Many surveyed firms have attribute their rising revenues to a sharp jump in order volumes in the year to date.

In addition, since early this year the trend of foreign (mainly US) textile and garment importers shifting orders from China to Vietnam to mitigate risks has become more apparent amidst the escalating US-China trade tensions.

Tran Nhu Tung, member of the board of management at Thanh Cong Textile Garment Investment Trading JSC (ticker TCM), said that their performance in the last two months was quite upbeat.

Accordingly, in August alone, TCM raked in VND463 billion ($20.4 million) in revenue, setting a new record monthly revenue, with an accrued profit ratio touching 19 per cent.

In the first eight months of this year, the company posted VND2.46 trillion in cumulative revenue ($109 million), equal to 80 per cent of its full-year plan, while its after-tax profit hit VND185 billion ($8.2 million), a 44 per cent jump over the projection and fulfilling its full-year profit target.

According to Tung, this upbeat outcome came in the wake of the company’s efforts to restructure production and boost production capacity.

TCM has to outsource production to meet rising orders from customers.

In the stock market, thanks to rosy business performance, TCM saw a nearly 43 per cent jump since early July, with the average trading volume surpassing 840,000 units per session.

Similarly, the ticker of TNG Investment and Trading JSC rose more than 25 per cent in the past two months.

This August, TNG reaped VND459 billion ($20.3 million) in revenue, up 47 per cent over August 2017. In the first eight months of this year, the company reported VND2.36 trillion ($104 million) in cumulative revenue, reaching 86 per cent of its full-year, while its profit came to VND118 billion ($5.2 million), a 54 per cent jump over the same period last year and reaching 93 per cent of the full-year profit target.

This year, TNG estimates reaching VND3.45 trillion ($152 million) in revenue and VND157 billion ($6.9 million) in after-tax profit, up 25 per cent each over the projection.

A source from TNG revealed that the company is expanding production to seize opportunities brought by a raft of free trade agreements (FTAs) Vietnam has signed with other countries as well as to meet growing production needs after the world’s major brands have shifted production orders from China to Vietnam.

The ticker GIL of Binh Thanh Import-Export Production and Trade JSC has jumped by 27.5 per cent since early June.

Currently, GIL has carved out a spot among the stocks with the highest earnings per share (EPS) ratio. According to the company’s first half financial statement, GIL recorded a 21 per cent jump on-year in revenue and 31 per cent in after-tax profit to reach VND1.24 trillion ($55 million) and VND64.4 billion ($2.8 million), respectively. Its EPS in the first half was VND4,944 ($0.22) per share.

The investor circle believes that textile and garment firms will fare better in the rest of the year, which is also their peak production season, bringing their tickers to new heights.