Export situation of domestic textile and garment enterprises
Textile is one of the industries directly affected by the COVID-19 pandemic. In 2020, textile and garment exports fell for the first time after 25 years of continuous growth.
In the common difficulties of the whole world, domestic textile enterprises have found suitable directions, adapted to new conditions, and achieved many positive results. For example, Song Hong Garment Company (code: MSH) announced that, in 2021, this enterprise has overcome difficulties and entered a period of positive growth.
Starting construction of Song Hong – Nghia Hung garment production and export zone in the mid-March 2021 shows that Song Hong Garment pioneers to seize the opportunity for high growth again after the pandemic. According to the plan, the factory will be built up in 8 months and completed in November 2021 to put into operation. It is expected that the factory will create jobs for nearly 3,000 employees and help increase the total revenue of this enterprise to about 5,500 billion VND. With a capacity increase of about 30%, the business is continuing to develop new potential FOB customers in 2021 and will prosper from 2022 onwards. According to Song Hong Garment, so far, the enterprise’s orders have been stable and complete until the end of Q3/2021. With a positive recovery in business performance this year, investors expect that Song Hong Garment will return to its previous performance of a 45% dividend.
In addition to Song Hong Garment, many other enterprises in the textile and garment industry also received good signs when the export turnover of the whole industry in the first 6 months of 2021 was estimated at 12.2 billion USD, up 15% yoy. The increase in exports has had a great impact on the revenue and profit of textile and garment enterprises.
For instance, the revenue of TNG Investment and Trading JSC (code: TNG) in the first 5 months of this year reach more than 1,742 billion VND, an increase of 423 billion VND ( up 32% yoy). The order of this enterprise has been detailed until Q2/2021 and the ones made at the end of Q3 and Q4 have been deployed faster. According to the plan, the enterprise has set a target of 4,798 billion VND in revenue and 175 billion VND in profit after tax in 2021, increasing 7% and 15% yoy respectively.
With Century Synthetic Fiber JSC, this enterprise achieved a net revenue of 567 billion VND in Q1/2021. Its profit after tax increased 35%yoy, reaching 70 billion VND, which was the highest quarterly profit of this enterprise in the past 10 years. Its business plan is 2,358 billion VND in revenue and 248 billion VND in profit after tax, up 33.5% and 72% yoy respectively. With this result, after the first three months, Century Synthetic Fiber has fulfilled 24% of the year’s revenue plan and 28% of the year’s profit after tax plan.
Another enterprise, Thanh Cong Textile and Garment Investment Trading Company, also set a revenue target of 4,218 billion VND this year, up 20% yoy; along with profit after tax is 290 billion VND, up 5% yoy. By the end of April 2021, the revenue of this company reached more than 53 million USD, up 26%yoy. Its profit was about 3.4 million USD, nearly double the same period.
Potential of Textile and Garment Enterprises till the end of 2021
According to the Ministry of Industry and Trade, textile enterprises will continue to benefit from free trade agreements, especially the EVFTA Agreement (EU-Vietnam Free Trade Agreement) and also from the US, EU, Japan, Korea markets. Accordingly, many textile enterprises have had export orders until Q3/2021, even until the end of 2021, thereby stabilizing the number of manufactured goods.
From now until the end of 2021, the pandemic is expected to be gradually controlled as well as the US, EU, etc will lift the blockade when basically having injected a sufficient number of vaccines. With that expectation, demand for goods in general and the demand for textiles, in particular, in the world market is recovering. This is a good sign for Vietnam’s textile and garment industry to boost exports and restore its position. Of which, the US market is still Vietnam’s main textile and garment export partner. The export turnover from the US in the first half of 2021 reach 7.6 billion USD, accounting for 49.7% of Vietnam’s total garment export value. Experts predict that this upward trend of growth will continue to be maintained, at least until the end of 2021.
In addition, it is forecasted that import and export activities will continue to prosper in the near future when FTAs are gradually being implemented in a more comprehensive and effective manner. In particular, the agreements: CPTPP, EVFTA, UKFTA, etc will continue to create favorable conditions for Vietnam’s textile and garment products to enter partner markets with preferential tariffs, thereby promoting strong export growth. Vietnam’s textile and garment products are facilitated to reduce costs and improve competitiveness with other countries exporting textiles and garments, especially in high-class textiles.
Accompanying the domestic enterprises, the Ministry of Industry and Trade also always closely follows market developments, supporting immediately removing bottlenecks for businesses. At the same time, the Ministry is also speeding up the implementation of the Strategy for the development of the textile and footwear industry to 2030, with a vision to 2035; along with a program for sustainable development of the textile and garment industry from 2021 to 2030. Besides, the Ministry is also supporting human resource training and 4.0 technology application in production design; greening the textile, leather and footwear industry; developing domestic textile and dyeing as well as ensuring the fabric demand for the industry.
In addition to large enterprises in the industry with large capitalization on the stock exchange, Vietnam also has many unpopular garment and textile processing factories whose quality is not inferior, even have cheaper production costs, etc. With the slogan “Whatever you need, VIRAC would meet” along with data sources covering more than 2 million Enterprises including both listed and unlisted, VIRAC is proud to be able to provide relevant information, necessary about Vietnamese textile enterprises and factories that you are interested in. From there, assist your company in getting more industry data, help you understand your partners/competitors, and easily plan and make business decisions in the long-standing garment market in Vietnam.