According to Vietnam’s “People’s Daily” report on May 17, due to the obvious recovery of major markets, compared with 2020, the textile and garment industry in 2021 is evaluated as having a bright future, thus providing a promising future. Enterprises in the industry have given impetus to increase operating income and profits.
Since the beginning of 2021, Vu Duc Giang, president of the Vietnam Textile and Apparel Association (VITAS), believes that due to the impact of market demand and the large-scale COVID-19 vaccination in various countries, in 2021 Vietnam’s textile and garment industry will actively recover. In fact, the export value of textile and clothing products increased by 9% in the first four months of 2021, reaching US$9.51 billion.
The rebound in exports has a huge impact on the operating income and profits of textile and apparel companies. For example, the operating income of TNG Investment and Trading Joint Stock Company in the first four months of 2021 reached 1.272 trillion VND, a year-on-year increase of 32%. A representative of the company said that orders have been scheduled until August 2021. According to the plan, TNG proposes that operating revenue will reach 4.798 trillion VND and after-tax profit will reach 175 billion VND in 2021, an increase of 7% and 15% respectively compared with 2020.
Century Yarn Company’s net income in the first quarter of 2021 was VND 567 billion. Although revenue fell slightly by 8.1% year-on-year, as yarn prices increased by 20% compared with the end of 2020, Century Yarn Company’s net income reached 248 billion VND, an increase of 35%. With this result, Century Yarn Company proposed that its operating income this year will reach 2.358 trillion VND, an increase of 34% compared with 2020.
Successful Trade and Investment Textile and Garment Company also proposed that operating income in 2021 will reach 4.218 trillion VND, an increase of 20%; after-tax profit will be 290 billion VND, compared with 2020 an increase of 5%.
Affected by the COVID-19 pandemic, the operating activities of Viet Jin Garment Corporation (VGG) changed significantly in the first quarter of 2021 after a year of decline. Revenue reached 1.453 trillion VND, a slight decrease of 1.4%, and after-tax profit reached 5.2 billion VND, which was significantly improved from the loss level of 21 billion VND in the first quarter of 2020. According to the assessment of Fuxing Securities Co., Ltd., the operating income of Viet Tin Garment Co., Ltd. in 2021 will reach approximately 7.757 trillion VND, an increase of 8.9%, and the after-tax profit will reach 187 billion VND, an increase of 24.1% compared with 2020.
The reason why companies have set higher operating income and profit targets is because they believe that the market will recover. In addition, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Vietnam – Free trade agreements such as the European Union Free Trade Agreement and the Regional Comprehensive Economic Partnership Agreement are also driving forces. Therefore, various textile and apparel companies 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, and in addition will produce high-quality, high-end yarns. Value-added original product. In the long term, the company will increase production capacity through the synthetic fiber production plant project. This is a project with a total production capacity of 60,000 tons, focusing on recycled yarn, high-quality yarn and special yarn. The total investment in the project is approximately US$120 million. It is expected that the first phase of the project will be put into operation in 2023, and the second phase will start construction. The second phase of the project will be completed in 2025.
Like Century Yarn Company, Yue Jin Garment Co., Ltd. plans to relaunch the Yue Jin Garment Co., Ltd. with a total investment of US$20 million in the near future by establishing Yue Tai Technology Co., Ltd. Tai Technology project was put into production of fabrics. This project will help Viet Chin Garment Co., Ltd. meet the rules of origin of various future free trade agreements. In 2020, more than 13% of the total operating revenue of Viet Chin Garment Co., Ltd. came from exports to the EU. Therefore, when the company can meet the rules of origin of the Vietnam-EU Free Trade Agreement, the company is expected to export more to the EU. . Furthermore, since the “Regional Comprehensive Economic Partnership Agreement” does not require fabric raw materials to be produced in Vietnam or other countries in the region, as long as the cutting work is performed in Vietnam, you can enjoy tax benefits for export to Japan. Since exports to Japan accounted for 27% of Viet Chin Garment Co., Ltd.’s total revenue in 2020, the “Regional Comprehensive Economic Partnership Agreement” will inject impetus into increasing exports to Japan in the future.
Securities companies believe that with the above-mentioned growth, textile and apparel industry stocks are expected to surge this year. Specifically, Century Yarn Company stock is expected to grow by 25%; Yuejin is expected to grow by 21%.
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