TCM faces headwinds

VNDirect expects TCM’s business growth to remain slow, with prolonged pressure on profit margins at least until the first half of 2026.

Business Downturn

In October 2025, TCM recorded revenue of VND 274.6 billion, down 14%, and post-tax profit of VND 19 billion, down 19% year-on-year.

Notably, TCM’s October exports were concentrated in Asia, accounting for 66.1% of total exports, with South Korea making up 26.95%, Japan 16.68%, and the domestic market 15.09%. The Americas contributed 21.1%, mainly the US (16.94%) and Canada (3.61%). Europe accounted for 12.7%, including the UK (9.72%) and Germany (2.26%).

For the first ten months of 2025, TCM posted revenue of VND 3.002 trillion, down 5% from the same period, achieving 66.3% of its annual target. Post-tax profit reached VND 237 billion, down 2%, completing only 85.1% of the 2025 profit target.

TCM attributed the revenue decline to the seasonal downturn in fashion textiles at the end of Q3, along with customers requesting early shipments to avoid new retaliatory tariffs from the US. Profit also fell short of the plan due to lower orders and factories operating below capacity.

According to VNDirect, weakened consumer demand in the US will continue to pressure global apparel demand. As a result, textile and garment companies like TCM may face challenges at least until 2026. However, the fabric segment and domestic market are expected to serve as TCM’s “lifeline.”

Statistics show that domestic fabric demand is estimated at 9–10 billion meters per year, while local production meets only about one-third of this. This forces Vietnamese companies to import around USD 12 billion worth of fabric annually from China and South Korea. Currently, Vietnam has only a small number of domestic fabric manufacturers, and TCM is among the key players. Therefore, TCM may be able to capitalize on this gap and turn the fabric segment into a core growth driver as export markets shrink.

After acquiring the Dong Nai Factory, TCM’s total capacity increased to 15 million meters of woven fabric, 31.5 million meters of dyed fabric, and 8,000 tons of knitted fabric. This gives TCM more room to expand orders.

Growth Challenges

VNDirect believes TCM’s recovery and growth may face significant obstacles. In Q3 2025, most listed textile and garment companies reported year-on-year increases in post-tax profit thanks to early ordering aimed at avoiding US tariffs. However, as previously noted, TCM’s business performance was less favorable, with both revenue and profit declining. This reflects TCM’s weaker adaptability compared to its competitors, mainly due to low operational flexibility and limited exposure to the US market—the market that benefitted most from the early-order wave.

Moreover, although expanding into CPTPP and UK markets can help reduce reliance on the US, these markets come with lower selling prices and smaller order sizes. As a result, TCM’s profit recovery is likely to be more challenging compared to companies with stronger specialization in apparel manufacturing.

Additionally, the US remains Vietnam’s largest textile and garment export market, accounting for nearly 50% of the sector’s total export value. When US orders weaken due to tariffs, manufacturers often try to divert exports to other markets. However, this is far from easy, as competitors in Bangladesh, Indonesia, and Cambodia are doing the same to capture orders. Vietnamese companies—particularly TCM—may therefore have to accept lower prices to secure contracts. This is expected to be TCM’s biggest challenge ahead.