Which textile stocks will see a breakout?

Many analysts recommend that investors look into stocks of firms that have discovered alternative raw resources and diversified their export markets...

Finding a niche market

BSC has just identified the industries that may be affected by US tariffs. According to BSC, despite tariffs, textile and garment companies can still retain orders due to their advantage in highly skilled labour, the ability to produce high-value-added products with higher productivity than their competitors, and the ability to meet ESG standards.

However, in the near run, US tariffs may raise the price of imported raw materials and other inputs, limiting textile firms' profitability. Tariffs can also impair Vietnam's textile and garment competitiveness in the international market, resulting in fewer earnings.

Although the Trump administration's tariff policies are unclear, textile and garment exports remain strong. Vietnam's textile and apparel sector generated about USD 22 billion in exports in the first half of this year, a 10% increase over the same period last year. The US remains the largest export market, with a value of USD 8.77 billion, up 17.1%; the EU reached USD 2.36 billion, up 14.8%; and Japan reached USD 2.24 billion, up 12.4%...

According to the Vietnam Textile and Apparel Association (VITAS), to mitigate the impact of US tariff policies, many enterprises in this industry have proactively maintained their production speed, aiming for long-term production and growing niche markets to explore development prospects. VITAS performed a survey in six key nations with established textile and garment industries (Bangladesh, Cambodia, Laos, Nepal, China, and Vietnam), and found that Vietnam had a substantial edge over other countries, trailing only China in a few measures. This demonstrates that the quality and pricing of Vietnamese textiles and apparel are medium to high.

In light of prospective tax policy changes in certain conventional countries, identifying and exploring new potential markets is critical. According to analysts, the Russia is a potential market. Russia is a huge market with the world's fourth largest GDP in terms of purchasing power parity. Vietnamese garments are well-known for their great quality and patterns that reflect Russian consumers' interests and current trends. To capitalise on this potential, Vietnamese companies such as TNG, MCH, and PPH are discreetly looking for new markets.

Many experts believe that, in addition to the raw material, tapping into new prospective markets will be critical to helping textile and garment industries accelerate in the final six months of this year.

Picking potential stocks

Securities firms all advise investors to closely watch information concerning tariffs and their impact on the textile sector when picking textile equities for the last six months of the year. Diversifying export markets, locating alternative raw material sources, and increasing manufacturing efficiency are all critical issues for investors to consider.

According to BSC experts, investors should consider MSH shares from Song Hong Garment Joint Stock Company and TNG shares from TNG Trading Joint Stock Company. So far, MSH has received orders till the end of 2025. Regarding TNG stock, the business intends to operate at nearly full capacity until August 2025. Notably, both of these enterprises grew their personnel, which bodes well for their output expansion potential.

Furthermore, MSH has changed its focus away from the US market and towards Russia and neighbouring nations. TNG's varied customer base gives the firm an edge in adapting to market swings.

Mirae Asset Securities JSC suggests that investors pick Century Synthetic Fibre Joint Stock Company's STK stock and Phong Phu Joint Stock Corporation's PPH stock for investments in the textile industry's yarn stock group. These two stocks are expected to expand significantly in 2025, when STK's Unitex facility is officially operational. Meanwhile, PPH maintained steady development in its sewing thread and towel segments, as well as partial shipments to Russia.