One of the big names in textile composites, Masood Textile Mills Limited (PSX: MSOT) happens to be an enormous exporter of finished products from Pakistan. The firm has a market capitalisation of over Rs 10.4 billion. Masood Textile operates in three segments - Spinning, Knitting, and Processing & Garments.

The company focuses on finished goods, producing all sorts of apparel, including sportswear, undergarments, t-shirts, etc. Its international clientele is a who's who of big names in global fashion and retail - Reebok, Adidas, Tommy Hilfiger, Abercrombie & Fitch, and Aeropostale, to name just a few. The firm also claims to be the number one exporter of underwear in Pakistan. In FY15, around 24.4 percent of the company's ordinary shareholding was acquired by a Chinese firm, Shanghai Challenge Textile Co Ltd, through a privately negotiated deal.

Prior Performance

Masood Textile has been the picture of growth where top line is concerned. However, the firm's gross profits haven't moved in the past three years, meaning profitability is getting worse; the graph indicates how the firm's gross and net margins have been declining each year. The recent year ended FY15 was particularly problematic for the company - although sales growth was an admirable 11 percent year-on-year, net profit fell by 12 percent. The firm cites an increase in cost of production, including increase in minimum wages and a higher PKR-USD parity weighing down on the firm. Both of these factors are particularly problematic for a firm like Masood Textile; firstly, the value-added segment of the textile industry is more labour-intensive, and thus a rise in minimum wage is going to impact its costs more. Secondly, the firm is highly export-oriented; Masood Textile's exports account for over 84 percent of its sales, as of FY15. And this number is a marked improvement from before: in FY12, exports were 95 percent of total sales.