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FPT Update – OUTPERFORM
26/09/2024 - 8:52:28 SAFPT CORPORATION (FPT VN)
The company sustained healthy growth in 1H2024 driven by solid performance of the global IT services segment. Looking forward to 2025, the vigorous outlook persists given 20% YoY EBT growth. Maintain an OUTPERFORM rating with a target price at VND147,300/share at the end of 2025.
FPT announced net revenue at VND29,338bn (+21.4% YoY) and EBT at VND5,203bn (+19.9% YoY) in 1H2024, in line with our expectations. The respective growth was 20.8% YoY and 19.9% YoY in 8M2024.
The global IT services segment [Revenue/EBT: VND14,573bn (+29.7% YoY)/VND2,302bn (+25.0% YoY) in 1H and +30.4%/+26.6% YoY in 8M2024] continued to be the company’s key driver on the back of rosy growth in most of its major markets (e.g Japan, APAC). Revenue from digital transformation services jumped by 37% YoY, bringing in 46% of the segmented revenue in 1H2024.
The domestic IT services segment [VND3,504bn (+18.2% YoY)/VND157bn (-9.6% YoY)] made progress on revenue but regression on EBT, explained by investments in some new products and the fact that sales contribution from hardware (which offer low profit margins) was still high.
The telecom services segment [VND7,966bn (+7.3% YoY)/VND1,697bn (+15.1% YoY)] heightened profitability thanks to better cost control and an increase in ARPU (details were not disclosed), despite stable top line growth. The online advertising segment [+7.6% YoY/+57.7% YoY] enhanced from the low base last year due to a shrinkage in firms’ advertising budget in light of the challenging economy. As one of FPT’s fast-growing arms, the education segment delivered revenue growth of 31.8% YoY.
A rebound in profit from affiliates (from negative VND22bn in 1H2023 to positive VND133bn in 1H2024 primarily fueled by FRT’s recovery) contributed to the overall EBT. Meanwhile, financial profit slid by 31.2% YoY owing to lower interest income and dividends.
We project net revenue and EBT for FPT in 2024 at VND63,470bn (+20.6% YoY) and VND11,060bn (+20.2% YoY), 1% higher than the prior update. The respective growth is projected at 20.7% YoY and 22.9% YoY in 2025. Our target price for FPT at YE2025 is VND147,300/share, equivalent to a total return of 10.8%.
