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FPT Flash note – BUY
29/01/2024 - 4:54:42 CHFPT CORPORATION (FPT VN)
The company maintained vivid growth in 2023 driven by solid performance of the global IT services segment, in line with our forecast. Reiterate BUY rating at a target price of VND116,117/share.
FPT announced FY2023 net revenue at VND52,618bn (+19.6% YoY) and EBT at VND9,203bn (+20.1% YoY), completing 98% and 100% of our projections, respectively.
The global IT services segment [Revenue/EBT: VND24,288bn (+28.4% YoY)/VND3,782bn (+27.1% YoY)], the company’s key earner and growth driver, completed its target of USD1bn of revenue in 2023 and is set to reach USD5bn in 2030. The segment reported growth in all of its major markets, including Japan [+43.4% YoY (52.2% JPY-based); contributing 39% to the segmented revenue], the US [(+8.6% YoY; 29%], APAC [+37.7%; 25%], and Europe [+21.9% YoY; 7%]. This was attributed to rising investments in IT services, particularly digital transformation (DX), especially in Japan post COVID-19. FPT’s revenue from digital transformation services jumped by 42% YoY, bringing in nearly 43% of the segmented revenue in 2023.
The domestic IT services segment [VND7,161bn (+4.6% YoY)/VND379bn (-2.5% YoY)] experienced a tough year in 2023 due to a curb or delay in enterprises’ IT spending amid the tough economy, although there were some improvements toward the last months of the year.
The telecom services segment [VND15,186bn (+8.8% YoY)/VND2,895bn (+15.4% YoY)] retained stable revenue and EBT growth, while the online advertising segment [-20.0%/-54.2% YoY] posted lacklustre results due to a shrinkage in companies’ advertising budget in light of the tough economy. The education segment continued to generate splendid revenue growth of 31% YoY. FPT expanded its network of training facilities in over 20 provinces and cities, with 145,000 learners.
Financial profit increased by 98.6% YoY (mostly thanks to interest income), contributing to the company’s EBT growth. Meanwhile, profit from affiliates tumbled by 84.3% y/y, which might primarily result from FRT’s sluggish performance.
Quick comment: We maintain our net revenue and EBT projections for FPT in 2024F at VND63,129bn (+20.0% YoY) and VND11,006bn (+19.6% YoY). Our target price for FPT for the next 12 months is VND116,117/share, equivalent to a total return of 23.2%.
