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FPT Flash note – OUPERFORM
30/05/2024 - 11:55:18 SAFPT CORPORATION (FPT VN)
The company sustained vivid growth in 1Q2024 driven by solid performance of the global IT services segment, in line with our expectation. The stock price has increased by 38% from our latest update and fully reflected 2024’s potential earnings. However, looking forward to 2025, the outlook is still very vigorous with 25.5% YoY net profit growth. Thus, we move our target price to 2025 at VND152,800/share with an OUTPERFORM rating.
FPT announced 1Q2024 net revenue at VND14,093bn (+20.6% YoY) and EBT at VND2,534bn (+19.5% YoY). The respective numbers were VND18,989bn (+20.6% YoY) and VND3,447bn (+19.7% YoY) in 4M2024.
The global IT services segment [Revenue/EBT: VND6,999bn (+28.7% YoY)/VND1,119bn (+25.4% YoY)] continued to be the company’s key earner and growth driver, recording glorious growth in all of its major markets in 1Q2024 (and 4M2024). Revenue from digital transformation services jumped by 36% YoY, bringing in nearly 42% of the segmented revenue in 1Q2024.
The domestic IT services [VND1,472bn (+5.1% YoY)/VND41bn (+136% YoY)] witnessed some YoY improvements, albeit still far from previous years’ levels due to a curb or delay in IT spending of domestic enterprises amid the challenging economy.
The telecom services segment [VND3,885bn (+5.1% YoY)/VND805bn (+11.4% YoY)] maintained stable revenue and EBT growth, while the online advertising segment [+33.6%/+20 times YoY] bounced back from the low base last year due to a shrinkage in enterprises’ advertising budget in light of the challenging economy. The education segment continued to generate strong revenue growth of 26% YoY.
Financial profit decreased by 31.6% YoY owing to lower interest income and absence of dividends. Profit from affiliates rebounded by 70.3% YoY, to VND74bn, which might be primarily fueled by FRT’s recovery.
Quick comment: We maintain our net revenue and EBT projections for FPT in 2024 at VND63,151bn (+20.0% YoY) and VND10,903bn (+18.5% YoY) and project that the respective growth is 19.6% YoY and 23.2% YoY in 2025. Our target price for FPT at YE2025 is VND152,800/share, equivalent to a total return of 14.1%.
