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FPT Update – OUTPERFORM
28/10/2024 - 10:18:39 SAFPT CORPORATION (FPT VN)
The company sustained healthy growth in 9M2024 driven by solid performance of the global IT services segment. Looking forward to 2025, the vigorous outlook persists given 23% YoY EBT growth. Maintain an OUTPERFORM rating with a target price at VND148,600/share at the end of 2025.
FPT announced net revenue at VND45,241bn (+19.3% YoY) and EBT at VND8,111bn (+19.8% YoY) in 9M2024, in line with our expectations.
The global IT services segment [Revenue/EBT: VND22,668bn (+28.6% YoY)/VND3,614bn (+25.7% YoY)] upheld its momentum, driving the company’s performance on the back of rosy growth in most of its major markets (e.g Japan +30.4% YoY, APAC +36.6% YoY). Revenue from digital transformation services jumped by 35% YoY, bringing in 46% of the segmented revenue in 9M2024.
The domestic IT services segment [VND5,296bn (+8.6% YoY)/VND197bn (-23.7% YoY)] has yet made much progress on its results. The slide in EBT was 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 [VND12,320bn (+9.2% YoY)/VND2,547bn (+14.9% YoY)] strengthened profitability thanks to better cost control and an increase in ARPU, despite stable top line growth. The online advertising segment [+16.2% YoY/+45.4% YoY] bounced back 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 continued to deliver vibrant revenue growth of 20% YoY.
Profit from affiliates surged by 15 times to VND276bn (primarily fueled by FRT’s recovery), contributing to the overall EBT in 9M2024. Meanwhile, financial profit slid by 40.3% YoY owing to lower interest income and dividends.
Quick comment: We maintain our net revenue and EBT projections for FPT in 2024 at VND63,419bn (+20.5% YoY) and VND11,037bn (+19.9% YoY). The respective growth is projected at 20.5% YoY and 23.1% YoY in 2025. Our target price for FPT at YE2025 is VND148,600/share, equivalent to a total return of 12.2%.
