FPT –Forecast Update for 2024F/25F: AI Cloud Expected to Drive Net Profit Growth to 25% in 2025
• For 2024, we project revenue and pre-tax profit (PBT) to grow by 19% and 20%, respectively. Specifically, revenue growth in the Technology/Telecommunications/Education & Investment segments is expected to reach 24%/10%/15%, while PBT growth for these segments is forecast at 24%/18%/14%.• For 2025, we anticipate revenue and PBT growth of 23% and 22%, respectively. Revenue in the Technology/Telecommunications/Education & Investment segments is projected to grow by 29%/13%/13%, while PBT growth for these segments is expected to reach 35%/9%/14%.
• We use a sum-of-the-parts valuation method for FPT, incorporating valuation for the AI cloud service segment using a five-year DCF approach, with a terminal growth rate of 3% and a WACC of 13%. The current target price is VND 159,000 per share, reiterating a ACCUMULATE recommendation.
• As of January 16, 2025, FPT is trading at a trailing P/E ratio of 28.6x, which is over two standard deviations higher than its five-year average of 17.8x. This revaluation has occurred much faster compared to global IT service leaders who have also expanded deeply into AI projects since the breakthrough of generative AI (GenAI) in late 2022. While we acknowledge FPT’s strong potential as Vietnam’s largest IT service provider and its promising position in the future wave of AI investments, we believe more time is required for its AI cloud services to make a meaningful contribution to profitability, enabling financial results to align with the current valuation levels.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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