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Analyst Pin-board FPT 5M-2021 Results: Key Businesses Are Picking Up, Extending Profit’s Double-Digit Growth

• 5M-2021 revenue and PBT respectively posted VND13.3tn (+18.6% YoY) and VND2.4tn (+21.8% YoY), slightly behind our expectations by completing 36%/40% of the corresponding forecasts due to lower-than-expected global IT services performance.
• Global IT services revenue upheld its high growth seen in April with an 18% YoY rise in May, accelerating from a moderated 10% YoY level in Q1-2021 due to the underperformance of the Japanese market, while domestic IT services continued to witness robust growth of 49% YoY over the same period. Product mix changes have resulted in enhanced labor productivity and, thus, a higher profit margin for the technology segment (5M-2021 PBT margin 14.7%, +160bps YoY). There was just over VND1tn of signed revenue for offshore projects in May, up 68% YoY on the back of a low base effect. Besides, the same reason applied to onshore contracted revenue, which shot up 88% YoY in 5M-2021.
• Telecom segment revenue growth rate picked up in May, staying at 20% YoY, following a neutral pace of 10% YoY in Q1-2021. At the same time, higher economies-of-scale, tight cost management, pay TV’s turnaround profitability, and the recovery of online advertising services have altogether propped up profit margin to increase by 150bps to 19.3%.
• While we maintain a strong positive stance on FPT’s outlook as we believed it is well-positioned (cost advantage and improving technology capabilities) to capture the digital cloud computing, and AI adoption megatrends over the long-term, the current valuation may not support short-term stock price appreciation (current trailing P/E of 20.8x is 3sd higher than its average since 2017). Our previous forecasts (2021F revenue/NPAT-MI are projected at VND36.9tn/VND4,265bn), which are currently under review, suggesting a 2021F/22F forward P/E of 17.9x/15.8x. The current TP of VND90,000 is under revision as well.