FPT - Revamped Business Structure
We remain optimistic on the stable growth achieved by FPT’s two core businesses, Technology and Telecom, which was discussed in our previous FPT Company Report. The divestments can be a strong catalyst for FPT share price in the short term as the deals are successfully concluding as expected. In the long term, regarding FPT valuation, the company’s FCFF analysis shows a remarkable stability in cash generation and P/E ratio for 2018 can be revised owing to the higher contribution of Telecom and Technology, which have P/Es that are higher than those of the divested businesses.
We evaluate FPT price at VND62,900/share and anticipate a cash dividend of VND2,000 per share in the following 12 months, which results in a 12.9% total return from the closing price on 28th November 2017 and we rate NEUTRAL on the stock as FPT has rallied since SCIC’s divestment event. This target price is higher than that in our Company Report published in May 2017 because of an improved cash flow forecast as a result of FPT’s successful divestments from FPT Trading and FPT Retail.
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