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FRT – Ambition to build a comprehensive healthcare ecosystem in the long-term

• In Q1-2024, FRT's net revenue and NPAT-MI recorded VND 9,042 bn (or USD 377 mn, +4.0% QoQ, +16.6% YoY), and VND 39 bn (net loss of Q1-2023: VND -5 bn), respectively. It is due to the better-than-expected performance of Long Chau while FPT shop narrowed its net loss based on the improvement of gross margin, reached 13.4% (+393 bps YoY, +198 bps QoQ).
• We believe that Vietnamese preventive healthcare (immunization) is the compelling land for Long Chau in the middle-term. Given Long Chau’s aggressive strategies against other modern pharmacy chains and the fragmented characteristics of vaccine market with the shortage in public vaccine station counts, we suppose that this chain will inch up its market share over the next 5 years. In 2024, we project its’ net revenue and NPAT to be VND 847 bn and VND -78 bn, respectively.
• Based on the Sum of the Parts (SoTP) valuation method, we have revised our target price for FRT to VND 174,500 per share, up from VND 139,500 per share, on the pillars of (1) adding Long Chau vaccine factor in our forecast, and (2) revising up Long Chau’s target FY24 P/S from 0.85x to 1.0x regarding its faster-than-expected revenue expansion by Long Chau vaccine centers. Hence, we have ACCUMLATE recommendation for FRT stock with the expected return for the next 12 months of 7.4% compared to the closing price of VND 162,500/share on May 8th, 2024.