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FRT – Long Chau persists its riding role for FRT’s performance in 2024

• In Q4-2023, FRT's net revenue and NPAT-MI recorded VND 8,690 bn (or USD 364 mn, +5.5% QoQ, +2.7% YoY), and VND -101 bn (net loss of Q3-2023: VND -13 bn), respectively, resulting in 2023 EPS of VND -2,375. It is due to (1) one-off costs regarding FPT Shop closure and inventory expiration processing, and (2) higher-year ago bonuses related to strong performance of Long Chau.
• In 2024, we project that the company's net revenue will reach VND 41,619 bn (or USD 1,741 mn, +38.0% YoY) and VND 304 bn (or USD 12.7 mn), respectively, resulting in an EPS of VND 2,229. It is driven by (1) the rehabilitation of ICT demand from the 2023 low-base for both revenue and profit margin and (2) the increasing coverage of Long Chau into tier-2,3 provinces with higher performance in each store.
• Based on the Sum of the Parts (SoTP) valuation method, we have revised our target price for FRT to VND 139,500 per share, up from VND 112,800 per share, on the pillars of (1) raised number of store count to over 3,050 stores by the end of FY27; and (2) revise up Long Chau’s target FY24 P/S from 0.60x to 0.85x on the new expansion plan of Long Chau (enter new market – tier 2,3 provinces).
• FRT’ stock price has increased by +46% from Dec-2023. Therefore, we suppose that the growth expectations of FRT has partly reflected on its stock price movement. We have NEUTRAL recommendation for FRT stock, downgrading from ACCUMULATE level in our previous report.