X-Stock | FPT VND 90,600 +24%: New Contract Signings Continue to Recover

INVESTMENT THESIS

Compared with our previous recommendation, BSC maintains its BUY recommendation on FPT with a target price of VND90,600/share, implying an upside of 24% versus the closing price on May 18, 2026, but down 28% compared with our previous report, based on the following views:

• FPT is currently trading at a 2026 forward P/E of 11.7x, equivalent to -2 standard deviations from its five-year average of 20.0x. We believe the current share price has already reflected: (1) market concerns that AI applications could affect FPT’s order intake; (2) concerns that FPT may no longer be able to sustain average earnings growth of 20% per year as it did during 2021–2025; and (3) the fact that FPT maintains an impressive ROE of 24% compared with other companies in the sector, whose average ROE is around 18%. Therefore, we assess that downside risk at the current price level is not too high. In addition, FPT has started to show early signs of recovery, with new contract signings recovering from 2H2025 to date.
• However, we apply a target P/E of 15.0x instead of 20.0x as in our previous report, reflecting a 20% discount to the one-year average of 18.0x. This is because: (1) we currently expect growth during 2026–2027 to reach only around 15%–16% per year, lower than the average of 20% per year during 2021–2025, amid a still-weak recovery in the APAC and U.S. markets and challenges in the education segment; and (2) strong foreign selling pressure and lower expectations among domestic investors toward technology stocks. We will revisit our target price if new contract signings in APAC and the U.S. exceed expectations in Q3 and Q4/2026.

EARNINGS UPDATE

Q1/2026 results: Net revenue reached VND12,480bn (-22% YoY), while NPAT-MI reached VND2,487bn (+14% YoY).

• Net revenue declined by 22% YoY due to the deconsolidation of FOX’s revenue after it was transferred to the Ministry of Public Security for management in Q1/2026. Excluding FOX, FPT’s revenue would have grown by 8.7% YoY, mainly driven by the technology segment, which recorded revenue of VND10,842bn (+11% YoY). In contrast, the education segment recorded revenue of VND1,638bn (-4% YoY), amid increasing competitive pressure from public school clusters.
• NPAT-MI increased by 14% YoY, supported by: (1) margin improvement in the domestic IT segment; and (2) earnings recovery at associates and joint ventures, including FRT, FPT Synex, and FPT Telecom.

Other updates: In April 2026, FPT recorded revenue of VND4,748bn (+20% YoY) and NPAT-MI of VND873bn (+21% YoY), mainly driven by the IT segment, which recorded revenue of VND4,198bn (+23% YoY), supported by the low base in the same period of 2025. New contract value reached VND6,143bn (+58.4% YoY), continuing to recover.

BSC’S assessment: FPT’s Q1/2026 earnings were 6% lower than our expectations in the previous report, as: (1) earnings in the education segment did not improve as expected due to increasing competitive pressure from public school clusters; and (2) revenue in the APAC market had not recovered as initially expected.