FPT_ADD_TP VND 76,700_Upside 15.2%_Value Chain Transformation_BSC Company Update

 We issue ADD recommendation on FPT stocks with a target price of VND86,000 in 2021 (+ 15.2% upside potential from its closing price on Mar 11th 2021), equivalent to 35.2% higher than the target price of 2020 due to the adjustment of new target P/E= 18; after re-evaluating (i) Company’s competitive positioning (ii) Growth potential in the following years (iii) The P/E of businesses in the region will increase from 17 to 24 due to low interest rate.

 

 FPT sets 2021’s revenue and profit before tax target of VND34,730 billion (+16% YoY) and 6,210 billion (+18% YoY), respectively.

 

 We forecast that FPT’s net revenue and NPAT in 2021 will reach VND36,140 billion (+21.2% YoY) and VND5,323 billion (+14.6% YoY) respectively, equivalent to 2021F EPS of VND5,049 /share and a forward P/E of 15.4.

 

 An industry leader is facing opportunities for Digital transformation

 Positive business prospects in 2021

 

 FPT’s recovery speed is adversely affected by the Covid-19’s movement disorders

 Challenges of attracting labors in present scenario of IT job market.

 

 In 2020, FPT will achieve revenue and net profit after tax of VND29,830 billion (7.6% YoY) and VND4,422 billion (+13.1% YoY) respectively, equivalent to 94% of net revenue and 99% profit, compared to BSC’s latest forecast. 

 BSC is optimistic about FPT’s business outlook in 2021 thanks to (i) Business segments recovering from low base (ii) Digital transformation projects still have room for growth.