FPT Corporation (HOSE: FPT) | Q1 2025 Update, BUY – 1Y Upside +22.6%

Following recent more cautious global IT demand, education enrollment, and investor sentiment in light of policy-related events and geopolitical risks, as well as the increasing uncertainty surrounding tariffs and the potential for a U.S. recession has prompted us to revise our 3-years revenue, profit forecasts, and valuation.

Despite these challenges, FPT's fundamentals remain solid. We continue to maintain a BUY rating with a revised 12-month target price of VND 133,100/share, down from VND 171,000/share previously, representing a potential upside of 22.6% from the closing price of VND 108,600/share as of May 5, 2025.

Key changes to our assumptions include:

o       Revenue: Revised down by 1.6% to VND 73,712 bn (from VND 74,900 bn), primarily due to softer-than-expected demand in the U.S. and APAC regions.

o       Profit: PBT is projected at VND 13,227 bn, representing a 19.5% YoY increase, 5.2% below our initial forecast.

o       CAPEX: Planned VND 11,000 bn CAPEX in 2025, the highest in FPT's history, to drive long-term growth.

o       Backlog momentum: The company’s newly signed revenue backlog reached VND 11,505 bn, representing 27.4% of the full-year forecast.We continue to see strong growth opportunities in international markets, particularly in Japan and Europe, driven by demand for digital transformation services. The telecommunications segment also presents upside potential, with FPT investing in key infrastructure projects.

Q1/2025 Performance Overview

Consolidated Results:

o       Revenue: VND 16,058 bn (+13.9% YoY)

o       PBT: VND 3,025 bn (+19.4% YoY)

o       NPAT-MI: VND 2,174 bn (+20.9% YoY)

FPT’s Q1 results met over 21% of both internal and market forecasts for 2025. While the topline growth was solid, momentum was somewhat hindered by uneven global IT service demand and muted performance in the education segment.

Segment-wise Performance:

o       Technology

§  Revenue: VND 9,769 bn (+15.3% YoY) / PBT: VND 1,416 bn (+22.5% YoY)

§  The global IT services segment continues to perform well, with strong growth in Japan (+30.4%) and Europe (+24.6%). The company secured 9 international contracts valued over USD 10 million, a 125% YoY increase.

o       Telecommunications

§  Revenue: VND 4,582 bn (+14.2% YoY) / PBT: VND 967 bn (+17.1% YoY)

§  FPT Telecom delivered solid growth, driven by the expansion of AI-integrated broadband services and investments in digital infrastructure.

o       Education & Other

§  Revenue: VND 1,834 bn (+3.2% YoY) / PBT: VND 642 bn (37.6% margin)

§  Despite slower enrollment growth, the education segment continues to generate strong margins, bolstered by cost management and stable tuition pricing