Development milestones enterprise in Vietnam, FPT has helped organizations and businesses create more value, at the same time and significantly contributed to promoting the national DX,
OVERVIEW
General Information
Date of establishment: September 13 1988 th
Headquarter: No 17 Duy Tan Street, Dich Vong Hau Ward, Cau Giay District, Hanoi, Vietnam
Website: https://fpt.com.vn
Development milestones
For more than three decades of development, as a leading technology enterprise in Vietnam, FPT has helped organizations and businesses create more value, at the same time and significantly contributed to promoting the national DX, affirming Vietnam’s standing in the world’s IT map
1988 On September 13th FPT was established with the first 13 members
1996 Thanks to the ability to develop large - scale IT systems in the fields of finance and banking, tax, customs and e - government FPT grew to be the no
1997 FPT became one of the first four licensed Internet service providers in Vietnam
1998 FPT completed the digital government system FPT.eGov After 22 years, FPT.eGov has now been deployed in 20 provinces and cities nationwide, with more than 1,500 online public services and more than 600,000 applications solved per year, saving average social costs of over VND70 billion per year.
2000 FPT built the overall management system for hospitals FPT.eHospital After
20 years, the system has helped save an average of 1 million workdays a year
2001 FPT became the first Southeast Asian IT companies to receive an ISO 9000:
2002 FPT was equitized with a chartered capital of VND20 billion It also became the first Southeast Asian IT company to receive a CMMA certificate, the standard for managing quality control of software products, evaluated by the US Software Engineering Institute
2005 FPT was the first Vietnamese IT company to become a legal entity in Japan
2006 FPT became the main contractor in overseas markets for Petronas (Malaysia) with a software contract worth USD6.5 million FPT University was established, becoming the first university established within an enterprise FPT became the first Vietnamese IT company to be listed on the stock
2008 FPT implemented the Personal Income Tax management project that managed 13 million taxpayers, which became the largest project in Southeast Asia at the time of implementing
2012 FPT was listed in the Global Outsourcing 100 by IAOP.
2014 FPT deployed the electronic train ticket system for the Vietnam Railway Corporation, through which 36 million tickets got sold after six years of implementation FPT took over RWEIT Slovakia, marking Vietnam's first IT M &
2015 FPT made it to the Top 300 Most Valuable Enterprises in Asia (Nikkei Asian Review).
2018 FPT celebrated its 30th anniversary and announced the mission to become one of the leading DX corporations The Corporation purchased 90% stake of Intellinet - one of the largest technology consulting companies in the US.
2019 FPT strengthened its stance to become a comprehensive DX service provider Signing two DX consultancy contracts with the second largest international parcel delivery network in Europe DPDGroup and Vietnam's leading seafood company Minh Phu Signing a five - year licensing agreement with aJapanese company for $ 6.5 million, for the use of FPT's RPA platform akaBot.
2020 Elevating FPT's position in the international market Outshining hundreds of renowned international IT companies to participate in comprehensive DX consulting and implementation contracts, worth hundreds of millions of dollars, with leading International corporation in the US, Japan, and Malaysia In Vietnam, FPT was the strategic DX partner of numerous prominent companies in various fields including energy, finance and banking, manufacturing, real estate and aquaculture Several Made - by - FPT products such as akaBot (an RPA platform for business automation), akaChain (a blockchain platform), and Cloud MSP la comprehensive cloud computing solution) were the first and only solutions in Vietnam selected in Gartner Peer Insights akaBot was also ranked in the Top 6 worldwide popular RPA platforms FPT was the one and only Vietnamese company experienced with the Silver Stevie Award in the category of "The MostValuable Corporate Response to Covid - 19" Being the first technology firm inSoutheast Asia to become a strategic partner, the world's leading Institute forArtificial Intelligence (AI).
Operating Section
FPT is a large-sized IT service provider in Vietnam, aiming at becoming a leading comprehensive DX provider in the world The core businesses of the Corporation focus on three main sectors, of Technology, Telecommunications and Education.
1.3.1 Technology (56% of total revenue) a Position and scale
77 made-by-FPT DX platforms and solutions
48 offices and R&D centres in 26 countries and territories
05 complexes of university campus and software park in Hanoi, Danang, Quy Nhon, HCMC and Can Tho, with a total area of 112 hectares
FPT is the strategic DX partner of many leading international and domestic enterprises in a raft of segments Airbus, Amazon Web Services, Bayer, Hitachi, IBM, Microsoft, Oracle, Panasonic, RWE, Schaeffler, SCSK, Siemens, Toppan, BIDV, Cenland, Dien Quang, Dong Luc, EVN, EON Vietnam, Habeco, Hung Thinh, MB, Medlatec, Minh Phu, MobiFone, Saporo, Sunhouse, Thien Long, TPbank, Truong Thanh, Vietcombank,Vietnam Airlines, Vinamilk b Services, Products and Solutions
As a pioneer in the latest trend of technology, especially those core Industry 4.0 technologies, FPT has quickly seized global opportunities to develop an ecosystem of Made-by-FPT platforms, solutions, products and services Such ecosystem has
5 helped accelerate and facilitate the DX journey at businesses and organizations worldwide.
DX Consulting: Consulting DX End-to-End (from planning to implementation); Consulting digital personnel (establishing digital culture and digital workforce); IT Systems Consulting (information digitization, process transformation, IT infrastructure development and consolidation)
DX solutions and services based on technologies: AI, RPA, loT, Big Data, Cloud
Specialized solutions and services in the fields of Banking and Finance, Public Finance, Telecommunications, Health, Transportation, Electricity, Water, and Gas.
Technology system integration and transformation
Technology based solutions: SAP, Oracle, Microsoft, ESRI
Software testing and assurance services
Integrated circuit design, embedded software production, CAD / CAE.
As one of the three leading Internet service providers in Vietnam, FPT has constantly adhered to the market trends and strived to invest in its infrastructure, in a bid to upgrade the quality of products and services and enhance the application of new technologies, aiming at bringing extraodninary consumer experiences.
Telecommunication services: Internet services, private channels, data centers, VoId phone, value - added telecommunications services; inter - provincial and international connections, IoT services
Television services: FPT television, FPT Play, entertainment products on Internet and mobile platforms.
Digital content services: Online advertising, smart advertising system eClick AdNetwork
FPT Education Organization and FPT University were the award winners of
As an educational brand with international impact, FPT Education has fully expanded its educational levels provide the labor market with high quality human resources.
Elementary, secondary and high school
International exchange programs and international student development.
Companies in the same industry
Despite their minority status in the stock market, select technology companies have garnered attention Notable names include FPT (FPT JSC), CMG (CMC Technology Corporation), ABC (VMG Communications JSC), YEG (Yeah1 Group JSC), ADG (Clever Group JSC), ICT (Telecommunications – Informatics Joint Stock Company, CTIN), and MFS (Mobifone Technical Services JSC).
Equity and Shareholding Information
(Source: FPT’s Annual Report 2020) 1.5.2 Top 10 Shareholder
(Source: FPT’s Annual Report 2020)1.5.3 Organization structure
(Source: FPT’s Annual Report 2020) 1.5.4 Shareholder structure
Fundamentally, FPT’s telecommunications infrastructure has covered 59/63 provinces and cities in Vietnam It also has 48 offices in 26 countries and territories worldwide
(Source: FPT’s Annual Report 2020) 1.5.6 Board of Directions
Name Current Position Shares Owned
Truong Gia Binh Chairman of Management Board 55,455,025
Name Current Position Shares Owned
Hoang Huu Chien Chief Accountant 209,562
Nguyen The Phuong Deputy General Director 982,928
Hoang Viet Anh Deputy General Director 650,346
Vu Anh Tu Director of Technology
Nguyen Van Khoa General Director 358,233
Nguyen Viet Thang Head of Supervisors Board 88,350
Jean Charles Belliol Independent Member of Management
Dan E Khoo Independent Member of Management
Name Current Position Shares Owned
Hamaguchi Tomokazu Independent Member of Management
Le Song Lai Member of Management Board
Do Cao Bao Member of Management Board 8,869,545
Nguyen Khai Hoan Member of Supervisors Board 509,628
Nguyen Thi Kim Anh Member of Supervisors Board
Spokesman/Person in charge of
Bui Quang Ngoc Vice Chairman of Management Board 19,487,713
Scopes of Business
Digital transformation based on technologies: AI, RPA, IoT, BigData, Cloud…
Specialized solutions in fields: Banking - Finance, Public Finance, Telecommunication, Healthcare, Transport, Electricity, Water, Gas…
Technological system integration and transformation
Solution based on technology platforms: SAP, Oracle, Microsoft, ESRI
Software testing and quality assurance services
Microcircuit design, embedded software manufacturing, CAD/CAE…
Telecommunication services: Internet, exclusive leased line, data center, VoIP phone, value-added services, international and interprovincial connection, Cloud and IoT services…
FPT television services: FPT television, FPT Play, Internet and mobile platform based entertainment services.
Digital content services: digital newspapers including VnExpress.net, Ngoisao.net, iOne.net, online advertisement, eClick AdNetwork smart advertising system
Elementary, secondary and high school education and training.
Vocational, undergraduate and post-graduate education.
International affiliate programs and international student development programs.
BUSINESS PERFORMENT ANALYSYS
Industry overview
Covid-19 has made a significant impact on the revenue and growth of the IT industry on a global scale Overall, the IT industry’s revenue and its growth rate have suffered a decline in 2020, the reduction rate of the industry, nevertheless, was still lower than that of the global economy’s, as well as those of other prominent industries such as airline, travel, and services
During the tumultuous year of 2020, the global economy faced unprecedented challenges, experiencing a significant -4.3% contraction, as reported by the World Bank The COVID-19 pandemic severely impacted various industries, leading to steep declines: retail businesses saw a -5.7% growth rate, while the airline industry witnessed a staggering -60.9% drop These negative growth rates reflect the profound impact of the pandemic on businesses and economies worldwide.
Meanwhile, according to Gartner, worldwide IT spending in Q42020 has been revised upward in comparison to Q3 (at -5.4%), as businesses worldwide has been gradually adapting to Covid-19 new norms Global IT growth rate for the whole
2020 accordingly has been lifted to -3.2% Total global IT spending in 2020 is forecast at approximately USD3.7 trillion
The surge in global IT spending during Q4 was driven by businesses prioritizing digital transformation (DX) efforts As companies adapted to the post-pandemic landscape characterized by remote work, online education, and e-commerce, they invested in technology to support these new ways of operating and maintain business continuity amid social distancing measures This accelerated spending aimed to create a more agile and resilient infrastructure to meet the evolving demands of the "new normal."
Thanks to effective disease control policies, in 2020, Vietnam has achieved a 2.8%-GDP growth, ranked amongst the best growing economies despite heavy disruptions caused by Covid-19 In addition, with a young labor force, capability for quick adoption of new technologies, and its competitive costs, Vietnam is fast in becoming one of the leading business ecosystems of choice for supply chain shifting Therefore, it seems clear that this is a golden opportunity for Vietnam in general and the Vietnamese IT industry in particular to raise its position in the global market.
In 2020, according to Statista, a German market and consumer data company, Vietnam’s
The IT service industry continues to flourish, with revenue projected to reach USD 1.12 billion in 2020, demonstrating a modest increase from the previous year This industry encompasses a range of services, including IT Consulting and Implementation, Business Process Outsourcing, and other specialized IT offerings.
The consumer price index in 2020 increased by 3.23% compared to 2019 and by 0.19% compared to December 2019 The average core inflation of 2020 increased by 2.31% compared to the average of 2019.
The market price level in 2020 is mainly influenced by supply and demand factors that change continuously and complicatedly before the development of the Covid-
19 epidemic The price level tends to decrease or stabilize at a low level during times when supply and demand are negatively affected by the epidemic and recovers when the epidemic is under control CPI peaked in January, up 1.23% and fell the most in April, down 1.54%.
Some reasons for CPI increase in 2020
January and February are Tet months, so the demand for shopping increases, the average price of food items in 2020 increased by 4.51% compared to the previous year, contributing to the overall CPI increase of 0.17%.
The price of food items in 2020 increased by 12.28% compared to the previous year, contributing to the CPI increase of 2.61%, mainly due to the high price of fresh food items during the Lunar New Year Due to the influence of storms and floods in the central provinces in October and November, the impact of heavy flooding on vegetable areas, many ponds, lakes, and barns was damaged, washed away, etc., causing prices to rise Fresh, dried and processed vegetables increase.
Due to the complicated effects of the Covid-19 epidemic in the world, the demand for some types of medical supplies, preventive and curative drugs for domestic use and export is high, so the prices of these items tend to decrease slight upward trend The average price of drugs and medical equipment in 2020 will increase by 1.35% compared to the previous year.
The interest rate factor of the macro environment will strongly affect capital mobilization activities for investment projects.
Supply and Demand
Because due to the increasing and high demand of customers for information technology such as the demand for internet, computers, mobile phones, software the industry's needs need to be expanded and enhanced to meet the needs of customers meet customer and market needs Since then, the scale of the industry is expanding and the industry will grow stronger From that demand, the intensity of competition among enterprises in the industry decreased.
Although FPT is a diversified and rich company in various fields, but from the above results, we can see that FPT's businesses are all medium and especially large companies, concentrated mainly in big cities such as: Hanoi, Ho Chi Minh City
Because the Vietnamese market is undeveloped and the raw material suppliers for FPT are many and scattered, FPT sometimes has difficulties in production and especially has many domestic materials that do not have to be imported These things have created disadvantages and difficulties for FPT for suppliers.
Suppliers have a wide range of products in terms of type, quality and price.Therefore, if FPT wants to have good quality products, it needs to spend a lot of money And each type of raw material is different, FPT has to import from different suppliers, so the cost it spends is quite large to be able to have enough materials for production That is also the difficulty that FPT faces in the source of spending to import raw materials from suppliers.
Barriers to entry
Most of the Corporation’s business sectors have low entry barriers and yet faced big challenges as foreign or emerging competitors arrive and seize market shares
2.3.2 Policy barriers to enterprises' market entry activities
The basic taxes of the industry are import and taxes However, tax policy related to steel changes constantly This creates instability, bringing many concerns to production and business enterprises in the industry.
The risks occur in attracting talents; or the lack of HR quantity and quality to keep up with business growth and meet international standards for globalization.
Bad reputation has a big impact on businesses - from brand image to negative monetary effects.
FUNDAMENTAL ANALYSIS
Balance Sheet Analysis
Unit: 1,000,000 VND Table 1: FPT's Balance Sheet from 2016 to 2020
II Short-term financial investments
8,317,823 III Long-term assets in progress
IV Long-term financial investments
II Other resources and funds
As of December 31st, 2017, FPT’s total assets were VND 25,000 billion, down VND 4,833 billion, a 16% decrease in comparison to 2016 This is because FPT Retail and Synnex FPT are no longer FPT’s subsidiaries as of December 31st, 2017, therefore, the assets of these companies were not incorporated in the Corporation’s consolidated financial statements Accordingly, various balance sheet amounts also decreased sharply, for example, the inventory has reduced by VND 3,534 billion, equal to 78%; cash and cash equivalents has reduced VND 1,625 billion, equal to 17% YoY However, FPT witnessed a significantly increase in total assets in the next 3 years when FPT’s total assets were recorded at VND41,734 billion as of December 31, 2020, increasing 25.0% compared to 2019 In addition, cash and cash equivalents increased gradually thanks to cash flow from operation Moreover, fixed assets increased by VND 1,226 billion and VND 978 billion in 2018 and 2019 respectively due to the continuous investment in expanding business activities while fixed assets increased slightly by VND826 billion in
2020 because FPT eased its in asset investment during the complicated pandemic Since
2017, FPT has kept its inventories at a stable level no more than VND 1,400 billion and similar to short-term receivables with an average of VND 6,345 billion per year.
Having decreased by VND 6,624 billion to 11,761 (decreased by 36% and accounted for 47% of total resources) as of December 31 , 2017, FPT’s total liabilities then rose sharply st to VND 22,365 billion (mainly came from current liabilities) in 2020, surpassing its equity and making up 55% of total resources, which indicates the company may be under short-term financial constrain Meanwhile, FPT’s equity increased stably over the period, reaching to VND 18,607 billion at the end of 2020
Unit: 1,000,000 VND Table 2: FPT's Income Statement from 2016 to 2020
1 Gross revenue from goods sold and services rendered
298 3 Net revenue from goods sold and services rendered 39,531, 469 42,658, 611 23,213, 537 27,716, 960 29,830, 401 4 Cost of sales 31,093, 334 32,976, 206 14,490, 658 17,004, 911 18,016, 743 5 Gross profit from goods sold and services rendered 8,438, 135 9,682, 405 8,722, 879 10,712, 050 11,813, 657 6 Financial income 574,
,165 In which: Interest expense 374,186 368,546 238,344 358,988 385,338 8 Share of net profit from associates 35,
,194 9 Selling expenses 2,638, 455 3,074, 637 2,047, 834 2,345, 958 2,713, 561 10 General and administration expenses 2,751, 158 3,441, 129 3,553, 288 4,219, 255 4,495, 366 11 Operating profit 2,964, 201 4,219, 952 3,799, 831 4,609, 873 5,190, 654 12 Other income 99,
16 Current corporate income tax expense
103) 18 Net profit after corporate income tax 2,57 5,691 3,52 8,114 3,23 3,997 3,91 1,712 4,4 23,745
18.1 Profit after tax attributable to Parent Company 1,990,6
18.2 Profit after tax attributable to non- controlling shareholders 585,
(*): Consolidated revenue consists of the financial performance of the Distribution and
Retail sector in the period from January 1st, 2017 to December 17th, 2017.
In 2017, FPT recorded net revenue of VND 42,659 billion, up 8% from 2016 However, the result of 2018 did not unify revenue of FPT Retail and Synnex FPT as these two companies are no longer subsidiaries of the Corporation Under like-for-like conditions, 2018 revenue grew 17.4% YoY Like-for-like comparison means as: 2017 business results do not include divestment profits from FPT Retail and Synnex FPT and consolidate the business results of these two companies under the equity method (VND 19,778 billion) The net revenue continued to increase by 19.4% to VND 27,717 billion in 2019, which shows an effective business strategy (with a strategic focus on rapid growth, sustainable development and becoming a technology-focused corporation FPT completed the reduction of its ownership in FPT Retail and Synnex FPT to under 50% In concrete terms, FPT’s ownership ratio in FPT Retail and Synnex FPT has been reduced to 47% and 48%, respectively Therefore, these companies are no longer subsidiaries of FPT, becoming associates instead from December 18th, 2017.) In 2020, despite the impact of Covid-19 and many global geopolitical upheavals leading to a serious economic crisis worldwide, FPT still saw a positive growth of net revenue with 7.6%, rising to VND 29,830 billion
In the last 3 years, although the cost of sales and expenses increased over the year, FPT’s net profit after corporate income tax rose gradually during the period and at the end of 2020, net profit was at VND 4,424 billion, up 13.1% y-o-y.
In 2017, current ratio and quick ratio was respectively at 1.45 and 1.35, which is a slight increase when compared to that of 2016 But then, these ratios decreased gradually over the next 3 years and were at 1.15 and 1.09 respectively in 2020 The reason for this decrease is that short-term debt increased by VND6,262 billion, mainly due to increases in short-term loans and financial leases, payables to employees, dividends and profits payables Because all ratios are above 1.0 and there is a large amount of cash and cash equivalents, indicating high financial safety and low liquidity risk.
In 2016, Debt/Total assets and Debt/Equity ratios were respectively 33.3% and 86.8%, which are the highest figures over the period This is because accounts payable balance increased strongly thanks to the expansion of the Retail segment and better payment terms earned by other segments, which increased amounts payable while they weren’t due at year end The 3 following years witnessed significantly decreases in debt ratios but in 2020, short-term and long-term loans increased by 62.0%, increasing the Debt/Total Assets and Debt/Equity ratios to 30.5% and 68.5% respectively, from 23.5% and 46.8% in 2019 Another outstanding point is that Debt/Equity ratio is always smaller than 1 during 5 years, which shows that total assets of the company is mainly based on equity and does not depend too much on debt.
The company maintains a strong financial position, with a consistently negative net debt ratio This ratio indicates that the company possesses more cash and cash equivalents than its financial obligations, implying a higher level of financial stability The negative net debt is attributed to the company's effective cash flow management, which has resulted in increased cash and deposits from operations.
The operational capability of FPT improved in 2019 as the cash turnover decreased from 63.4 days (in 2018) to 59.5 days, mainly because of the increasing of the receivable turnover by 0.2 times, equivalent to a 4-day reduction for collection This indicated that FPT has been improving its capacity of managing credit policy The cash turnover ratio of FPTcontinued to decrease from 59.5 days in 2019 to only 50.0 days in2020 thanks to the policy of tightening inventory and payables, minimizing cash flow at risk during the epidemic
The year 2018 was marked by the transformation of FPT after restructuring with outstanding financial performance Specifically, revenue and PBT increase significantly by 17.4% and 30.6% YoY, respectively, in like-for-like comparison Compared to the actual number (no adjustment) of 2017, PBT and revenue are down 9.3% and 47.1% YoY respectively EPS was VND 3,903, up 32% in like-for-like and down 12.4% compared to the actual number of 2017 In 2020, thanks to an efficient cost control, FPT has increased most of its profitability ratios In particular, the ratio of Operating Margin, Pre-tax Profit Margin and After-tax Profit Margin increased by 17.4%, 17.6% and 14.8% respectively thanks to the effective cost control as well as due focuses high-margin businesses The Return on Equity increased slightly by 0.1% while the Return on Capital Employed and the Return on Assets decreased due to the increase in debt.
Overall, the changes in business performance after divesting from the technology product distribution and retail sector have shown that this is the right direction.
In 2020, despite the impact of Covid-19, FPT still ensured stable growth Earnings per share (EPS) reached VND 4,120, increasing 12.4% (EPS in 2019 retrospectively adjusted based on the dividend payout ratio of 15% in 2020 and regulations on EPS calculation in the line with Circular No 200/2014/ TT-BTC is VND 3,667).
Over the years, P/E, P/B, and P/S ratios have witnessed a steady increase, reaching 14.35, 2.94, and 1.55 times in 2020, respectively This surge suggests that investors have progressively valued FPT's stock higher relative to its earnings, equity, and sales.
The enterprise-value-to-EBITDA ratio is calculated by dividing EV by EBITDA or earnings before interest, taxes, depreciation, and amortization Typically, EV/EBITDA values below 10 are seen as healthy FPT’s EV/EBITDA in 2020 was 7.34, which means that it takes about 7 years for an investor to recover the cost of acquiring the company through EBITDA
4w o STOCK VALUATION (Based on BIDV Securities Company’s analysis report)
36,140 Profit before tax (Billion VND)
6,337 Profit after corporate tax (Billion VND)
Weighted Average Cost of Capital
Free cash flow to the firm
Valuation Model Price per share Percent
By P/E and FCFF stock valuation methods, the final result of FPT’s stock price is forecasted to reach VND 86,000 The current market price is VND 84,400 per share (15/05/2021), suggesting a 2% upside to the current market price However, compared to the stock price at the end of 2020 (VND 58,100), the target price of VND 86,000 in 2021 suggests a 48% upside It can be concluded that the current market price is approaching to the recommended price.
Through fundamental analysis, technical analysis and stock valuation, we conclude that:
FPT has an outstanding financial performance when profitability ratios has stable increases per year, especially in the context of hard time due to the impact of Covid-19 pandemic in 2020 as well as the ability to use financial resources of the business, FPT has a good and stable development in the volatile macroeconomic environment In addition, FPT is the most prestigious, highly profitable company which have dominant market position in Vietnam With the inevitable trend of the technological industry, strong competitive advantage and effective corporate governance, FPT’s stock price may have sustainable growth in the future.
In terms of technical analysis, using 5 lines of Bollinger Bands, MA, MACD, RSI and Fibonacci, we think that in the short term, FPT’s stock price may be in sideway trend when the forces of supply and demand are nearly equal before moving to another uptrend in the long term.
In the first 5 months of 2021, FPT’s stock price has risen significantly and is close to our stock valuation.
For the long-term goal: Investors should buy FPT’s stock because of the large potential of FPT’s development.
For the short-term goal: The stock price is likely not to bring large profits, so the investor should consider buying alternative stocks.
Financial Ratios
From 2017 to 2020, the company's current and quick ratios exhibited a gradual decline, dropping from 1.45 and 1.35 to 1.15 and 1.09, respectively This decrease can be attributed to an increase in short-term debt driven by higher short-term loans, financial leases, and payables to employees, dividends, and profits Despite the decline, the ratios remain above 1.0, indicating adequate financial safety with a significant cash and cash equivalent balance, minimizing liquidity risk.
In 2016, debt ratios were elevated at 33.3% and 86.8%, primarily due to expanded accounts payable However, subsequent years saw a reduction in debt ratios In 2020, debt ratios increased to 30.5% and 68.5% due to a rise in short-term and long-term loans Notably, the Debt/Equity ratio remained below 1 throughout the five-year period, indicating the company's reliance on equity rather than debt for its assets.
Besides, the ratio of net debt to equity remained at a safe level as net debt (total interest- bearing debt minus cash and cash equivalents on hand) being negative in most years thanks to increased cash and deposits generated from operations and effective cash flow control A negative net debt implies that the company possesses more cash and cash equivalents than its financial obligations, and hence is more financially stable.
FPT's operational efficiency improved in 2019 with a decrease in cash turnover, attributed to a higher receivable turnover In 2020, the ratio further declined to 50.0 days due to inventory and payables management, mitigating cash flow risks during the pandemic This demonstrates FPT's enhanced credit management and operational capabilities.
The year 2018 was marked by the transformation of FPT after restructuring with outstanding financial performance Specifically, revenue and PBT increase significantly by 17.4% and 30.6% YoY, respectively, in like-for-like comparison Compared to the actual number (no adjustment) of 2017, PBT and revenue are down 9.3% and 47.1% YoY respectively EPS was VND 3,903, up 32% in like-for-like and down 12.4% compared to the actual number of 2017 In 2020, thanks to an efficient cost control, FPT has increased most of its profitability ratios In particular, the ratio of Operating Margin, Pre-tax Profit Margin and After-tax Profit Margin increased by 17.4%, 17.6% and 14.8% respectively thanks to the effective cost control as well as due focuses high-margin businesses The Return on Equity increased slightly by 0.1% while the Return on Capital Employed and the Return on Assets decreased due to the increase in debt.
Overall, the changes in business performance after divesting from the technology product distribution and retail sector have shown that this is the right direction.
In 2020, despite the impact of Covid-19, FPT still ensured stable growth Earnings per share (EPS) reached VND 4,120, increasing 12.4% (EPS in 2019 retrospectively adjusted based on the dividend payout ratio of 15% in 2020 and regulations on EPS calculation in the line with Circular No 200/2014/ TT-BTC is VND 3,667).
Meanwhile, P/E, P/B and P/S increased gradually per year and reached to 14.35, 2.94 and 1.55 times respectively in 2020 This indicates that the investors determined the market valued of a stock increasingly higher as compared to the FPT’s earnings, equity and sales.
The enterprise-value-to-EBITDA ratio (EV/EBITDA) represents the multiple of a company's earnings before interest, taxes, depreciation, and amortization (EBITDA) that an acquirer would pay to acquire the company Values below 10 are typically considered healthy, indicating that an investor could recoup their acquisition costs within 10 years In 2020, FPT Corporation recorded an EV/EBITDA ratio of 7.34, suggesting that an investor could potentially recover their acquisition investment within approximately 7 years through the company's EBITDA earnings.
4w o STOCK VALUATION (Based on BIDV Securities Company’s analysis report)
36,140 Profit before tax (Billion VND)
6,337 Profit after corporate tax (Billion VND)
Weighted Average Cost of Capital
Free cash flow to the firm
Valuation Model Price per share Percent
By P/E and FCFF stock valuation methods, the final result of FPT’s stock price is forecasted to reach VND 86,000 The current market price is VND 84,400 per share (15/05/2021), suggesting a 2% upside to the current market price However, compared to the stock price at the end of 2020 (VND 58,100), the target price of VND 86,000 in 2021 suggests a 48% upside It can be concluded that the current market price is approaching to the recommended price.
Through fundamental analysis, technical analysis and stock valuation, we conclude that:
FPT has an outstanding financial performance when profitability ratios has stable increases per year, especially in the context of hard time due to the impact of Covid-19 pandemic in 2020 as well as the ability to use financial resources of the business, FPT has a good and stable development in the volatile macroeconomic environment In addition, FPT is the most prestigious, highly profitable company which have dominant market position in Vietnam With the inevitable trend of the technological industry, strong competitive advantage and effective corporate governance, FPT’s stock price may have sustainable growth in the future.
In terms of technical analysis, using 5 lines of Bollinger Bands, MA, MACD, RSI and Fibonacci, we think that in the short term, FPT’s stock price may be in sideway trend when the forces of supply and demand are nearly equal before moving to another uptrend in the long term.
In the first 5 months of 2021, FPT’s stock price has risen significantly and is close to our stock valuation.
For the long-term goal: Investors should buy FPT’s stock because of the large potential of FPT’s development.
For the short-term goal: The stock price is likely not to bring large profits, so the investor should consider buying alternative stocks.
TECHNICAL ANALYSIS
STOCK VALUATION (Based on BIDV Securities Company’s analysis report)
P/E Method
36,140 Profit before tax (Billion VND)
6,337 Profit after corporate tax (Billion VND)
FCFF Method
Weighted Average Cost of Capital
Free cash flow to the firm
Valuation Model Price per share Percent
By P/E and FCFF stock valuation methods, the final result of FPT’s stock price is forecasted to reach VND 86,000 The current market price is VND 84,400 per share (15/05/2021), suggesting a 2% upside to the current market price However, compared to the stock price at the end of 2020 (VND 58,100), the target price of VND 86,000 in 2021 suggests a 48% upside It can be concluded that the current market price is approaching to the recommended price.