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FPT released its 9M 2024 results with revenue of VND45.2tn (USD1.8bn; +19% YoY) and NPAT-MI of VND5.8tn (USD230mn; +22% YoY), completing 71% and 72% of our respective full-year forecasts and were broadly in line with our expectations as the impact of stronger-than-expected profitability of the Global IT and Telecom Services segments offset weaker-than-expected Education & others earnings in 9M 2024. We currently see slight downside risk to our current projection, pending a fuller review.
Global IT Services: Revenue +29% YoY & PBT +26% YoY. In 9M 2024, Digital Transformation (DX) revenue advanced 35% YoY and accounted for 47% of total Global IT revenue, which drove Global IT’s PBT margin of 15.9%, higher than our current forecast of 15.2% for 2024F. 9M 2024 sales posted the strongest growth in the EU market of 54% YoY, which beat our expectation and saw solid respective growth of 30% YoY and 37% YoY in the Japan and APAC markets. Revenue from the US grew 13% YoY in 9M 2024, indicating continuous economic uncertainties there. Conversely, FPT’s signed revenue maintained upbeat growth of 20% YoY to VND25.1tn (USD1.0bn) with the number of large deals (value of USD5mn+) increasing 65% YoY in 9M 2024, displaying a strong backlog of orders that bode well for future growth.
Domestic IT: Revenue +8% YoY & PBT -21% YoY. The Domestic IT segment continues to experience challenges considering the private sector’s IT spending, which fell short of our expectation for strong private sector IT spending in H2 2024.
Telecom Services: Revenue +9% YoY and PBT +15% YoY. In 9M 2024, Telecom Services’ revenue growth was driven by 11% YoY growth in broadband together with a 7% YoY increase in non-broadband business. The PBT margin expanded by 1.0 ppts YoY to 20.7% in 9M 2024 due to a widening PBT margin of paid TV business, per FPT. As such, Telecom Services’ profitability is stronger than our current expectation of 19.4% in 2024F.
Education: Revenue +16% YoY. Revenue growth slowed to high-teen digits vs robust 43% YoY growth in 9M 2023.
FPT’s 9M 2024 results
VND bn | 9M 2023 | 9M 2024 | YoY | 9M 2024/ Vietcap’s 2024F | Vietcap’s comments |
Revenue | 37,927 | 45,241 | 19% | 71% |
|
Technology | 22,517 | 27,964 | 24% | 70% |
|
- Global IT | 17,626 | 22,668 | 29% | 72% | * Revenue from the Japan/APAC/EU/US markets grew 30%/35%/54%/13% YoY, respectively. * In 9M 2024, revenue from DX services rose 35% YoY (47% of Global IT revenue), while new signed revenue increased 21% YoY and large deals (value at USD5mn+) increased 65% YoY to 33 deals. |
- Domestic IT | 4,891 | 5,296 | 8% | 64% |
|
Telecom | 11,690 | 12,800 | 9% | 73% |
|
- Telecom Services | 11,278 | 12,320 | 9% | 73% | * Fixed-broadband revenue grew 11% YoY while non-broadband revenue grew 7% YoY. |
- Online advertising | 413 | 480 | 16% | 70% |
|
Education | 4,435 | 5,155 | 16% | 65% | * Slightly trailed our forecasts due to slower growth in Education. |
Investment & others | -715 | -678 | -5% | 58% |
|
PBT | 6,768 | 8,111 | 20% | 72% |
|
Technology | 3,128 | 3,812 | 22% | 72% |
|
- Global IT | 2,878 | 3,614 | 26% | 76% | * Profit margin declined 40 bps YoY to 15.9%, mainly due to the cost of goodwill amortization for acquisitions in 2023-early 2024, but higher than our forecast of 15.2%. |
- Domestic IT | 250 | 197 | -21% | 38% | * The Domestic IT segment continues to experience challenges considering the private sector’s IT spending, which fell short of our expectation for strong private sector IT spending in H2 2024. |
Telecom | 2,299 | 2,666 | 16% | 77% |
|
- Telecom Services | 2,217 | 2,547 | 15% | 77% | * Profit margin expanded by 1.0 ppts YoY to 20.7% in 9M 2024 due to improvements in SG&A efficiencies as well as widening PBT margin of the paid TV business. As such, this segment’s profitability is stronger than our current expectation of 19.4% in 2024F. |
- Online advertising | 82 | 119 | 45% | 78% | * Profit margin improvements due to recovery in business and marketing activities in H1 2024, which exceeded our expectation. |
Education, investment & others | 1,341 | 1,633 | 22% | 65% | |
NPAT-MI | 4,742 | 5,762 | 22% | 72% |
|
Source: FPT, Vietcap
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