- We upgrade our rating for FPT from OUTPERFORM to BUY but cut our target price (TP) by 11% to VND138,700/share as the share price has dropped ~18% over the past three months.
- The price correction has brought FPT’s valuation down to respective 2025F/26F P/Es of 20.8x/17.0x (vs its 3Y avg. TTM P/E of 20.5x), making it compelling for long-term investment.
- Our 11% lower TP reflects (1) a 7% lower 2025F NPAT-MI forecast, (2) respective 13%/15% lower target P/Es for global IT/domestic IT to 26x/18x (from 30x/21x) following 5%/30% lower 2024–27F aggregate PBT projections (due to cautious IT spending indirectly impacted by macro uncertainties), and (3) a change in our GPUaaS business valuation method from DCF to target P/E due to less visibility on long-term cash flows amid rapid technological evolution. These factors are partly offset by the positive impacts of rolling our TP horizon forward to mid-2026.
- While we project a temporary slowdown in FPT’s 2025 performance, we remain optimistic on its medium-term outlook, led by its global IT business which is well-positioned to benefit from rising global IT spending, leveraging its competitive labor costs and improving technological capabilities. This is complemented by its stable telecom and education segments.
- Upside/Downside risks: Stronger/weaker global IT spending, DX adoption; faster/slower progress of FPT Fornix HCMC02 data center (DC); faster/slower AI Factory utilization ramp-up.
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