- We cut our target price (TP) for FPT by 23% to VND90,300/share but maintain our BUY rating as the share price has dropped ~20% over the past seven months.
- Our lower TP mainly reflects lower target P/E assumptions across segments, including global IT (from 26.0x to 17.0x), domestic IT (from 18.0x to 13.6x), and education (from 18.0x to 11.4x). We lower the global IT multiple to reflect sector derating amid near-term AI deflation concerns, while the education multiple reflects its flat medium-term outlook. This is partly offset by rolling our TP horizon from end-2026 to mid-2027.
- We find FPT’s valuation undemanding with respective 2026/27F P/Es of 12.6x/10.8x and PEG of 0.8 (based on 2026F P/E and 2025-28F EPS CAGR) as we believe near-term AI concerns over the global IT business appear largely priced in.
- We project a 17% NPAT-MI CAGR over 2025–28F as AI deflation and macro uncertainties should continue weighing on IT services demand in 2026–27F before transitioning to an AI inflation phase from 2028F, when AI adoption should drive more meaningful demand. Over this period, domestic IT growth should accelerate on stronger digital transformation (DX) demand, while we project the education segment to remain broadly flat.
- Upside/Downside risks: Stronger/weaker IT spending recovery/AI adoption; faster/slower new enrollment growth of the education business; higher/lower contribution from associates.
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