- We cut our target price (TP) for FPT by 5% to VND77,800/share and maintain our BUY rating.
- Our lower TP mainly reflects a 10% lower global IT equity value (target P/E cut by 12% to 15.0x from 17.0x due to a 15% cut to aggregate 2026-31F PBT) and a 15% lower education equity value (target P/E cut by 13% to 10.0x from 11.4x due to an 11% cut to aggregate 2026-31F PBT). These factors outweigh a 26% higher domestic IT equity value (due to higher 2027F domestic IT NPAT forecast) and the positive impact of rolling our TP horizon forward to end-2027 from mid-2027. Our 15.0x global IT target P/E is a 9% discount to Indian IT peers’ median forward P/E, which we view as justified by their superior capabilities in higher-value-added services (such as consulting) and deeper domain expertise (such as banking).
- We forecast 2026/2027F NPAT-MI of VND10,755bn/VND12,299bn (+15%/+14% YoY), driven by 15%/16% YoY growth in global IT PBT (continued growth in Japan as well as Europe, the Middle East and Africa (EMEA), steady growth in the US, and broadly flat APAC). Domestic IT PBT should grow 78%/12% YoY mainly on digital transformation (DX) demand from the public and private sectors. Meanwhile, we project education PBT to decline 4% YoY in 2026 and then remain flat YoY in 2027 due to continued weak enrollment.
- Over 2026-29F, we project a 14% NPAT-MI CAGR, led by global IT (15% PBT CAGR), while the domestic IT contribution (11% PBT CAGR) is small and education is broadly flat. We believe this slower growth (vs 22% CAGR over 2021-24) is largely priced in, with 2026/2027F P/E at 10.8x/9.4x and 3Y PEG at 0.7x. Our TP implies 2026/2027F P/E of 14.4x/12.7x.
- Upside/Downside risks: Stronger/weaker IT spending/AI adoption; milder/more intense competition in global IT services; higher/lower contribution from associates.
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