FPT – All business lines kept on track – EARNINGS UPDATE

• FPT’s 1H21 net profit rose 17.2% yoy, in line at 44.5% of our FY21F forecast.
• Unrealised revenue of tech contracts surged 43.9% yoy in 2Q21 to VND5,848bn.
• 1H21 digital transformation (Dx) revenue grew 19.3% yoy to VND2,116bn, accounting for 23.3% of the technology revenue.

1H21 results on track with double-digit revenue growth across all business segments
• FPT’s net revenue rose 19.2% yoy to VND16,228bn in 1H21 thanks to double-digit revenue growth across all business segments, forming 45.8% of our full-year forecast. 1H21 net profit increased by 17.2% yoy to VND1,906bn, in line at 44.5% of our projection. Notably, 1H21 top line witnessed an impressive growth in domestic IT services revenue (+40.7% yoy), online advertising sales (+26.2% yoy), and education & others (+55.7% yoy) after being hit by COVID-19 in 1H20.
• In technology segment, new signed revenue in 1Q21 reached VND5,848bn, increasing 43.9% yoy, showing strong technology revenue growth potential in upcoming quarters. Digital transformation (Dx) revenue totaled VND2,116bn in 1H21, accounting for 23.3% of the technology revenue and up by 19.3% yoy.
• Telecommunications segment continues to improve EBT margin to 21.9% in 1H21 from 19.3% in 1H20 thanks to better results of Pay-TV and postponement of capex investment in infrastructure due to Covid-19. There has been a recent good news for FPT telecom, which is that FPT TV will exclusively broadcasts the UEFA club tournament. Thereby, it can rapidly increase FPT telecom’s subscriber base.
We maintain a positive view on FPT’s 2021-22F outlook
We expect that FPT’s business lines will maintain their growth trajectory in 2H21F and FY22F with the introduction of vaccines. We forecast FPT’s FY21F revenue and net profit to grow 18.7% yoy and 21.0% yoy, respectively. For FY22F, we expect FPT will deliver a growth of 18.0% yoy in net profit
Risks and catalysts
Potential re-rating catalysts include the expansionary government fiscal policy and a successful M&A deal with an overseas technology company. Downside risks are fewer technology contracts if the pandemic prolong.

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