We attended FPT's online analyst meeting on August 6, which discussed the company’s H1 2024 results and medium-term business outlook in 2024-25. Overall, management remains positive regarding FPT’s business prospects across segments, which are broadly in line with our expectations.

1. Technology  

Management anticipates an acceleration in signed revenue in H2 2024 due to solid demand, especially digital transformation (DX) across key markets. In H1 2024, FPT won 27 large deals (deals with USD5mn+ value), in which the company recorded a USD100mn+ won deal (2- or 3-year terms) in providing DX service with a Singaporean client in the aviation industry. Together with these deals, the company is gaining market share across global markets, and FPT is confident that the company will accelerate growth in H2 2024 as demand for AI remains quite strong despite global macroeconomic uncertainties. In addition, the company saw good progress in synergies with its latest acquisitions. For example, the acquisition of Japanese company NAC embraced FPT’s sales force and consulting capabilities in the marketing and CRM areas. Regarding concerns over JPY fluctuation, the company saw insignificant impact from JPY appreciation to its bottom line in 2024, as the company’s expenses and working capitals are borrowed in JPY at fixed interest rate terms as a natural hedge for revenue; in the case that the JPY/VND appreciates 10%, net margin will expand at around 50 bps, according to management. 

FPT plans to expand its GPUaaS business to Japan, to achieve USD100mn revenue in 2027 and deliver a PBT margin of more than 20% for this subsegment. To recap, FPT Cloud and Nvidia signed a USD200mn MoU on April 23, 2024, to establish an AI factory in Vietnam and FPT is granted access to Nvidia’s cutting-edge H100 chipsets, AI Enterprise application suite, and GeForce NOW cloud platform. The company will deliver comprehensive software, hardware, cloud computing, and generative AI solutions/services to enterprises across various industries. According to management, demand for GPUaaS in Vietnam is strong and FPT’s clients mainly come from the technology and financial sectors. FPT projects its GPUaaS revenue to achieve USD100mn in 2027, an IRR of 20-25% for 3-5 years of investment and operation, a PBT margin of 20-30%, and a utilization rate to reach 80% in 2025. FPT also plans to set up an AI factory/provide GPUaaS in Japan as the firm believes that demand for AI is robust and untapped in the region, while clients in APAC are facing data privacy requirements by local authorities to get access to FPT’s GPUaaS in Vietnam. The company is still in discussion with its partners in Japan, potentially renting local data centers to host this service, and has not committed any capex yet.

2. Telecom 

Management expects its data center business will continue to grow at a double-digit rate in the medium-term. In H1 2024, FPT saw weaker YoY non-broadband revenue due to the slowdown in paid TV business as macroeconomic uncertainty in Vietnam remains. Regarding its data center business, the phase I of the hyperscale data center in District 9, Ho Chi Minh City is planned to be implemented in Q3 2024, while phase II and III’s construction will be completed in 2025. The company is in an early phase to work on attaining land use rights for its future plan of a hyperscale data center in Hanoi. Per management, current data centers post robust ~25% YoY growth in revenue annually.

3. Education 

Management aims for high growth and commits to expanding its K12 network aggressively. In H1 2024, FPT Education revenue experienced solid growth of 24% YoY due to strong private education demand. The company also completed the FPT Education Complex project in Thanh Hoa, securing an investment certificate to build an education complex in Hue Province. FPT is also bringing AI training to its education curriculum with an expected 5,000 university students enrolling in this program.

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