► Stock market commentary October 25: VN-Index may retest the support zone of 1,240 - 1,250 points
Recommendation to increase weight for FPT stocks
According to Agribank Securities Company (Agriseco), in the third quarter of 2024, FPT Corporation (FPT) recorded pre-tax profit of VND 2,913 billion, continuing to be the quarter with the highest profit ever. Accumulated in the first 9 months of the year, revenue reached VND 45,241 billion (+19% over the same period), pre-tax profit reached VND 8,111 billion (+20% over the same period), completing 75% of the yearly plan. The main growth driver came from the foreign technology services segment with a 29% increase in revenue.
Technology Sector: Revenue in the first 9 months of 2024 reached VND 27,964 billion (+24% YoY), profit before tax (PBT) reached VND 3,812 billion (+22% YoY). The foreign IT sector continued to maintain a growth rate of 29% YoY, accounting for 81% of technology revenue thanks to high growth rates from the Japanese and APAC markets. Newly signed revenue reached 1 billion USD and continued to win bids for 33 large projects over 5 million USD, up 65% YoY. Digital transformation revenue grew strongly by 35% YoY thanks to focusing on developing Cloud, AI/Data Analytics.
The Telecommunications sector grew steadily with revenue reaching VND12,800 billion (+10% YoY), mainly thanks to the good growth of broadband Internet services. Profit margin improved due to reduced operating costs and recovery of the digital content segment.
Education Sector: Revenue grew by 16% year-on-year to VND5,155 billion. FPT is building educational complexes in provinces and cities, expanding training in new fields such as artificial intelligence, semiconductors, and automobile industry.
Long-term prospects when promoting the development of AI, semiconductors, and automotive software: FPT is gradually preparing for the above orientations through M&A deals with technology companies in the US, Japan, and France; cooperating with large global corporations: Nvidia, Microsoft; building AI Factories in the US and Singapore; opening an artificial intelligence center in Vietnam; establishing FPT Automative. FPT also opens new training programs in the semiconductor microchip industry and plans to provide 10,000 technology personnel by 2030.
Q3 and 9M 2024 business results maintain a growth rate of 20% compared to the same period in 2023, in line with our expectations. FPT is trading at P/Ef 2024 at 24.1x, higher than the average of the previous 5 years. The stock price has increased by more than 60% since the beginning of the year, however, Agriseco still assesses FPT as an attractive long-term investment opportunity with the development orientation of AI - semiconductors - automotive software. Therefore, Agriseco recommends increasing the proportion of stocks with a target price in 2025 around VND 150,000 - 160,000/share.
Neutral recommendation for BWE stock
Vietcombank Securities Company (VCBS) maintains a neutral recommendation on Binh Duong Water - Environment Joint Stock Company - BWE (BWE), with an unchanged target price of VND49,500/share (12% upside potential).
BWE announced preliminary business results for the first 9 months of 2024 with revenue reaching VND 2,901 billion (up 11% year-on-year, completing 70% of the yearly plan), profit after tax reaching VND 468 billion (down 5% year-on-year, completing 67% of the yearly plan).
In general, revenue from water supply and revenue from water treatment increased by 11% and 10.6% year-on-year, respectively. Water consumption in Binh Duong province reached 149 million m3 - 822,000 m3/day and night (up 9%, completing 77% of the annual plan). Profit after tax decreased slightly due to increased financial expenses - exchange rate difference loss because about 57% of BWE's total outstanding debt was financed from foreign sources, mainly USD (VND 3,057 billion out of total short-term/long-term outstanding debt of VND 5,326 billion).
Business outlook: Positive outlook from water consumption demand; Roadmap for water price increase in Binh Duong expected to be issued soon; Continue to promote M&A.
In particular, on October 23, Saigon - Can Tho Water Joint Stock Company held an extraordinary General Meeting of Shareholders to approve the election of the Board of Directors - BWE and Mr. Nguyen Hien Triet to participate in the investment with the respective ratio of 65% and 35% of charter capital, and at the same time approved the capital increase plan - offering shares to existing shareholders to mobilize 50 billion VND to continue investing in completing the Saigon - Mekong water plant with a capacity of 25,000 m3/day and night, increasing the capacity to 50,000 m3/day and night.
Source: https://vov.vn/thi-truong/chung-khoan/mot-so-co-phieu-can-quan-tam-ngay-2510-post1130733.vov
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