We attended FPT's online analyst meeting on November 12, which discussed the company’s 9M 2024 results and medium-term business outlook for the remainder of the year and in 2025. Overall, management is confident in delivering robust results across segments in 2025, which is in line with our expectations.

1. Technology  

Management anticipates a stronger recovery in the US market in 2025, driven by increased IT spending under a Trump presidency. In Q3 2024, FPT recorded a new digital transformation (DX) contract (three-year term) of USD225mn with an existing US client, leveraging FPT’s strong capabilities and commitment to its clients. Management believes this contract will accelerate FPT’s signed revenue growth in the US market in Q4 2024. Along with the contract, FPT has been gaining market share globally, with value per contract significantly increasing in recent years. As a result, FPT is confident in securing larger contracts in the future. Additionally, under Trump’s presidency, FPT anticipates rising IT spending in the US. Management does not foresee any significant risk from potential increases in tariffs on IT service exports to the US. In contrast, stricter visa regulations for foreign workers may present challenges for staffing IT service companies in the US, impacting human resource allocation. Nevertheless, this should not only be a challenge for FPT but also its Indian peers.

FPT to launch GPUaaS business in both Japan and Vietnam and deliver an EBITDA margin of roughly 50% for this subsegment in 2025. FPT expects capex investment of USD50mn in both the Japan and Vietnam markets for its GPUaaS business, with the possibility of another USD50mn in each country in 2026 if conditions are favorable. Management projects GPUaaS revenue to reach USD100mn, with a utilization rate of 90% and an EBITDA margin of around 50% in 2025. In Japan, the GPUaaS business will be bundled with AI services, with pricing expected to be in line with local providers. FPT has completed the first phase of GPUaaS procurement, acquiring Nvidia H100/GH200 hardware for its operations in Japan and Vietnam, and will begin taking pre-orders on November 13, 2024. 

2. Telecom 

Management plans to enhance its pay TV business and launch its D9 data center in 2025. In 9M 2024, FPT implemented cost-cutting measures to navigate a challenging macroeconomic environment, which helped the company to widen the PBT margin of the telecom services segment. By the end of 2024 and into 2025, FPT plans to invest in new licenses to boost advertising capabilities, diversify content, and launch a new interactive platform targeting younger demographics for its pay TV business. For its data center business, FPT’s D9 data center has faced delays due to logistical challenges in securing equipment this year, and FPT will launch this data center in 2025 at the latest.

3. Education 

Short-term industry headwinds led to single-digit enrollment growth in 2024, but FPT expects enrollment growth to regain momentum in 2025. In 2024, FPT Education faced temporary challenges due to (1) reduced spending on private education amid a difficult macroeconomic environment, and (2) expanded enrollment quotas for IT and technical courses at public universities. Management anticipates a recovery in enrollment in 2025, which they attribute to improving economic conditions and a stronger focus on branding for this business segment.

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