FPT’s Five Forces Analysis
FPT announced steady 2021 target growth at the top of double digits, with revenue expected
to grow by more than 16%. Target profit before tax (PBT) increased by 18% to over VND
6,200 billion. At the end of the first session of 2021, FPT recorded high revenue growth and
PBT at 14.4% and 22.3%, respectively, of which contributed 40% to total PBT and 55% to
total revenue. of the whole Group in the core business segment: Technology.
FPT's revenue from digital transformation in 2020 reached VND 3,219 billion, 31% higher
than the previous year. In the first quarter of this year, revenue growth from digital
transformation was 15% year-on-year.
From the micro-environment perspective, Porters’ five forces approach will be used in
assessing certain threats that may affect FPT company‟s profitability such as the threat of
the entry of new competitors, the threat of substitute products or service, the bargaining
power of customers/ suppliers, and the intensity of competitive rivalry.
FPT is the pioneer in the digital trend via development, application, and self- transformation.
Competitors in FPT’s technology segment such as Viettel, VNPT, CMC, VNG, Misa( when it
acquisition base.vn to change into the SMB-Server Message Block) and the indirect
competitors are Netflix, Microsoft, Xiaomi, Google.
Competitive forces models offer two-way video, on-the-fly interaction, and application
sharing. Such systems provide for interactive remote instruction systems, which link sites
over a high-speed intranet.
Dynamic pricing- A good example of dynamic pricing occurs in where prices vary and final
prices are determined by the forces of supply and demand. Dynamic pricing refers to prices
that are determined by market forces.
The business forces that are driving the transition from traditional education to the online
limited supply of faculty with specialized expertise. The business forces that are driving the
transition from traditional education to online learning are all of the following except a limited
supply of faculty with specialized expertise.
With strategy 4.0, FPT could adapt its position in the global market with the effect of the
bargaining power of suppliers. Supplier bargaining power affects the level of competition in
an industry, especially when there are many suppliers when there are only a few good
substitutes in the market, or the cost to switch raw materials is particularly high. By
increasing FPT’s visibility, FPT is less affected by the bargaining power of the suppliers.
Besides, the strategy also could improve the bargaining power of customers. Because even
when they improve the goodwill, they will respect the voice of bargaining power of
customers, so that it increases.
In addition to the competitive analysis, an analysis of FPT’s financial statement will be taken
into consideration. The method of financial statement analysis involves income statement,
asset and capital structure, financial ratio (profitability, operating efficiency, liquidity, and
solvency ratios), and cash flow analysis (operating, investing, and financing cash flows)
above mentioned analyses help to realize the second objective of this research, which is to
conduct a structured financial statement analysis that facilitates forecasting and valuation.
Secondary data will be collected from the FPT Company‟ website including financial
statements (balance sheet, income statement, and cash flow statement) and annual reports.
Besides, IT industry statistics and peer companies‟ financial indicators which served as input
for the relative valuation approach are collected from Stock68, Vietstock, VnIndirect, Viet
Capital HOSE, and HNX websites. For the sake of macro-environment and industry analysis,
researches on the overall economic overlook and Vietnam IT industry reports will be utilized.
Concerning the third objective- to illustrate step by step how to convert financial analysis and
forecast into a valuable outcome, output from the above analyses serve as inputs which in
turn is helpful in making a reasonable forecast of FPT’s future financial performance. The
forecast of sales, earnings, dividends will be conducted in order to provide the inputs for the
valuation model. I would like to utilize absolute and relative valuation approaches to
calculate the target price of FPT Company. Based on the derived value calculated, a
recommendation will be given whether to buy, sell, or hold FPT stock.
