Employees of FPT, the largest software company in Vietnam, at an online meeting. (Photo courtesy of the company)Pricesof Vietnam’s giant FPT Corporation (FPT) stocks fluctuate in a narrow range and havenot exceeded three-digit numbers so far, although the company recorded strongincreases in business results over the quarters.
FPT,the largest software company in Vietnam, achieved revenue of 28.21 trillion VND(1.24 billion USD) in the first 10 months of 2021, up 19.4 percent, and profitafter tax of 4.3 trillion VND, up 20 percent over the same period in 2020.
Revenuefrom new contracts in the technology segment reached 19.5 trillion VND, up 27 percent.
Atthe current price, a share's price/earnings (P/E) ratio is approximately 23times, much lower than the P/E of technology corporations around the world.
Contraryto FPT, CMG shares of The CMC Corporation, the second-largest Information andCommunications (ICT) group in Vietnam, are traded at quite high prices. At theend of November this year, CMG was priced at 62,500 VND per share, P/E was upto nearly 40 times. However, the liquidity of these stocks is very low, at lessthan 100,000 units per session.
CMG'sshare price has increased sharply, nearly doubling compared to the beginning of2021. Many large shareholders wanted to sell out, such as Agribank whichregistered to sell more than 3 million shares.
Interms of operations, after partnering with strategic shareholder Samsung SDS,CMC Group has not made any breakthroughs to show that the partnership has begunto bear fruit. The two sides need time to resolve the challenges in culturaldifferences and working methods.
Apartfrom the two giants above, there are other small-cap technology enterprises inthe market such as Joint Stock Company For Telecom & Informatics (ICT),Electronics Communications Technology Investment Development Corporation (ELC),Innovative Technology Development Corporation (ITD) and Information andNetworking Technology JSC (CMT).
Theseenterprises have charter capital from 100 billion VND to 500 billion VND, withstock prices fluctuating around 2x. There are stocks with P/E of justaround 5 times, which is relatively low in the valuation of stocks in thetechnology industry.
Somenewbies in the technology sector have used the “tech label” to tell theircompelling stories, pushing the stock prices upwards.
SimcoSong Da Joint Stock Company (SDA) reported shares increasing 14 times inthree months from 4,485 VND per share to 75,000 VND per share.
Thesharp rise was attributed to the company’s promotion of artificial intelligenceapplications in the COVID-19 tracing product, and a series of other technologysolutions. However, with poor business results, SDA stock then flipped and fellto the floor prices for many sessions.
Anothertechnology company, Sai Gon Telecommunication & Technologies Corporation(SGT), was known for technology but has shifted to the real estate segment.Thanks to some industrial park projects, the market prices of SGT have risenfrom 7,000 VND per share to over 30,000 VND per share.
Brightfuture
Inthe past five years, Vietnam's information technology industry has madegreat progress with an average growth rate of 26.1 percent per year, becomingone of the key economic sectors with large revenue contribution to the Statebudget.
Anumber of small-scale technology businesses are starting to transform andactively seeking out new business activities.
JointStock Company For Telecom & Informatics (ICT) earns some 2 trillion VND inrevenue and 75 billion VND in after-tax profit each year. It has also becomethe operator and provider of a phone-based lottery sales system for VietnamLottery Company (Vietlott) with sales via mobile apps reaching more than 1trillion VND per year.
MobileMoney and 5G telecommunications networks are now the two important trends thatpositively affect the long-term prospects of telecommunications businesses.Information technology businesses are expected to benefit from publicinvestment and the Government applying digital transformation to"Make in Vietnam" products.
Theinformation technology package for 11 routes of the North-South expressway willhave a total value of 4 trillion VND, focusing on services such as intelligenttraffic, operating supervision, and automatic toll collection. The businesseson the stock market that are expected to be beneficiaries are PioneerTechnology and Elcom.
Digitaltransformation for uninterrupted businesses in a difficult context such as thepandemic will continue to be a big trend in the future. Deloitte's survey of2,750 private businesses found that business leaders around the world believethat the impacts of the pandemic on a large scale will not only last for thenext 12 months, but for the next several years.
Inthis context, businesses must renovate in all aspects, with developmentstrategies focusing on improving labour productivity and digitaltransformation.
About69 percent of businesses in the survey said that they had significantlyaccelerated the digital transformation process during the crisis, with thebelief that digital transformation will ensure trading is uninterrupted, alongwith many other benefits such as improved customer experience, increased sales,enhanced manageability and reduced costs, thereby bringing higher profits./.
VNA
