KIS Vietnam Security Corporation recently forecasted that software exports will be the growth engine for the technology sector after the divestment of FPT from retail and trade.
KIS has just released the stock analysis report of FPT. Accordingly, software exports are the main growth engine for the technology sector after the divestment of FPT from retail and commercial sectors.
In the first quarter, FPT Software signed a USD 100 million contract with Innogy SE a member of European energy company RWE. The contract is the biggest ever in 20 years, since Việt Nam’s largest software business was established in 1999. Innogy SE, which has a network of 23 million clients worldwide, earned 44 billion euro in 2016. Under the contract, FPT Software will provide solutions based on SAP technology, Internet of Things and digital conversion platforms for Innogy SE in the period 2018-24.
Meanwhile, Japan continues to be the key market for outsourcing services. “FPT expects the software outsourcing business to earn USD 1 billion in revenue by 2020. FPT also opened its sixth office in Japan in March,” KIS highlighted.
FPT Software announced on March 20 that it has signed a re-seller agreement with GE Digital to commercialize the latter’s software solutions. According to the agreement, GE Digital has officially named FPT Software an authorized re-seller of products and services in South Asia, specifically for GE Digital’s Automation, MES, Platform and APM Classic solutions. FPT Software will also provide professional services, including acceleration plans focusing on food and beverages, consumer packaged goods, heavy industry and the power industry. The two companies will collaborate to deploy activities from pre-sales to sales and marketing and initially deliver technical support to customers in Vietnam, Singapore, Malaysia, Thailand, the Philippines and Indonesia.
KIS shared that outsourcing is a large and stable market for technology companies. According to the Information Services Group, KIS estimated that the global outsourcing market in 2017 will reach a record of USD 64.3 billion.
“In the outsourcing service sector, the major expenses for software development and maintenance are the areas in which FPT is aiming to expand and grow overseas,” KIS noted.
In 2017, FPT Software achieved revenue of USD 275 million. With a high growth rate of about 30% per year, KIS estimated that software export sector of FPT can reach VND7.5 trillion (USD 327.4 million) in 2018.
According to KIS, the telecom sector continues to be the key growth driver of FPT in terms of number of subscribers in 2017, up 19%, helping FPT to be one of three largest Internet service provider in Vietnam.
Regarding to FPT IS, in the first quarter, the total value of signed contracts in software solutions and IT services reached VND 593 billion (USD 25.9 million), down 52% over the same period last year. The total value of contracts, which was signed but not implemented, reached nearly VND 3 trillion (USD 131 million). KIS estimated that revenue from this segment of FPT in 2018 will remain and reach VND 5 trillion (USD 218.3 million).
In the education sector, KIS believes that FPT Education continues to grow and aims to become a diverse education system. With this orientation, FPT Education has reached an agreement with Skillking India to cooperate in training Digital Marketing in Vietnam. With the education foundation from FPT Education and 25 years experience in Digital Marketing training from foreign partners, FPT Skillking pioneered the use of modern teaching and learning methods for students through.
In 2018, KIS forecasted that FPT will achieve net sales and net profit of VND 22.5 trillion (USD 991.1 million) and VND 3 trillion (USD 132.1 million), down 47% and 13%, respectively, due to the absence of profit from the divestment.