Currently, information technology businesses in Vietnam mainly
deploy software services based on the subscription model, bringing more
recurring and stable revenue. Even though the pandemic is over, this
group's revenue and profit are still relatively positive...
Vietnam's information technology (IT) workforce is highly adaptable to
the development of new technologies. A large number of young employees,
with good technical backgrounds, continuously improve their programming
skills to a higher level. In addition, IT organizations train and
educate about 50,000 programmers every year in addition to a proficient
human resource of 400,000 IT engineers.
Also with competitive advantage in cost. The cost of hiring a software
developer in Vietnam ranges from 10-25USD/hour, while other Asian
countries have higher salaries, with the average in China being
18-50USD/hour (for programming). low-level programmer), in Thailand is
from 13-40 USD/h, in the Philippines is 17.5-42.5 USD/h.
Government support policy for IT companies. Decision No. 2205/QD-TTg
approving the Intellectual Property and Cyber Security Development
Program. Growth decelerates in software powerhouses such as China and
Ukraine due to the unstable business environment, which brings great
opportunities for IT businesses...
Global economic
growth is more negative than forecast, leading to new revenue cuts and
delays in implementing new IT projects. IT labor costs increase faster
than expected because Vietnam still lacks 150-200 thousand IT engineers
each year in the period 2022-2024. These are challenges for domestic IT
businesses.
Besides, major economies, except
China, are expected to have a “soft landing” in 2023, which will reduce
overall IT spending. But there is still no sign of a decline in IT
projects and budgets.
Since the pandemic,
businesses have leaned towards OPEX-type IT spending (e.g.
subscription-based Cloud services) to improve operational efficiency and
productivity, while significantly cutting infrastructure spending.
on-site infrastructure (which requires large CAPEX). The falling share
of CAPEX IT spending in total IT spending makes spending in specific
areas of equipment, hardware, and on-premises infrastructure more
vulnerable to economic weakness, as cuts Reducing these costs is
relatively easy when businesses want to save money...
FPT: Currently, the international IT services segment, (especially the
US and EU) will grow more slowly in 2023 when high inflation in
developed markets will slow down IT spending, while businesses Revenue
from the Japanese market is likely to accelerate in 2023 thanks to work
volumes and a recovering JPY.
The long-term prospects for this segment are still attractive because FPT
's competitive advantage of low costs will help ensure the number of
new contracts in the future and high demand as businesses will still
promote digital transformation.
With the domestic
IT segment, FPT's revenue can record high growth due to expectations
that demand from banks will recover and the digital transformation
progress of government agencies will also accelerate.
ELC: The need to invest in smart transportation systems (GTTM) for
upcoming expressways under the North-South expressway project and
digital application in the transportation systems of major cities will
Promoting growth for ELC in 2023.
In the period
2023-2026, ELC's GTTM segment will generate an average revenue of VND
600 billion, supported by GTTM investment demand for highways (including
ETC) and cities, contributing nearly VND 60 billion. % into ELC's
revenue structure.
Risk: The progress of completing the North-South Expressway is slower than expected or ELC
does not win the GTTM packages of these expressways as expected.
Investments in other units (because ELC plans to develop the Real Estate
segment), if made, will reduce the group's operating efficiency.
Investors can open new purchases around the support zone of
10,500-11,000 VND/share to hold for a long-term goal of at least 1 year
when ELC reaches the mark of 22-25,000 VND/share.
CMG: Telecommunications sector, the main contributor to CMG profits - is
ready for the explosion of the Cloud services market. CMG owns an
extensive telecommunications infrastructure, including a domestic fiber
optic cable system connected to the international marine fiber optic
cable network and three Tier-3 DCs. The new DC with high technical
standards in Tan Thuan will help significantly increase CMC Telecom's
capacity (up to 1,800 racks), capturing the rapid growth of demand for
Cloud services in Vietnam.
CMG's 2023 P/E
valuation is 14.4x, recommending buying when CMG price drops sharply.
Risk of capturing IT spending from foreign customers and
slower-than-expected service transition (moving to services higher in
the IT value chain) of the Technology & Solutions segment. Investors
can open a new purchase around 40,000 VND/share and cut losses when CMG
breaks this price range and hold for a longer target when CMG reaches
the target of 50-55,000 VND/share.
Mr Khoi
--
Viet Business Forum
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