FPT CORPORATION. Divestment Delay. FLASH NOTE I December 1, 2016 NOT-RATED

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FPT CORPORATION Divestment Delay FLASH NOTE I December 1, 2016 We attended the FPT Capital Market Day regarding 3Q2016 and 9M2016 business performance review. Key updates are highlighted as follows: 3Q2016 witnessed a good performance as revenue and EBT grew by +7% and +22% YoY respectively. Revenue exhibited the strongest quarterly performance since 2Q2015. and sector contributed most to both top line and bottom line growth. Consequently, FPT had consolidated revenue of VND 28,468 billion (-2.7% YoY). EBT was VND 2,011 billion and net income was VND 1,330 billion (+4.7% YoY). EPS accumulated to VND 2,900 (+4.1% YoY). We expect the company surpasses 2016 targets slightly when Software Outsourcing, Services and Integration System segments do well. NOT-RATED Son Nguyen, Senior Analyst sonnt@tvs.vn Trading Data and Key Metrics Ticker FPT Sector Listed since 13-Dec-2006 Price as of 29-Nov- 2016 VND 43,150 52-week range (VND 000) 47,900-42,700 Market cap (VND bn) 19,821 Shares outstanding (mn) 459.43 Free Float (mn) 364.26 10-day average volume 543,070 Trailing P/ BV (x) 2.2 Trailing P / E (x) 11 Source: TVS, Thomson Reuters Data Price Performance Chart Divestment delay in and Distribution segments disconnects 2016 s earnings. Distribution & segments continue incurring low margin compared with others in 9M2016 and it created the economic sense to divest them from FPT s portfolio. As per management guidance, the divestment deal may not be closed in 2016 as they can not reach agreement with the potential buyers to sell bundle of and Distribution. 30.00% 20.00% 10.00% 0.00% -10.00% 1-Dec-15 1-Jan-16 1-Feb-16 1-Mar-16 FPT 1-Apr-16 1-May-16 1-Jun-16 VNIndex 1-Jul-16 1-Aug-16 1-Sep-16 1-Oct-16 1-Nov-16 1-Dec-16 Healthy growth in Software Segment driven by oversea market development, particularly Japan. 9M-2016 witnessed a jump of revenue to VND4,169 billion (+27% YoY) and EBT to VND 604 billion (+30% YoY). Oversea markets also signify a very high profit margin as they possess only 15% of FPT s revenue but account for 30% of EBT. Among foreign markets, Japan plays an increasingly important role that represents the best foreign market in 2016 so far and an average 32% growth / year over the last 10 years. In 2017, management team expects Bangladesh, Korea and Europe will add more penny to their pocket when they have positive talk with some potential clients, such as Airbus. Table: 9M2016 Business Performance 9M-2016 9M-2015 % change (YoY) Revenue 28,468 29,257-2.7% EBITDA 3,224 2,873 12.2% EBT 2,012 1,969 2.2% EBT margin 7.10% 6.70% 6.0% Net income 1,330 1,270 4.7% EPS - adjusted (VND) 2,900 2,787 4.1% Source: TVS, Thomson Reuters Data Price Perf. (%) 3M 12M YTD Absolute -2.9 3.1 2.9 Source: TVS research, Thomson Reuters Data Company Description Founded in 1988, FPT Corporation is a Vietnamesebased information technology conglomerate. The company operates in various sectors including,, Trading,, and Education. FPT expands into 19 countries and is among one of the most well-known Vietnamese companies. Revenue Structure 58% 2% % total revenue 23% 17% Source: Company data, TVS research Distribution & Thien Viet Securities JSC (TVS) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see more important disclosures in the last pages.

2 9M2016 BUSINESS PERFORMANCE UPDATE and sector contributed most to both top line and bottom line growth. Q3 and 9M-2016 performance. Q3-2016 recorded VND 10,650 billion (+7% YoY) in revenue and VND 754 billion Earnings Before Tax (+22% YoY). This was much better than the previous quarter when EBT had gone down 7% YoY. Q3 s sales were aided by strong growth from sector (EBT VND320 billion, +18% YoY) and cost reductions from sector (EBT292 billion, +45% YoY). Company s earnings increased by 29% YoY to reach VND667 billion. Q3 s revenue exhibited the strongest quarterly performance since Q2-2015. Gross profit maintained a considerable 21% in recent quarters but net profit margin felt to 4%. Figure 1: Quarterly performance Revenue Net income 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 14,713 11,744 10,476 10,650 9,729 8,703 9,213 425 457 389 662 346 515 468 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 FPT Play continues suffering loss due to cost allocation. We expect the company surpasses 2016 target slightly when Software Outsourcing, Services and Integration System segment do well. Working capital would be better in next year as the company focuses to enhance inventories turnover. Capex in 2016 is projected to be lower than the previous year because there have been setbacks at telecom projects and construction of office buildings. FPT Play is also projected to suffer loss in 2016 (-VND 170 billion) and 2017 due to 2-year cost allocation, although the performance is hoped to slightly improve next year. Over 9 months, FPT had consolidated revenue of VND 28,468 billion (-2.7% YoY). EBT was VND 2,011 billion and net income was VND 1,330billion (+4.7% YoY). EPS accumulated to VND 2,900 (+4.1% YoY). 9-month earnings went up 4.7% while revenue was reduced 2.7% thanks to the high net profit of Q2. 9M s growth was made possible due to good performance at sectors including Software outsourcing, services, and Integration System. Based on current results, we expect the

3 company to just slightly surpass last year s performance (VND 38,707 billion revenue VND 2,851 billion EBT). Table 1: Financial summary (VND billion) 9M-2016 9M-2015 % change (YoY) Revenue 28,468 29,257-2.7% EBITDA 3,224 2,873 12.2% EBT 2,012 1,969 2.2% EBT margin 7.10% 6.70% 6.0% Net income 1,330 1,270 4.7% EPS - adjusted (VND) 2,900 2,787 4.1% Figure 2: Quarterly Gross profit margin Figure3: Quarterly Net profit margin Gross margin Profit margin 25% 20% 15% 15% 20% 21% 19% 21% 21% 7.0% 6.0% 5.0% 4.0% 3.9% 4.0% 6.3% 4.0% 5.6% 4.4% 10% 11% 3.0% 2.9% 5% 2.0% 1.0% 0% 0.0% It is very unlikely that the selling of FPT Trading/ will go through in 2016. Distribution & segment. Across all sectors, Distribution & accounted for the biggest share of revenue (58%), followed by (23%) and (17%). Yet, Distribution & incurred low margin while and contributed most to the firm s EBT, 42% and 32% respectively. The company had to set provision for inventories of Nokia Lumia in Q3 and will continue to do so in Q4. Number of stores continued to expand to 355 stores (47% YoY), achieving 113% plan of 2016. FPT wants to sell the two sectors in one block but unable to finish the deal. FPT may have to revive the plan and split into 2 separate trades in Q1-2017, but the firm asserts its attention to hold maximum 49% of the shares after exit.

4 Cooperation with dairy company expected to add more revenue and diversify concentrated risks. Regarding the cooperation with VNM, 30-40sqm out of 120-150sqm at each store would be reserved to sell dairy products. FPT presents two main reasons for this cooperation: FPT would have another revenue stream from VNM s products while fixed costs are reduced. Risks are low and support from VNM is high. FPT does not have to suffer loss period when entering a new market (often 2-3 years after opening). At the moment, revenues from dairy products at FPT stores have doubled the break-even point and the stores get profit immediate after opening. This cooperation would have to yield at least a profit margin equal to current that of FPT retails. Maximum in the next 2 years, handset market would reach maturity point. This pushes FPT to find a new market to diversify. Generous offers from VNM did not trigger this cooperation; rather it was initiated by FPT s need to change. Cooperation with VNM is just the pilot project. If the plan goes well, FPT would open independent stores and enter into other new sectors. Figure 5: Revenue breakdown (VND billion) Figure 6: Revenue breakdown (%) Revenue (VND billion) % total revenue 572 2% 6,641 23% 16,333 4,922 Distribution & 58% 17% Distribution & Education -Others Education -Others Figure 7: Earnings before tax breakdown (VND billion) Figure 8: Earnings before tax breakdown (%) EBT % EBT 113 6% 397 649 20% 32% 853 Distribution & Education -Others 42% Distribution & Education -Others

5 Software Segment. Apart from Distribution &, we see that Software Outsourcing and Broadband were the two sub-sectors contributing the most to the firm revenue in the first 9 months, VND 3,666 billion and VND 3,171 billion respectively. Healthy growth in software segment driven by oversea market development, particularly Japan. Foreign markets demonstrated a desirable development. 9M-2016 witnessed a jump of revenue to VND4,169 billion (+27% YoY) and EBT to VND 604 billion (+30% YoY). Oversea markets also signify a very high profit margin as they possess only 15% of FPT s revenue but account for 30% of EBT. Among foreign markets, Japan plays an increasingly important role that represents the best foreign market in 2016 so far and an average 32% growth / year over the last 10 years. It is on track to achieve USD100 million revenue this year. Bangladesh and Korea are rising stars which have potential to contribute a bigger part in coming years. EU market will be promising in 2017 as FPT is in progress of negotiating with big potential clients. EBT increased quicker than revenue in which 60-65% were recurring revenue. The company has attempted to reduce currency risk by hedging currency exchange. Overall, fluctuation of JPY affected 7-8% of FSoft revenue in 2016. Revenue from domain and automotive accounted for 40% and 15% respectively. Bangladesh, Korea and EU markets expected to add more to top line in 2017. In 2017, revenue from EU market is expected to make a big jump as negotiations with big clients such as Airbus in progress. The company does not deem China as competition threat as the neighbor nation faces increasing salary. Instead, the Vietnamese software developer would take advantage of China s shortage of human resource to gain outsource contracts by continually boosting human capital, both qualitatively and quantitatively. Impacts of the US presidential election on the company are still unclear. There are possibilities that visas may be tightened and wages may have to go up. Yet, the Management will not release responses until the US new policies are clearer. Figure 9: Earnings before tax breakdown (VND billion) Figure 10: Earnings before tax breakdown (%) 9M-2016 Revenue (VND billion) EBT (VND billion) 454 476 2,006 730 502 Domestic market Japan 604 Domestic market 24,299 US EU 1,408 Overseas markets APAC Emerging markets

6 Table 2: Sectors performance in 2015-2016 experienced a good growth. Costs of installation of fiber-optic cables have been decreased. Japan market witnessed the strongest growth of 50%YoY, followed by Pacific markets (+30%YoY) and EU markets (+10%YoY). The USD85 billion acquisition deal between AT&T and Time Warner played a contributing factor in - 10% YoY growth in US market as the newly-merged company aims to cut costs across IT contractors including FPT. Integration System (IS) suffered setbacks from traditional clients. Government has tightened fiscal policies and cut budgets scheduled projects. Moreover, big clients in banking system have been carrying out systematic reform. This also caused reduction in spending. Nevertheless, IS sector welcomed new implementations of Intelligent traffic system at Hanoi-Lao Cai highway or other projects to recognize number plates and detect car density in HCMC. Revenue EBT Q3-2016 Q3-2015 9M-2016 9M-2015 Q3-2016 Q3-2015 9M-2016 9M-2015 1,307 1,099 3,666 2,901 207 167 556 452 949 615 1,838 1,606 232 288 544 622 84 33 93 152 209 194 593 609 1,113 969 3,171 2,700 505 380 1,408 1,006 253 220 676 694 126 106 343 269 67 52 177 121 Distribution 2,315 2,007 5,607 5,424 1,037 2,073 3,358 8,076 72 91 240 391 2285 1918 6544 5170 347 96 824 419 59 38 157 109 Education 165 151 464 412 36 37 122 114

7 Table 3: Sub-Sectors performance in 2015-2016 Distribution Sub-sectors Revenue Q3-2016 Q3-2015 9M-2016 9M-2015 Q3-2016 Q3-2015 9M-2016 9M-2015 Software outsourcing 1,307 1,099 3,666 2,901 207 167 556 452 System integration 949 615 1,838 1,606 Software solutions 232 288 544 622 IT service 209 194 593 609 Broadband 1,113 969 3,171 2,700 Leased-lines & others 505 380 1,408 1,006 EBT 84 33 93 152 253 220 676 694 Online advertising 126 106 343 269 67 52 177 121 IT distribution 2,315 2,007 5,607 5,424 Mobile Manufacturing & Distribution 1,037 2,073 3,358 8,076 2285 1918 6544 5170 Online retail 347 96 824 419 72 91 240 391 59 38 157 109 Education Education 165 151 464 412 36 37 122 114

8 FINANCIAL SUMMARY Earning Model (VNDbn) 2011A 2012A 2013A 2014A 2015A Balance Sheet (VNDbn) 2011A 2012A 2013A 2014A 2015A Net sales 25,370 24,594 27,028 32,645 37,960 Cash and equivalents 2,902 2,319 2,751 4,336 3,585 Cost of sales 20,412 19,902 21,489 26,456 30,466 Financial investment 862 662 1,443 1,428 2,617 Gross profit 4,958 4,692 5,539 6,189 7,494 Accounts receivable 4,023 4,202 4,925 5,379 6,313 Selling expenses 2,396 2,461 3,203 3,854 4,559 Inventory 3,276 2,700 3,329 4,573 5,268 General administration expenses 0.00 0.00 0.00 0.00 0.00 Prepaid expenses, other CA 310 347 460 993 1,176 Other operating income/(expenses) 5 34-133 -12 4 Total current assets 11,373 10,229 12,908 16,709 18,959 EBITDA 2,935 2,597 2,913 2,894 3,664 Property and equipment Depreciation & Amortization - - - - - At cost 3,139 3,938 4,672 5,891 7,632 EBIT 2,559 2,198 2,469 2,347 2,931 Less accumulated depreciation -1,257-1,590-1,869-2,355-2,966 Net interest income/(expenses) 0.00 0.00 0.00 0.00 0.00 Net property and equipment 1,883 2,349 2,803 3,536 4,666 Net investment income 36 33 22 41 - Net intangibles 485 485 504 635 319 Others (recurring) 65 53 38 34 39 Total investments 865 696 707 810 728 Pretax Profit 2,502 2,407 2,516 2,459 2,851 Other long - term assets 338 449 648 969 1,374 Income tax 422 421 450 380 413 Total Assets 14,943 14,209 17,571 22,658 26,046 Tax rate (%) 17 17 18 15 14 Account Payables 1,339 1,809 2,200 3,019 2,815 Minorities 705 912 1,045 1,344 1,601 Short-term debt 0 0 0 6,608 8,033 Net Income 2,079 1,985 2,065 2,079 2,438 Other current liabilities 7,137 5,010 6,869 3,343 4,119 EPS (basic VND, reported) 4,375 3,941 3,544 3,237 3,814 Total Current Liabilities 8,475 6,820 9,069 12,970 14,968 Weighted shares outstanding (mn) 384 391 454 455 456 Long-term debt 0 22 55 142 614 Other long-term liabilities 946 1,186 1,238 1,633 1,883 Common dividends declared - - - - - Total long-term liabilities 947 1,208 1,293 1,775 2,497 DPS (VND) 1,190 1,322 1,552 1,437 1,652 Dividend Payout ratio (%) 27% 34% 44% 44% 43% Stockholders' equity 5,521 6,182 7,209 7,913 8,581 Dividend cover (X) 3.68 2.98 2.28 2.25 2.31 Common Equity 2,161 2,738 2,752 3,440 3,975 Treasury shares -1-1 -1-1 -1 Growth and Margin (%) Capital surplus 50 49 49 49 49 Sales Growth (%) 27% -3% 10% 21% 16% Retained earnings 3,173 3,181 4,207 4,268 4,395 EBITDA Growth (%) 26% -12% 12% -1% 27% Budget sources and other funds 138 213 201 157 162 EBIT Growth (%) 28% -14% 12% -5% 25% Minority interest 705 912 1,045 1,344 1,601 Net Income Growth (%) 23% -5% 4% 1% 17% Total liabilities and equity 14,943 14,209 17,571 22,658 26,046 EPS Growth (%) 19% -10% -10% -9% 18% Capitalized leases - - - - - Gross Margin (%) 20% 19% 20% 19% 20% Capital employed 6,468 7,390 8,502 9,688 11,078 EBITDA Margin (%) 12% 11% 11% 9% 10% EBIT Margin (%) 10% 9% 9% 7% 8% Ratios (%) Net Income Margin (%) 7% 6% 6% 5% 5% ROE (%) 35.39 26.32 24.01 21.59 23.41 ROA (%) 15.26 13.62 13.00 10.34 10.01 Cash flow Statements (VNDbn) 2011A 2012A 2013A 2014A 2015A ROIC (%) 35.96 32.44 29.64 26.32 27.36 Pre-tax Income 2,502 2,407 2,516 2,459 2,851 Inventory days 51.32 54.94 51.34 54.66 59.11 Adjustments for: Receivable days 53.03 61.20 61.80 57.76 56.37 Depreciation and amortization 376 400 443 547 733 Payable days 22.31 28.95 34.14 36.10 35.04 Change in inventories -834 584-644 -1,312-693 Asset Turnover (x) 1.9x 1.7x 1.7x 1.6x 1.6x Change in trade receivables -291 105-687 -681-864 Net debt/equity (x) 0.3x 0.1x 0.1x 0.3x 0.5x Change in trade payables 974-115 618 1,086 395 Interest cover - EBIT(x) 0.1x 0.1x 0.0x 0.1x 0.1x Other operating cash flow -880-971 -846-949 -1,267 Cash flow from operations 1,847 2,410 1,400 1,151 1,156 Valuation (Multiples) Net Capital expenditure -465-716 -920-1,441-2,090 EV / EBITDA (x) 3.7x 3.5x 4.2x 6.5x 6.4x Acquisition - - - - - P/E (x) 5.5x 5.4x 8.0x 11.2x 11.0x Divestures - - - - - Dividend Yield (%) 4.95 6.21 5.45 3.96 3.93 Other investments, net 572 262 156 190 227 P/B (x) 1.7x 1.4x 1.6x 2.1x 2.2x Cash flow from investing 107-253 -1,576-1,469-2,901 Equity issued 42 41 17 16 27 Net borrowings 198-1,793 1,341 2,643 1,941 Dividends to shareholders -728-988 -750-756 -974 Cash flow from financing -487-2,740 608 1,903 993 Net cash flow 1,466-583 432 1,585-752 Opening cash 1,436 2,902 2,319 2,751 4,336 Notes: CA = current assets; CL = current liabilities Closing cash 2,902 2,319 2,751 4,336 3,585 Source: Thomson Reuters data, Thien Viet Securities model

9 ANALYST CERTIFICATION I, Nguyen Thanh Son, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies or its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. RATING and VIEWS Buy (B), Neutral (N), Sell (S) Analysts recommend stocks as Buys or Sell based on his own views. Being assigned a Buy or Sell is determined by as total stock s return (TSR) potential that represents the price differentials between the current share price and the price target expected during the time horizon plus expected dividend yield. Any stock not assigned as Buy or Sell is deemed Neutral. TVS Investment Research: Equity Rating Definitions 12-month rating Definition Buy Total Stock s Return Potential > 15% Neutral Total Stock s Return Potential between (-15%) and 15% Sell Total Stock s Return Potential < (-15%) Short-term rating Definition Buy Stock price expected to rise within three-month because of a specific catalyst or event Sell Stock price expected to rise within three-month because of a specific catalyst or event Not-rated The investment rating and target price, if any, suspended as there is not a sufficient fundamental basis for determining an investment rating or target. DISCLAIMER Copyright 2016 Thien Viet Securities JSC (TVS). ALL RIGHT RESERVED. This research report is prepared for the use of TVS clients and may not be redistributed, retransmitted or disclosed as a whole or partially in any form or manner without the prior written consent of TVS. The information herein is obtained from various sources and TVS does not guarantee its accuracy. Neither the information nor any opinions expressed in this publication constitutes a buy or sell recommendation on any securities or investment. TVS therefore does not take any responsibilities for any investor s decisions.

10 THIEN VIET SECURITIES JOINT-STOCK COMPANY HO CHI MINH 63A Vo Van Tan St, District 3 Floor 9, Bitexco Nam Long Building Tel: +84 (8) 299 2099 Fax: +84 (8) 299 2088 HA NOI 22 Lang Ha, Dong Da TDL Building Tel: +84 (4) 220 3228 Fax: +84 (4) 220 3227 RESEARCH DEPARTMENT Duy Nguyen (Mr.), Manager Equity Capital Market duynh@tvs.vn Trung Dong (Mr.), Associate Consumer Goods trungdq@tvs.vn Trang Vu (Ms.), Senior Analyst Basic Material trangvtt@tvs.vn Bach Nguyen (Mr.), Analyst Oil & Gas bachnkv@tvs.vn Son Nguyen (Mr.), Senior Analyst Real Estate sonnt@tvs.vn Quang Luong (Mr.), Analyst Team Support quanglt@tvs.vn INVESTMENT BANKING ib.hcm@tvs.vn BROKERAGE DEPARTMENT brokerage.hcm@tvs.vn brokerage.hn@tvs.vn