Dissertation submitted in partial fulfillment of the Requirement for the MSc in Finance FINANCE DISSERTATION ON COMPANY ANALYSIS AND VALUATION OF VIETTEL GLOBAL JSC (VGI), FPT TELECOM JSC (FOX), FPT ONLINE JSC (FOC), ELCOM TECHNOLOGY COMMUNICATION CORPORATION (ELC) PHUNG TOAN THANG ID No: 22080923 Intake 6 Supervisor: PhD. Nguyen Thi Hoai Thu September 2023 i ACKNOWLEDGEMENTS I would like to express my sincere appreciation to everyone who has helped me with my dissertation assignment. Thu Nguyen, my supervisor, has provided me with invaluable advice, encouragement, and feedback. I would also like to thank Ms.
Mai Vu, Ms. Thao Dang and the International School of Business at Banking Academy of Vietnam for their assistance and support. I appreciate the opportunity to utilize the school's facilities and resources. I am indebted to the managers and employees of Viettel Global JSC (VGI), FPT Telecom JSC (FOX), FPT Online JSC (FOC), and Elcom Technology Communications Corporation (ELC) for their assistance and participation in the collection and analysis of data.
Their responses and feedback were indispensable to the completion of my dissertation. I appreciate my classmates and acquaintances for their friendship, encouragement, and support. They have made my educational experience more pleasurable and memorable. Lastly, I would like to express my profound appreciation to my parents, siblings, and companion for their unconditional love, patience, and sacrifice.
They have always been there for me through thick and thin. They are the driving force behind all of my actions. Thang Phung Hanoi 06 September 2023 i EXECUTIVE SUMMARY The primary purpose of this dissertation is to conduct a company analysis and valuation of four of Vietnam's prominent telecommunications and online service providers: Viettel Global JSC (VGI), FPT Telecom JSC (FOX), FPT Online JSC (FOC), and Elcom Technology Communications Corporation (ELC). This dissertation seeks to respond to the following research questions: - What are each company's primary characteristics, strengths, weaknesses, opportunities, and threats? - How have the companies' financial and operational performance been over the past five years (2018-2022)? - What are the primary growth and profitability drivers and obstacles for each company? - How do the companies compare in terms of market share, competitive advantage, customer satisfaction, and social responsibility relative to one another and their industry peers? - How do the fair values of each company's equity differ from their current market values? To answer these concerns, the dissertation combines qualitative and quantitative data and analysis.
The qualitative data is derived from secondary sources, including annual reports, financial statements, websites, news articles, and industry reports. The quantitative information includes financial ratios, market multiples, discounted cash flow models, and sensitivity analysis. The dissertation's principal findings are as follows: - VGI is the largest and most diversified of the four companies, with operations in eleven Asian, African, and American countries. It has a solid brand image, a large market share, a loyal customer base, and a solid financial performance.
In addition, it confronts obstacles such as political risks, regulatory uncertainty, currency fluctuations, and intense competition in some markets. - FOX is the second largest of the four companies, with a concentration on providing broadband internet, cable television, and online education services in ii Vietnam. In terms of technological innovation, network quality, customer service, and corporate governance, it has a competitive advantage. However, it also confronts obstacles including market saturation, price wars, cyberattacks, and environmental problems.
- FOC is the third-largest company of the four, with a concentration on online news, entertainment, e-commerce, and digital marketing in Vietnam. It has an advantage in terms of content creation, user engagement, platform diversity, and data analytics. Nonetheless, it confronts obstacles including content piracy, user privacy, legal compliance, and social responsibility. - ELC is the smallest of the four companies, with a concentration on providing Vietnam with software solutions, system integration, network security, and cloud computing services.
It holds a competitive advantage in terms of product quality, consumer loyalty, niche markets, and strategic alliances. Nonetheless, it confronts obstacles including limited scale, low profitability, human resource management, and technological obsolescence. The dissertation concludes that the four companies have distinct characteristics, performance levels, growth prospects, and valuation outcomes, which reflect their distinct business models, strategies, and competitive positions in the Vietnamese telecommunications and online service industry. In addition, the dissertation contains suggestions for companies, investors, and policymakers to improve their value creation and capture in a dynamic and competitive market environment.
iii Table of Contents ACKNOWLEDGEMENTS. ii Table of Contents. iv List of Tables. vii List of Figures.
viii Chapter 1: Introduction. An overview on the global and Vietnamese Information and Technology market. Area of the study. Method of study.
4 PART 1: MACROECONOMIC AND INDUSTRY ANALYSIS. 5 Chapter 2: Macroeconomic analysis. World economy outlook for 2023 and onward. The South East Asia Economy.
Key macroeconomic indicators analysis. Summary of South East Asia Economy. Key macroeconomic indicators analysis. Summary of Africa Economy.
Key macroeconomic indicators analysis. Summary of Caribbean Economy. 18 Chapter 3: Industry analysis. The global ICT industry outlook.
The ICT industry performance. Competition drives in the global ICT market. The ICT markets’ outlook. The South East Asia Market.
The Africa Market. The Caribbean Market. 24 PART 2: COMPANY ANALYSIS AND VALUATION. 26 Chapter 4: Viettel Global Joint Stock Company (UPCoM: VGI).
Ratio Analysis and Forecasted Financial Statements. Forecasted Financial Statements. Suggested target price. 37 Chapter 5: FPT Telecom JSC(FOX).
Ratio Analysis and Forecasted Financial Statement. Forecasted Financial Statement. Suggested target price. 50 Chapter 6: FPT Online JSC (FOC).
Ratio Analysis and Forecasted Financial Statement. Forecasted Financial Statement. Suggested target price. 61 Chapter 7: Elcom Technology Communications Corporation (ELC).
Ratio Analysis and Forecasted Financial Statement. Forecasted Financial Statement. Suggested target price. 74 PART 3: SUMMARY AND RECOMMENDATION.
Conclusions and recommendations. 81 APPENDIX 1: Forecasted Financial Statements of Viettel Global. 81 APPENDIX 2: Forecasted Financial Statements of FPT Telecom. 85 APPENDIX 3: Forecasted Financial Statements of FPT Online.
89 APPENDIX 4: Forecasted Financial Statements of Elcom Technology Communications Corporation. 93 vi List of Tables Table 1. Ownership structure of Viettel Global. SWOT Analysis of Viettel Global.
Viettel Global Valuation - Football field analysis. Ownership Structure of FPT Telecom. SWOT Analysis of FPT Telecom. FPT Telecom valuation - Football Field Analysis.
Ownership structure of FPT Online. SWOT Analysis of FPT Online. FPT Online valuation - Football Field Analysis. Ownership structure of Elcom.
SWOT Analysis of Elcom. ELC valuation - Football Field Analysis. 74 vii List of Figures Figure 1. Profitability firgure of Viettel Global 2018 - 2022.
Gearing ratio of Viettel Global 2018 - 2022. Investment Ratio of Viettel Global 2018 - 2022. Key forecasted financial ratio of Viettel Global 2023 - 2027. DCF Valuation model of Viettel Global.
Sensitive analysis of DCF Valuation Model of Viettel Global. Multiple valuation model of Viettel Global. Profitability firgure of FPT Telecom 2018 - 2022. Gearing ratio of FPT Telecom 2018 - 2022.
Investment ratio of FPT Telecom 2018 - 2022. Key forecasted financial ratio of FPT Telecom 2023 - 2027. DCF Valuation Model of FPT Telecom. Senstive analysis DCF Valuation Model of FPT Telecom.
Multiple valuation model of FPT Telecom. Profitability firgure of FPT Online 2018 - 2022. Investment ratio of FPT Online 2018 - 2022. Key forecasted financial ratio of FPT Online 2023 - 2027.
DCF Valuation Model of FPT Online. Sensitive analysis of DCF Valuation Model of FPT Online. Multiple valuation model of FPT Online. Profitability of Elcom 2018 - 2023.
Gearing ratio of Elcom 2018 - 2023. Investment ratio of Elcom 2018 - 2023. Key forecasted financial ratio of Elcom 2023 - 2027. DCF Valuation Model of Elcom.
Multiple Valuation Model of Elcom. Summary of Valuation result of VGI, FOX, FOC, ELC. 75 viii Chapter 1: Introduction 1. An overview on the global and Vietnamese Information and Technology market - Global market: The global IT market consists of IT services, computer hardware, telecommunications, and software.
It is estimated that the global ICT market for the IT industry was worth $323.26 billion in 2021 and will increase at a 7. The global IT market is driven by cloud computing services, big data and analytics, social, mobile, and cloud computing, next-generation security technologies, and emerging technologies such as AI, IoT, robotics, and AR/VR. In addition to cyber threats, regulatory compliance issues, skills shortages, and high innovation costs, the IT market is plagued by cyber threats, skills shortages, and high innovation costs. The IT market is comprised of Asia-Pacific, Western Europe, Eastern Europe, North America, South America, the Middle East, and Africa.
In 2023, the United States held nearly 36% of the global ICT market, followed by the European Union and China, each with over 11% (Statista, 2023). The Asia-Pacific region is anticipated to have the fastest-growing IT market due to its rapidly developing digital infrastructure, rising smartphone and internet adoption, and government and private IT investments. The players in the global IT market provide a variety of products and services to meet the needs of customers. Major IT companies include Apple, Microsoft, Verizon Communications, China Mobile, AT&T Inc., Huawei, Deutsche Telekom AG, Dell Technologies Inc., Samsung Electronics Co., and Comcast Corporation (Statista, 2023).
These businesses compete based on quality, innovation, pricing, customer service, and the reputation of their brand. The global IT market is anticipated to evolve due to rapid technological advancement and shifting consumer preferences. Future trends on the IT market include: 1 - Customers are adopting cloud-based solutions due to their scalability, adaptability, affordability, and security. - Improve customer experience, business processes, and data insights with AI and machine learning.
- Demand for Internet of Things (IoT) devices and solutions that connect and share data among connected objects and systems. - 5G technology will enhance data transmission, network capacity, and latency. - Development of AR/VR applications for immersive and interactive customer experiences across all industries. The global IT market is dynamic and diverse, presenting customers and service providers with numerous opportunities and obstacles.
In the coming years, the IT market should expand steadily due to rising demand for ICT solutions across industries and regions. Cybersecurity threats, regulatory compliance issues, skills shortages, and high innovation costs all pose threats to the IT industry. Therefore, market participants in IT must adopt innovative strategies and technologies to remain competitive and satisfy customers. - Vietnamese Market: Vietnam’s ICT market is a significant and growing sector in the country’s economy.
A recent industry report estimated that the market value was USD 7.7 billion in 2021, and projected an annual growth rate of approximately 8 percent from 2022 to 2026 (International Trade Adminsitration, 2022). This growth is driven by the increasing adoption of ICT solutions by both the public and private sectors. The government of Vietnam has recognized ICT as a key industry and socio-economic growth driver, and has implemented policies and programs to promote the application of advanced ICT solutions in various domains, such as governance, education, health, and agriculture. One of the major initiatives is the National Digital Transformation Program, which was approved in 2020 and aims to achieve digital transformation across all sectors and regions by 2025, with a vision to 2030 (International Trade Adminsitration, 2022).
2 Internet use in Vietnam in 2023 also showed remarkable progress.93 million internet users in Vietnam in January 2023, representing a penetration rate of 79.1 percent of the total population (Kemp, 2023). This was an increase of 5.3 percent) compared to the previous year. Some of the leading sub-sectors in the ICT market include telecommunications, cloud computing, cybersecurity, e-commerce, e-government, smart city, and fintech (International Trade Adminsitration, 2022).