FRT - HM Research-Report V.final

RMIT Research Challenge 2022
hosted by
RMIT Vietnam Finance Club
Team: The Wolves of Nguyen Tri Phuong (NTP)

from
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Wolves of Nguyen Tri Phuong 1

The Wolves of Nguyen Tri Phuong
FPT Digital Retail Joint Stock Company (FRT)
Students’ Research Group
Consumer sector:
This report is published for educational purposes only by
students competiting in the RMIT Research Challenge 2022 Ho Chi Minh Stock Exchange (HOSE)
DATE: 06/05/2022 PRICE: VND 141,900 as of 06/05/2022 RECOMMENDATION: BUY (30% UPSIDE)
TICKER: FRT.HM (Reuter Eikon) TARGET PRICE: VND 181,300
Recommendation: Buy FRT: PRESCRIPTION FOR SUCCESS

MARKET SNAP SHOT EXECUTIVE SUMMARY
We initiate coverage on FPT Digital Retail JSC. (FRT) with a BUY recommendation and
Price [VND] 141,900
a one-year target price of VND 181,300, representing a 30% upside potential from
52-week high [VND] 169,800 current levels of VND 141,900 on May 6, 2022. Our rating is based on 3 key general
catalysts: [1] Favorable market dynamics for both technology retail and
52-week low [VND] 24,300 pharmaceutical retail industry; [2] Strategic expansion strategy backed
operational investments; [3] Distinctive market positioning to lead both markets.
Share outstanding [mm] 78.98
Industry positives stimulate FRT’s growth potential
Free float shares [mm] 37.28 FRT will continue to benefit from the laptop segment’s potentials, since Vietnam’s
Market Cap [VND bn] 9,710.95 household possession rate of laptops is still attractively low. Also, we believe that
Vietnam’s favorable demographics trends such as [1] aging population, [2] fast
5 Day average trading
1,172,180
urbanization and [3] rising consuming class, will benefit the pharmaceutical retail
volume
market in general, and FRT’s Long Chau growth in particular.
Bull/ Bear case scenario
Well positioning strategy will foster FRT’s dominance in the market
Bull case
193,800VND Currently, the Vietnamese pharmacy retail market is predicted to face high competition
among domestic players, and a shortage of pharmacist supply. Thus, we view Long
Target price
VND 181,300
Chau’s well-planned expansion strategy into [1] less competitive, but not less
lucrative regions & [2] strategic locations, along with its quality pharmacist attraction,
Bear will be the key drives for its future dominance in the market.
case
171,600VND Strong rebounce in 2021’s financials give FRT’s momentum in the near future
Current price Higher contribution from pharmacy retail segment is expected to spur FRT’s growth in
VND 141,900 the future, and also improve its net profit margin, expectedly reaching 3.6% in 2026F.
Source: Team Estimates
Moreover, Because Long Chau is expected to be FRT’s key growth force, our long-term
SOTP Valuation Summary [VND]
181,300 view is that FRT will soon relieve its high leverage capital structure by its own operation
growth, especially when Long Chau has started earned positive profit from 2021.
96,100
85,200
30% SOTP valuation, integrated with DCF & relative multiple for each segments
upside We use Sum-of-the-part (SOTP) model to separate our valuation between FPT Shop
and Long Chau, as these 2 segments have different nature and business cycle, so it
Total makes nonsense if we consider these 2 values as one. Also, our valuation for each
segments is based 50% Discounted Cash Flow method (DCF) and 50% on Relative
Source: Team Estimates Multiple. Since we believe that a retail firm should also be valuated in comparison with
Price history FRT vs. VN-Index its peers, not just based on its operation itself.
rebased
150% FRT’s comprehensive internal management will help mitigate its key risks.
100% We determine a variety of potential risks that may threaten FRT’s operation and our
valuation outcomes, ranging from market risks to industry and operational ones. We
50%
also include scenario analysis, sensitive analysis as well as Monte Carlo simulation to
0% assess the impact of these risks on our target price. Finally, we point out some key
-50%
practices that will help FRT mitigate these threats.
Key financial highlights
-100%
4/2018 4/2019 4/2020 4/2021 4/2022 Unit 2018A 2019A 2020A 2021A 2022E 2023F 2024F 2025F 2026F
FRT VNINDEX Net revenue [VND bn] 15,298 16,634 14,661 22,495 29,437 38,063 47,074 56,244 65,308
Source: Refinitiv, Team Estimates
Gross Profit Margin [%] 12.9 12.4 13.8 13.9 15.6 16.8 17.9 19.0 19.6
Price to Sales (Current, Forward) [x]
EBIT Margin [%] 3.4 2.5 1.1 3.1 3.5 3.9 4.5 5.1 5.4
0.7
0.6 Net Profit Margin [%] 2.2 1.2 0.1 2.0 2.1 2.4 2.9 3.3 3.6
0.5
0.4 ROA [%] 7.7 3.5 0.2 5.5 5.0 5.3 6.1 6.8 7.0
0.3
0.2 ROIC [%] 13.3 5.5 0.3 10.8 9.2 10.1 11.8 13.8 14.5
0.1
ROE [%] 35.6 16.7 0.8 30.6 28.3 27.1 28.2 29.1 27.7
0
4/2020 12/2020 8/2021 4/2022
Current Forward
20-day EPS [VND] 4,961 2,612 266 5,618 7,778 11,044 15,999 21,979 26,927
deviation
Source: Refinitiv, Team Estimates EPS Growth [%] -29.4 -47.3 -89.8 2012.0 38.5 42.0 44.9 37.4 22.5

Source: Company data, Team analysis

RMIT RESEARCH CHALLENGE 2022 FPT Retail
Fig.01: FRT Revenue break-down by BUSINESS DESCRIPTION

business segments [VND billion]
FPT Long Chau
FPT Retail JSC. (FRT) was established in 2012 as a subsidiary of FPT corporation - the
FPT Shop
largest information technology service provider in Vietnam. FRT business model
18,558
Peripherals 7% anchors on two key segments: technology retail and pharmaceutical retail. With ICT
+53% retail, FRT leads the laptop retail market with 2021 gross revenue of VND 5.7 trillion, a
Laptop& 28%
tablet 21% market share. Apple products’ sales also contribute sizeably to the company’s
22,495 income. In terms of Pharmaceutical retail, FRT’s acquired business - Long Chau
14,662 3,937 Mobile 28%
1,186 pharmacy chain has tripled its income in 2021 to VND 3.9 trillion (Fig.1). Continuing to
solidify its position in the Pharmaceutical retail sector, while maintaining sales in a
18,558 Apple 37%
13,476 saturated ICT retail market, will be the dual objective the company needs to achieve.
Business segmentation
2020 2021 FPT Shop
Sales structure Technology retail (FPT Shop and F.Studio)
Source: Company data • Laptop and tablet: Despite the economic downturn, FPT Shop recorded significant
Fig.02: Stores growth of FPT Shop and growth in sales of laptop and tablet in 2021. Specifically, the segment’s revenue
FPT Long Chau, (2018-2021) [#] reached VND 5,700 billion - a 220% growth yoy, contributing 28% to FRT’s revenue
FPT Long Chau CAGR
1,047 18-21
and solidifying the market leader position in 2021. This achievement is highly
FPT Shop correlated with the digital consumers’ behavior in 2021 when working and studying
795 400 from home are enforced by the government.
663 111% • Apple products: Apple products are primarily sold via F.Studio – Vietnam’s first
553 200
70
20 Apple Premium Reseller (APR) chain, totaling 15 stores across 4 key cities of
647
Vietnam. The new Covid variants did also disrupt the operations of FRT and result in
533 593 595 5% slow sales growth in the first 3 quarters of 2021, however, sales started to pick up in
Q4-2021 (Fig.4) thanks to the successful launch of the iPhone 13 series & MacBook
2018 2019 2020 2021 Pro 2021, and consumers purchasing power revived after months of quarantine.
Source: Company data • Mobile and digital accessories: These two categories contributed 35% of FRT’s
Fig.03: Long Chau and FPT shop 2021 revenue, reaching VND 7,000 billion in 2021, mainly thanks to the
national footprint (as of April, 19th, aforementioned consumers’ behavioral shift during quarantine. Digital accessories
2022) Long Chau
FPT Shop remain a cross-selling segments of FPT, with the company strategy to import more
Pharmacy
high-margin peripherals made in China.
# stores 772 551
Pharmaceutical retail (FPT Pharma): Long Chau is a renowned drug chain based Ho
%growth 8.7% 100%
Chi Minh city, with more than 15 years of experience. In 2017, FPT Retail, under Ms.
y-o-y Diep’s leadership, has succeeded in acquiring Long Chau and many other private drug
chains across Ho Chi Minh, hence establishing FPT Pharma. FRT has set its goal to
acquire 30% of the lucrative drug retail market in its upcoming plan. By 2021, FPT
Pharma, with a network of 400 stores covering 53/63 provinces, and a revenue grew by
333% yoy, has stunned the market. The market has been both challenging and enabling
Long Chau, however, the chain is expected to improve its margin thanks to digitized
inventories management, and increasing economies of scale via massive expansion.
Market positioning
Technology Retail – Remaining dominance in resilient and stable market: FPT
Shop is the second-biggest ICT retailer in Vietnam, directly challenging Mobile World
Group (MWG) with 772 stores nationwide (Fig.3), regardless of such nation-wide
footprint, FPT acknowledges the decelerating electronics market after the tailwinds in
National
3 – 5 stores 0 – 3 stores 2021. The firm is also slowing down expansion and has moved into new territory of
6 – 14 stores 4 – 10 stores
footprint 15 – 24 stores 11 – 15 stores sales growth, namely laptop services center, gaming PC segments... which are all in
Above 25 stores Above 15 stores their initiation phases and yet to show major changes to the financial statements.
Source: Company data, Team analysis
Pharmaceutical Retail – Fastest growing drug chain in Vietnam: FRT stuns the
Fig.04: Quarterly Sales from FPT Shop
market with triple-digit y-o-y growth in both number of stores and gross sales via its drug
and Long Chau (2019-2021) [VND retail segment. Long Chau outpaced the market and advanced to the second-biggest
trillion] drug chain in Vietnam in 2021, and DKSH – a Swiss-based logistics provider with the
FPT Long Chau
biggest capillary network in Vietnam, recorded Long Chau chain to account 45%
FPT Shop
+70% (Appendix.C2) of its 2021 sales. However, due to Vietnam advancing to a new normal
10
status we question the market potentials and Long Chau’s capacity to successful take
over the market to create growth landmarks like in it did in 2021.
5 Company’s upcoming strategy
Working side by side with FPT Software in the One team initiative, FRT is making
0 progress in its full-scale digitalization plan, to advance toward operational excellence.
Q1 Q1 Q1 Q2 Q3 Q4
-19 -20 -21 -21 -21 -21 Long Chau is destined to be FRT’s key driver of growth, hence, FRT is investing in
Source: Company data, Team analysis supply chain and logistics of its drug retail outlet, to further its expansion roadmap.
Fig.05: Ownership Structure

CORPORATE GOVERNANCE & ESG INVESTMENT FRAMEWORK
FPT Corp. Corporate Governance
Ownership structure | Operating under Vietnam IT giant: FPT Corp. controls nearly
Others 47% of the total shares of FRT (Fig.5), concretizes its position as a strategic investor of
45% 47% the retail-led subsidiary. With extensive knowledge and capability of the biggest IT
corporation in Vietnam, FPT has integrated digital advancement in the operation of
FRT, helping the company to attain operational excellence. This is exemplified by the
4%
5% One team initiative - a digital transformation project between FRT and FPT Software,
Foreign investors VOF Investment Ltd. aiming to digitally enhanced the ERP systems of FPT Shop and FPT Long Chau.
Source: Refinitiv, Team analysis Board diversity | Breaking the norm to lead the game: Under the leadership of
Fig.06: Board’s diversity vs. regional chairwoman Nguyen Bach Diep who has nearly 20 years of executive positions, and
benchmark
more than 10 years managing FPT Retail. Diep has helped FRT to solidify the top 1
Female Male position in the Laptop segment, and most importantly, she and FRT team has
Board successfully ventured into the pharmaceutical retail market back in 2018. Still, 2/8
of Mngt. 40% 60%
Executive members of the executive team are woman – a working progress to reach regional
Committee average, but has outpaced Vietnam domestic peers (Fig.6).
25% 75%
HOSE
Executive management | Diverse team with a track record of leadership:
14%
VN30 86%
Comprising of 8 members, 25% of which are females, the team manages FRT’s 1000+
stores ecosystem. The executive team is made of highly-skilled talents with relevant
APAC 22% 78%
education background and experience from the business and technology field, which
29% 71%
Source: Grant Thornton, FRT, Team analysis helps fusing FPT’s tech-driven capability with FRT’s vision and goals (Appendix.E3).
Fig.07: CFA Institute Corporate CFA Institute Framework Corporate Governance | Checking all the boxes: With the
Governance Scorecard for FRT
(Details in Appendix E1) framework, we assess 4 key pillars of FRT’s governance and conclude an
Executive Committee outperforming board that aims to bring the best to the retail giant (Fig.7).
Environment
Compen-
Share- Carbon footprint | Under control thanks to location champion and evolving
holders’
sation 3.6 Right logistics: The MIT innovation lab highlights the key contributors of GHG in a traditional
Committee
Protection retail store to be transportation and property (distribution centers’ and stores’ GHG
emissions) (Fig.8). Via our geospatial analysis for Long Chau drug chain and FPT Shop
in Ho Chi Minh city, it is concluded that the FRT chooses the expansion with
Audit Committee consideration strategy for their ICT and Drug chains (Appendix.E2). The chains are
Source: CFA Institute, FRT, Team analysis
well-positioned to synergize with the locations and benefit from well-managed
Fig.08: GHG emissions of an average
retail store, breakdown by sources
distribution route. Furthermore, technological changes have been made to control
inventory, to better online customer experience, and most importantly to reduce
7%
4% unnecessary carbon footprint. While these claims are yet to be justified due to the lacks
1% of sustainability reporting from the company, we affirm the tech-driven retail chain like
18%
FRT will know what to do with their gadget to achieve sustainable operation.
Packaging Material & Waste | Starting to take action: With the nature of the retail
70% industry involves creating large volume of waste especially packaging-level waste, both
FPT Shop and Long Chau chains have started to take action, via their environment-
Transport-Level
emissions Return rates friendly packages. However, the chain needs to do more in attainment of a sustainable
Property-Level
excedent business model, and needs to both keep track and manage its waste more efficiently.
emissions Logistics Leg
Social
Packaging-Level
Corporate Social Responsibility | A giver to society: The hard-hiting pandemic has
emissions
Source: MIT Innovation Lab caused the vulnerable group of the society to be in dire situation. With each business
Fig.09: Key summary of FRT’s 2021 segment, FRT has different campaigns designed for certain groups in need, totaling
CSR initiatives [VND bn]
more than VND 10 billion in gross value. Case in point, the company has created the
Voluntary
Financial aid campaigns 7.25
for Lunar
Financial aid for New Year
bereaved employees 0.25
COVID-19 Gro
ss 2.00
Medication
valu
Food and gifts e 0.20
Gross value 9.70

Community funding
raised by FRT 1.04

nities with Covid-19 medication packages, medical equipment (SPO2), digital devices
0.65
for online learning (Fig.9).
11.40 HOPE
Employee’s Health & Safety | Retailer also a caretaker: Besides the bare minimum
Internal
Founda
tion a of social insurance, and health-checkup benefits for 4,860 employees, FRT spent VND
corpora 9.0 billion on financial aids, and Covid medications for their employees and their loved
te fund ones. Virtual engagement activities were also conducted to establish bonds and to
that ensure mental well-being of company’s workers during the hard moments of 2021.
aids Human Capital Development and Management | Recently remodeled:
the Compensation and benefits scheme has been remodeled in 2021 to attract and retain
External
commu talents. Virtual trainings were conducted amid the pandemics to equip workers with
product knowledge, sales process and company’s operation. This also helps seeking
Source: FRT, Team estimates and retaining fast growing and high performing talents.

Fig.10: Household possession rate (%) INDUSTRY OVERVIEW | TECHNOLOGY RETAIL

14% The global consumer electronics industry has shown a sign of rebound under the acute
India
70% Covid-19 pandemic, reaching $1,085.8bn of total revenue in 2021. The pattern is
Indonesia 16%
similar for Vietnam market when the total sales hit $7,475mn in 2021 (Fitch Solutions),
67% pushed by emerging online channels. However, we expect this robust rebound cannot
Philippines
19% last long because the growing momentum of segments in this industry is not high.
67% Laptop segment: still has room for growth but will hardly reach its peak growth
Thailand 17% rate as under Covid-19: The household possession rate of laptops in Vietnam and
73% other relevant economies in Asia is relatively low (Fig.10) and thus, the key growth
Vietnam 28% driver still comes from the demand of the first-time buyers. During the acute phase of
72%
Covid-19 in 2019-2021, lockdown & restrictions have pushed the trend of remote
studying and working, leading to double-digit growth in sales for laptops. However, we
Smartphones Laptops put a doubt on the sustainability of this abnormal uptrend as the significant increase in
Source: Euromonitor, team analysis
demand will have been removed when the Covid-19 passes its peak and restrictions
Fig.11: Sales forecasted of laptop and are eased. Also, as high price sensitivity is a typical characteristic of frontier economies
smartphone [VND billion] (2021-26) such as Vietnam, laptop revenue will be cannibalized by smartphones when people
CAGR 2021-26
prioritize smartphones rather than laptops with a higher price. Thus, we expect the
Smartphone 6.4%
sales volume for the laptop segment to increase with a high growth rate as there is still
Laptop 8.8%
much room for growth but will not hit its peak as during Covid-19 in 2020-2021 (Fig.11).
128,537 Smartphone segment: reaches saturation, key dynamic comes from the upgrade
114,565
94,348 98,697 momentum: Different from laptops, the smartphone market in Vietnam has already
passed the expansion phase with double-digit growth and is now stepping into the
saturation phase. The smartphone possession rate of Vietnamese households has
reached nearly more than 70% in 2021 (Fig.10), leaving little room for growth in this
12,240 13,218 18,654 segment. Therefore, the key growing momentum in the following year will not come
15,389
mainly from the demand of first-time buyers, but from the demand to upgrade their
2021 2022 2024 2026 phones, pushing the brands to release high-end products with new attractive features
Source: Fitch solutions, Team analysis
or forcing retail giants such as MWG and FRT into intense competition. This growing
Fig.12: Population by income group momentum will be backed up by the rising purchasing power of consumers in Vietnam
(daily spending), [Million]., 2011 (PPP) as the middle-income and high-income earners group is forecasted to increase their
Higher consuming Entry-level consuming
class (>$70 per day) class ($11 - 30 per day) percentage of total households by 2026. With these trends, we expect the smartphone
Established consuming Below consuming
class (>$70 per day) class ($11 per day) segment to maintain its slow growth till 2026, with a CAGR of 6.4% for smartphone
104
98 sales value, as the market now has not much room for growth (Fig.11).
87 2
80 4 0 18
1 0
5 1 0 14 36 INDUSTRY OVERVIEW | VIETNAMESE PHARMACY RETAIL
57
The pandemic has caused remarkable fluctuations to the global pharmaceutical
74 72
58 industry, amassing a total revenues of $1,112.6bn in 2020. However, the market growth
27
is projected to soon return to its pre-pandemic level by 2026 and the growth of the
2000 2010 2020 2030 global medicine spending is also predictably muted. In contrast, the outlook for
Source: McKinsey Global Institute
pharmerging markets like Vietnam is much more positive, with much more room for
Fig.13: Median age forecast
development through rising unmet needs for medicines and diversified trade channels.
With favorable trends from the pharmaceutical industry, aligned with Vietnam’s
Vietnam +25% potential, we are confident that Vietnam is poised to win the race in pharmacy retail.
Asia
Vietnam’s favorable demographics trends: As Vietnam has been one of Asia’s
& Pacific outperformers regarding GDP growth, its consumption trend is about to enter the next
chapter. Vietnamese’s income is also growing, expectedly adding around 36 million
World
people to the consuming class next decade (*) (Fig.12). Vietnam’s urbanization, has
2019 2040 also been on a robust growth trajectory, with the urban population projected to rise by
10 million in the next 10 years. In addition, the Vietnamese population is ageing rapidly,
Source: Euromontior
with its median age expected to overtake that of the region from 2022 onwards (Fig.13).
International Fig.14: Vietnam’s peer All of these trends, we believe, will all lead to higher living standards for the Vietnamese
assessment Drug spending per capita population, thereby creating a higher demand for health care consumption from now on.
GDP/capita
Sing.
184.9 58.5 Vietnam still has room for future growth: Although Vietnam’s drug spending per
Mal. capita is projected to be on a steep rise, even reaching 163 USD in 2025, the current
85.3 10.2
figure for Vietnam is still low compared to neighboring economies (Fig.14). With the fast
Thai.
84.3 7.3 economic growth, together with favorable demographics trends, we can confidently
Vie. envision a positive outlook for the industry in Vietnam.
70 3.5
However, it is not the OTC channel that will benefit the most: Although the ETC
Phi. channel is recently hindered by the Covid-19 pandemic, it is still expected to be the
42.5 3.4
m ain g r owth driver of the pharmaceutical industry, spurred by 2 key rationales:
Source: © Dream Incubator Group

Fig.15: Vietnam’s medicine sale

structure [USD billion] [1] The Vietnam’s health insurance coverage in 2020 was 90.85% and required to
14 13
reach 95,15 in 2025 by the Government;
12
10 9 [2] The Circular No. 02/2018/TT-BYT promulgated the Good Pharmacy Practice
8
7 78% requirements and also controlled the abuse of prescription drugs on OTC channel.
6 77% Hence, the sales of OTC medicines is forecasted to be outpaced by that of ETC
4 75% medicines, and make up less in the total industry’s sale (Fig.15).
2
0 Within the OTC channel, modern pharmacy chains are claiming their positions:
2021e 2026f 2031f Although mom-and-pop drug stores were key players in the Vietnamese pharmacy
% OTC sale % ETC sale
landscape, many challenges like fragmented distribution and poor compliance to
Source: Fitch Soutions
regulatory standards have recently dethroned their dominance. In contrast, modern
Fig.16: Porter’s 5 forces analysis pharmacy chains, with guaranteed drugs quality, better consulting services and more
(Details in Appendix C4)
Competitive rivalry simplifized distribution system behind, are gradually replacing their mom-and-pop
counterparts in the Vietnamese pharmacy retail industry. We believe that modern
pharmacies will continue to reshape the industry landscape, since more and more
Bargaining
power of Threat of modern pharmacy oulets are opened from the giants’ the expansion strategy.
new
customers
entrants COMPETITIVE POSITIONING
The Vietnamese technology retail as well as the pharmacy retail industry is now a
playground for only a few dominators like MWG, FRT, DGW in ICT or segment
Pharmacity, Long Chau, An Khang in pharmacy segment. Thus, there is less room for
Bargaining power any prospective entrant to compete in this two segments (Fig.16). We believe that FRT,
of suppliers Threat of
substitutes with its unique competitive advantages from Long Chau, will position itself differently
Pharmacy retail Technology retail and remain its standing in the market.
1 2 3 4 5
FRT’s dominance in authorized Apple chain is threaten by new entrants:
Lowest Highest
Establishing its first Apple-authorize store with the highest-level license in 2012, FRT
Source: Team analysis became the first retailer to meet the standard for all three-store model (APR, AAR,
Fig.17: Apple mono stores in Vietnam AASP) of Apple. This strategic move was considered a big competitive advantage for
in 2012 and 2021
FRT because partnering with Apple was a step toward its dominance in the high-end
+29 stores segment, positioning itself distinctively from the dominance of MWG in the mid-end
31 segment. However, due to the rising demand for Apple products Apple has increased
its partnership with many more brands such as eDiGi, ShopDunk, Future World,
15
TopZone, etc. to increase its penetration in Vietnam. Therefore, the number of mono
1
2
6 4 stores (authorized by Apple) selling only Apple products is rising rapidly (Fig.17),
5 pushing FRT’s dominance at stake.
2012 2021
F.Studio Future- Dual-objective expansion strategy: Unlike some other pharmacies, Long Chau is
Shop Dunk
world aiming at a dual objective of expansion along with business efficiency. This strategy is
e.DiGi Topzone reflected in Long Chau’s highest revenue per store among its competitors in recent
Source: Company data
years (Fig.18). Our analysis shows that Long Chau has a well-planned strategy in
Fig.18: Comparison between Long situating their stores at more favorable locations like intersections, or residential areas.
High Chau vs competiors
Also, the way Long Chau positions itself to avoid sale cannibalization among other
Busines efficiency (sale/store)
pharmacies is also a key factor that set it apart in this fierce competition (Appendix.B1).
Moreover, Long Chau not only manages its annual business efficiency, but also
focuses on its customers’ satisfaction to dominate the race in the longer run (Fig.18).
(Key attributes included in our customer satisfaction research were Prices, Product
availability, Store accessibility, Diversified medicine portfolio). Hence, we believe that
Long Chau chains will soon become the top-pick pharmacies, especially since the
market is proved above to be more and more consolidated.
Dominance in a “thirst” for pharmacist resource: Pharmacist resource - one of the
key treasures of pharmacies’ expansion strategy - is getting involved in a race between
Customer satisfaction pharmacy retailers. Data from the Drug Administration Department of Vietnam (DAV)
Low High Mekong Delta
Source: Team analysis
Source: GSO
Fig.19: Number of pharmacists by
region 2020 [#]
Red River Delta 16,995
Northern Midlands
& Mountains 7,545
North and South
Central Coast 15,535
Centrals
Highlands 1,902
avg. 9,968
Southeast 7,655
10,178
shows that there are only 1.19
pharmacists per 10,000
Vietnamese, while the demand
for drug spending is proved to
be accelerating above. That’s
why a thirst for pharmacists
(with at least a bachelor’s
degree) starts to be more
visible. Long Chau, with the
mission to realize the
“Pharmacists with 4T”, is the
first player to apply “Virtual
Simulation Room” in its
internal training system. Also,
becoming the highest-level
partner of top pharmaceuticals
like AstraZeneca, pharmacists
at Long Chau are exposed to
many opportunities to be well
trained by foreign prestigious
organizations & and get
international certificates. We
believe that this condition not
only professionalizes the
Long Chau brand through
customers’ lens, but also
attract more pharmacists,
especially as its demand for
pharmacists is growing, even
outpaces the growth rate of
number of new pharmacists in
Vietnam (Fig.19&44).

Fig.20: Computer hardware products

sales forecast [million] (2021-2026) INVESTMENT SUMMARY
+2.86% We initiate a BUY recommendation on FRT with a target price of VND 181,300 using a
blended approach of DCF-based SOTP and Multiples-based SOTP. This presents a
30% upside from last closing date on 06/05/2022. Our positive view is based on FRT’s
2.2 2.4 2.5 2.6 three main attractive theses: [1] Market dynamics: ICT retail still having rooms for the
0.7
giants, plus Pharmaceutical retail being backed by macroeconomic momentums and
0.7 0.7 0.7
0.5
1.0 0.6
1.1 1.2
0.6 1.2
0.7 regulatory shift; [2] Strategic expansion plan accompanied by supply chain investment;
2021 2023F 2025F 2026F [3] Unique market positioning fends for ICT retail and leverages drug retail sector:
PC Notebook [1] Favorable market dynamic creates rooms for dual sectoral growth
Desktop Tablet ICT retail sector starting to stabilize – FPT Shop to defend its
Source: Fitch Solutions position:
Fig.21: OTC and ETC sales forecast After the tailwinds support from demand spike in 2021, we believe the market for ICT
[VND trillion] (2021-2026)
products has moved into a stabilized period. Computer’s hardware products sales –
+9.32% FPT Shop’s main sales source, is forecasted to grow 2.86% p.a. (Fig.20) FPT Shop’s
216 CAGR existing market leadership will too, experience same growth. Although FRT’s Apple
184
sales has lost its shine due to participation of new entrants, we believe market growth
43
for this sector will correlate with new releases of Apple product lines in the upcoming
156 50 10.3%
139 times (e.g. Apple iPhone 14 in 2022 will be a key driver of Apple’s product revenue for
31 38
166 2022). Finally, other digital accessories will stay true to its cross-selling and up-selling
9.0%
118 140 (77%) nature, ultimately sharing the same growth with the computer’s hardware segment.
108 (76%)
Shifting demographics and regulatory environment - The right catalysts for “drug-
2021 2022F 2024F 2026F chain-reaction”: Vietnam population is advancing to its golden age (Fig.22) where
OTC medicine healthcare concerns are at all time high. Hence, the demand growth for medications will
sales ETC medicine
sales remain robust, with shifts from OTC medicines to ETC medicines (Fig.21), due to the
Source: Fitch Solutions
restrictions in unprescribed use of antibiotics. Furthermore, Decisions 808/QĐ-BYT from
Fig.22: Vietnam Population Pyramid
[million] (2010 vs. 2025F) Health Ministry has drove business to move to a online reporting system, sharing
9 7 5 3 1
1 3 5 7 9 information of their customers. Such developments are posing new opportunities for
0-4 FPT Long Chau as well as other tech-driven drug retailer.
5-9
10-14
[2] Domestic expansion capitalizes untapped potentials of the drug retail industry
15-19 Long Chau’s expansion plan – Right place and right time
20-24
25-29 Through a bird’s eye view, we identify that Long Chau is the second biggest player in all
30-34
35-39
economic regions of Vietnam (except Northern Midlands & Mountains where Long Chau
40-44 leads the number of stores). From our view, Southeast Vietnam (where most drug
45-49
retailers do their business) is lacking pharmacists with a total of 7,655 pharmacists,
2010 2025F lower the National average, will soon be a fragmented market and show little room for
Source: World Bank, UN, Fitch Solutions growth. Also acknowledging that, Long Chau has expanded to new territory faster than
Fig.23: Number of stores break-down any other chain, especially during the wake of the Covid-19 pandemic, with up to 74%
by regions of Long Chau stores located outside Ho Chi Minh city. Notably, Long Chau segments
Red River Delta Central Highlands
Northern Midlands
& Mountains South East their target market to be both the traditional mom-and-pop store all over Vietnam and
North & South the modern trade channel. FRT certainly knows where, when and how to play it right.
Central Coast Mekong Delta
Digital strategy – Amplifying the power of FRT’s digital root
566 1,047 262
6% To combat a fast-moving and fast-changing drug retail market, FRT needs an adaptive
19% 18% 5% digital transformation solution, along with the development of an omni-channel business
5% 0%
11%
17%
4%
3%
56% model for Long Chau. Currently, collaboration between FPT Retail and FPT Software in
39% 55% the One team project has shown initial success when Long Chau is now a data-
33% driven retail outlet, that is advancing its brick-and-click model. New ERP software is
16% 12% being integrated into the operations of Long Chau and FRT, better the logistics and
Long Châu Pharmacity An Khang
liberalize laborious tasks. Notable, Long Chau’s Online medicine purchase application
Source: Team analysis Medical consultation
Fig.24: Long Chau mobile application Nation-wide
comparing to peers
500
# installs 100
10
[‘000]
Ecommerce-
platform ✓ ✗ ✓
✓ ✓ ✓
enjoys the largest user base in Supply chain investment – The right path to operational excellence
Vietnam with the most Exerting dominance in customer experience, price and service is only at the tip of the
downloads comparing with An retail iceberg the next important thing is to manage the inventory, which has been and
Khang and Pharmacity on will be dealt with excellently by FRT via recent acquisition of Huu Nghi Viet Han logistics
both Apple App Store and company and new OMS (order managing system) developed by FRT in-house team
Google Play, marking Long and FPT Software. With Long Chau being one of the few drug chains to record positive
Chau’s fast and aggressive net income in 2021, FRT has demonstrated the ability to become the cost leader of the
participation into the omni- sector, and upcoming strategies will further ensure that Long Chau will soon achieve
channel retail model (Fig.24).
Shipping operational excellence to consolidate its rightful position in the drug retail market.
sis

Fig.25: Location overlap rate (store [3] Unique market positioning fends for ICT retail and leverages drug retail sector
overlaps in 1km radius in HCMC) Geospatial analysis – Poised for success with low store overlap
(Details in Appendix B4)
Via our extensive study on the locations of over 930+ outlets of FPT Long Chau, FPT
FPT # of stores
Long Chau
Shop, thegioididong.com (MWG.HM), and Pharmacity, we conclude FRT to have the
35% 141 most prominent control over cannibalization risk. Specifically, both Long Chau an FPT
FPT Shop
33% 106
Shop has the upper hand comparing with Pharmacity and thegioididong.com,
438
Thegioi respectively, with 35% and 33% overlap rate (meaning 3 out of 10 Long Chau or FPT
didong.com 82% 285 Shop are positioned 1km from another store), while it is 8 out of 10 for Pharmacity or
Pharmacity
81%
thegioididong.com stores (Fig.25). A further look into store’s location, we believe the
current store footprint strategy of FRT holds the key to win the competitive front via:
Source: Team analysis 2017 2018 2019 2020 2021
Fig.26: Value contribution of retail Source: Company data, team analysis
channels in Vietnam, 2015 - 2020
CAGR
25% 32% 45% 12.5%
75% 68% 55% 6.8%
2015 2017 2020

Modern retail Traditional retail
Source: EVBN
Fig.27: Store positioning of certain
Modern trade drug retailers
Long Chau
An Khang
Pharmacity
Long Chau
store 1km
radius
Traffic density
(Daily average)
High Normal

Fig.28: FPT Retail’s revenue projection
[VND Trillion]
FPT Long Chau +22%
FPT Shop 65
56
+17% 47
38 51%
29
23
13 15 17 14
49%
2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F

2026F
Source: Company data, team analysis
Fig.29: Profitability ratios [%]

20%
15%
10%
5%
0%
GPM EBITM NPM

Source: Company data, team analysis
Fig.30. SG&A percentage of net
revenue from 2017-2021 [%]
Selling expense
G&A expense
2.7%
2.3% 2.1% 2.6%
1.9%
10.7% 9.2%
8.8% 8.5% 8.5%

[1] FPT shops are placed in believe all the strategic decisions made by FRT, accompanied by the favorable market
adjacent to its competitors – momentum, coupled with a competitive profile will drive shareholders’ value. All of these
thegioididong.com and other key drivers will be included in our forecast and valuation.
mobile retailers. Our analysis FINANCIAL ANALYSIS
concludes 21% of total FPT Strong revenue growth is forecasted, driven mainly by Long Chau: The net
stores in HCMC are placed revenue of FRT started to decelerate in 2019, hitting the bottom in 2020 mainly due to
next to, or across the street to the sharp decrease in demand for ICT products caused by the pandemics. However,
MWG’s thegioididong.com the revenue then recorded a significant increase in 2021 (+53%), especially in Q4.2021
chain (Appendix.B3). While due to [1] an increase in laptop demand thanks to the trend of working and studying
MWG is downsizing its remotely; [2] an increase in Apple sales when iPhone13 is released; [3] an increase in
operations in the ICT retail demand for medicines, supplements, & medical devices during the acute phase of
industry due to self- Covid-19. We forecast FRT’s revenue to increase with a CAGR of 22% from 2021 to
cannibalization and
2026, due to: [1] technology retail maintains sustainable growth as smartphones reach
underperforming sales in
saturation and laptops return to a robust growth rate after its peak during Covid-
certain products categories,
19; [2] pharmaceutical retail drives sharp increase in revenue as Long Chau has now
FRT chooses its expansion
stepped into the growth stage, forecasted to dominate the market in the next 5 years.
plan wisely and considerately
with stores positioning close to Positive picture for profit margins, driven by Long Chau and better cost control:
its rivals and far enough from Higher contribution of the pharmaceutical segment with higher GPM has improved the
each other. This reinstates FRT’s total GPM from the bottom of 12.7% in 2019 to 14% in 2021, offsetting for
FRT’s upper hand in managing technology retail segment with fierce competition and lower profit margin. For the net
the expansion game. profit margin, the increase in operating expense as Long Chau is in the expansion
phase as well as the sharp decrease in revenue of technology retail hit by the Covid-19
[2] FPT Long Chau’s focus is
has resulted in a higher cost structure, leading to a poor NPM of only 0.2% in 2020
to capture the shares in both
(Fig.29). The number then rebounded to 2% in 2021 due to [1] Long Chau has passed
traditional retail channels
its initial high-risk expansion phase, recorded a positive net profit in 2021 due to
(mom and pop, private drug
stores...) while competing economies of scale; [2] Rebounded demand for ICT in 2021 has improved the cost
directly with the modern retail structure (Fig.30), leaving room for NPM to increase. We forecast that FRT’s margins
channels (convenient drug continue to improve when the company switches its focus to ICT products with higher
chain: An Khang, margins (Xiaomi, Huawei…), and the contribution from Long Chau, which steps into the
Pharmacity,...). This dual goal growth stage (with an advantage in market share), is becoming substantial.
objective is well-satisfied
thanks to Long Chau’s well-
positioning in key cities and its
market- relevant store layout
attractive to typical consumers
of the mom and pop stores
(Appendix.B1). Geospatial
analysis further shows that per
one Long Chau store, there
are up-to 2 or 3 Pharmacity
stores nearby (Fig.27). This
move from FRT is designed to
capture the fast-growing
modern retail channels (12.5%
5-year CAGR in market share
value), while stay competitive
at the modern trade segments
(Fig.26).
Repositioning – FPT Shop
choosing the right business
model to set forth to:
Witnessing the tailwinds of ICT
retail market, FRT has
envisioned long-run future of
market slowdown and
uncertainties, thus the
company has successfully
expanded into the gaming
segment and laptop servicing
centers with services covering
63 provinces nation-wide. We

Fig. 31: CCC & DIO comparison [days]

100 Efficient working capital management: Freeing up cash and optimizing working
80 capital, mainly inventory, is the key priority for any retail company to enhance its
60 business efficiency. 2 key segments of FRT also requires a high SKU level in supply,
40 especially when Long Chau is expanding rapidly across Vietnam. Although FRT’s
20 inventory in 2021 almost tripled that of 2020 (60% the from ICT segment and 40% from
2017 2018 2019 2020 2021
the pharmacy chain), this investment in working capital is on par with the revenue
CCC (FRT) CCC (MWG) generated within the year. That’s why FRT’s days of inventory outstanding (DIO) in
DIO (FRT) DIO (MWG) 2021 reaches a 64 days, lower than that of recent years (Fig.31) . Also in 2021, FRT
Source: Team analysis has succeeded in cutting its cash conversion cycle (CCC) by 21 days from 2019, mainly
Fig.32: FRT’s difference in CFO and due to its better inventory management and increase in its days payable. Even MWG, a
CFF [VND Trillion] giant in the industry, has still been struggling with its working capital management.
4
FRT’s growth potential is expected to ease its debt burden: Breaking down from
2 DuPont analysis, FRT’s bounceback in 2021’s ROE (%) is not only driven from its profit
margin, but also levered from the rising equity multiplier. In 2021, its short-term debt
0 climbed up 2.4 times, making up 56% of the total asset. Also, FRT’s growth is financed
mainly from outsource (mainly debt), not from its own operation, visible in its huge
-2 difference between the financing cash flow (CFF) and the operating cash flow (CFO) in
2018 2019 2020 2021
CFO recent years (Fig.32). However, we view FRT’s demand to finance out is suitable with
CFF
Source: Team analysis its aggressive expansion strategy, especially when Long Chau is scaling hard. As Long
Fig.33: FRT’s net debt/ebita & equity Chau has just recorded positive net income from 2021, we envision 2 key positive
multiplier [x] (2021-2026F)
financial outlooks for FRT throughout the forecast period: [1] FRT’s earnings growth
6.0
will soon keep pace with that of its debt and [2] FRT’s leverage level is getting
4.0 healthier. This argument is represented in FRT’s dropping Net debt/EBITDA ratio &
2.0
equity multiplier from 2022 onwards (Fig.33). Moreover, Pitriotski F-Score model also
shows that FRT’s financials is healthy among its peers (Appendix.A6).
0.0
2021 2022F 2023F 2024F 2025F 2026F VALUATION
Equity multiplier
Net debt/EBITDA We use Sum Of The Parts (SOTP) Valuation for FPT Retail as a whole (aggregated
from ICT Retail and Pharmaceutical Retail segments). The target prices from ICT Retail
Fig.34: SOTP Valuation Summary and Pharmaceutical Retail are derived from [1] Discounted Cash Flow Method (50%)
Technology Retail and [2] Relative Multiple Method (50%). FRT’s target price is calculated to be
Method
Method Weight
Weight Price
Price Contribution VND181,300, representing an upside of 30% of FRT’s closing price on 06/05/2022
FCFF 50% 99,203
99,203 (VND141,900). To consolidate our valuation, we extend our valuation to three scenarios
96,132
96,132 (bull-base-bear), and conduct a Monte Carlo analysis. Overall, the target price of VND
P/E 50% 93,060
93,060
Pharmaceutical Retail
181,300 drives P/E forward of 27.81 (close to P/E on 6 May, 2022), but with a PEG of
Method
Method Weight Price Contribution
0.73, reflecting that our buy recommendation is a fairly attractive deal.
FCFF 50% 82,970
82,970 DCF METHODOLOGY
85,199
85,199
P/E
P/S 50% 87,428
87,428 Our DCF valuation employs the Free Cash Flow to the Firm (FCFF) methodology to
Current Price (6 May, 22) VND141,900
VND 141,900 value both ICT Retail and Long Chau segments. We chose this model because it allows
Target Price VND181,300
VND 181,300
us to better control over the parameters and assumptions. We apply a 5-year FCFF for
Technology Retail and a 10-year FCFF for Pharmaceutical Retail segment, driving VND
Upside 30%
99,203 per share and VND 82,970 per share respectively. We believe this method best
reflects the current situation and future growing picture of the segments in general and
Fig.35: WACC Calculation FRT in specific.
(Details in Appendix D7) Technology Retail: We apply 5-year FCFF as (1) Smartphone segment is reaching
WACC calculation saturation and (2) FRT’s technology retail segment has already stepped into maturity
Risk-free rate (Rf) 2.13% phase, maintain sustainable growth. (Detailed assumptions in Appendix.D1).
Equity risk premium (MRP) 8.21% Pharmaceutical Retail: We apply 10-year FCFF with two stage (2022-2026 & 2027-
Beta (B) 1.18 2031) as Long Chau has passed introduction stage, shifting into the growth stage,
Cost of equity 11.83%
recording net income from negative to positive. (Detailed assumptions in Appendix.D2).
Pre-tax Cost of Debt 3.27%
Tax Rate 19.63%
WEIGHTED AVERAGE COST OF CAPITAL (WACC)
Target D/(D+E) 53.92% We estimate a WACC of 10% for both Technology Retail and Pharmaceutical Retail
WACC 6.9% (Fig.35). The unlevered beta is calculated from peers, then we lever it following the
VND Long-term Inflation 2.50% leverage structure of each segment and adjust the beta to the market average. We
USD Long-term Inflation 1.90% apply the CAPM model for calculating the cost of equity of 11.83% for technology retail
Inflation Differential 0.60% and 8.7% for pharmaceutical retail. We also use our target leverage structure D/(D+E)
Adjusted WACC 7.5% ratio for calculating WACC, reflecting our expected view for capital structure of the
Average market CAGR 12.5%
company.
Average WACC 10.0%


Fig.36: Scenarios (Bear-Base-Bull)

(2022F – 2026F) TERMINAL GROWTH RATE (g)
Technology Retail Bear Base Bull
Our estimated terminal growth rate (g) is 1% from 2026F for the Technology
FPT Shop
Retail segment and 3% from 2031F for the Pharmaceutical Retail segment, based on:
Stores opening 128 200 300
CAPEX 694 686 678 [1] the technology retail segment is reaching saturation; [2] the pharmaceutical retail
%Inflation 2% 2.5% 3% segment still have many potentials to grow. We also benchmark our assumptions
%Rev growth (laptops) 8% 10% 12% following the Vietnam GDP growth, with a CAGR of 11% (IMF). We believe the figures
%Rev growth (phones) 4% 5% 7% best reflect our expectation of the long-term growing picture of both segments of FRT
%Rev growth (Apple) 6% 8% 10%
SCENARIO ANALYSIS
%Rev growth (others) 4% 5% 6%
Pharma. Retail Bear Base Bull
We conduct a recalculation for the price target in two different scenarios, [1] Bear case,
Long Chau representing our conservative view and [2] Bull case (representing our aggressive
Stores opening 1500 1690 1890 view). Main drivers leading to the difference in the result are (1) New stores opening,
CAPEX 656 646 637 (2) Revenue growth per store, and (3) Capex (Fig.36).
%Rev/store growth 3.5% 5% 6.5%
[1] Bear case: we assume that Technology Retail and Pharmaceutical Retail performs
FPT Retail (Output) Bear Base Bull
worse than expected, resulting in a price of VND 171,600/share, representing an upside
CAGR total revenue 18.6% 22.0% 25.9%
CAGR total
of only 20.98%. For Technology Retail, FPT Shop can open only 128 new stores by
25.3% 29.2% 33.3%
gross profit 2026F due to competition from others, equal to 64% of base case and revenue per
CAGR total EBIT 31.6% 35.7% 40.3% store grows less than expected, at a 4.21% CAGR over 2022-2026. For Pharmaceutical
CAGR total net income 34.0% 38.9% 43.8% Retail, Long Chau can open only 1500 stores by 2026, which is 93% of the base
Upside 22.9% 30% 39% scenario. Also, the growth of revenue per store is less than expected, with a CAGR of
Source: Team analysis 3.49% between 2022-2026, and 1% over 2027-2031.
Fig.37: Monte Carlo Simulation [2] Bull case: We assume that Technology Retail & Pharmaceutical Retail outperform
(Appendix D10) our base case, resulting in a price of VND 193,800/share, representing an upside of
100% of outcomes give the share price higher
than 20% above the current price of 36.58%. For ICT Retail, FPT Shop opens 300 stores by 2026F, accounting for 150% of
VND141,900 (6 May, 22) our base case, and the revenue growth rate per store reaches a CAGR of 6.33% over
2000 2022-2026 with an assumption that the company can actively search for more business
1500 lines and demand for ICT products increases. For Pharmaceutical Retail, Long Chau
1000 expands to 3904 stores by 2031F (108% of the base scenario) and revenue growth per
500 store will be higher than expected, with a CAGR of 6.49% for the period 2022 – 2026,
0 and 3% for the period 2027 – 2031. This result is calculated in case Long Chau can
172,457 188,569 successfully acquire 22.68% of the market share by 2031F.
SIMULATION ANALYSIS
Fig.38: Sensitivity Check We perform a Monte Carlo simulation to gain a deeper view on how different scenarios
(Appendix D10)
might impact our results (Fig.37). By testing with 100,000 iterations from key variables
New Long Chau
and assumptions (Appendix.D10) the analysis drives 100% probability of having target
stores opened 74%
%growth in
18% prices higher than current market price, consolidating our recommendation.
revenue
6%
RELATIVE VALUATION
New FPT Shop
stores
We conduct Relative Multiples Valuation as a market-oriented approach to compare the
%growth in mobile 1% result and confirm our recommendation. We apply P/E multiple for Technology Retail
revenue
1%
segment and P/S multiple for Pharmaceutical Retail segment, resulting in a contribution
%growth in
laptop of VND93,060 per share from Technology Retail and VND 87,428 per share from
Pharmaceutical Retail segment. To better reflect the position of FRT in the peers
basket, we adjust them through market filter and financial performance filters (1-Growth
Fig.39: Peers Comparison
(Details in Appendix.D.6)
factors, 2-Probability factors, 3-Risk factors) (Appendix.D6). Rationales for applying
Ticker
each multiple method and criteria for choosing peers are shown below:
Country Relative P/E
(Technology Retail)
Technology Retail: We apply the P/E multiple because we believe this method best
MWG VN Equity Vietnam 1.47
DGW VN Equity Vietnam 1.08 reflects the characteristics of the ICT Retail segment (sustainable, reaching saturation)
PET VN Equity Vietnam 1.02 and FRT’s business model. For spotting peers, we apply top-down approach, narrowing
COM7 TB Equity Thailand 1.82
ERAA IJ Equity Indonesia 0.60 down to Asian economies that have the same ICT demand pattern. We then choose
REDI IN Equity India 0.63
1373 HK Equity Hong Kong 0.96
companies with similar business model (revenue mainly contributed from ICT) to our
Ticker
(Pharmaceutical Retail)
Country Relative P/S basket, adjusted those multiples through market filter and financial performance filters
RRHI Philippines 0.02
to finalize an expected P/E of 11.97 for FRT’s technology retail (Appendix.D6).
KAEF IJ Equity
002727 CH Equity
Indonesia
China
0.05
0.06
Pharmaceutical Retail: We apply P/S multiple due to current performance of Long
603883 CH Equity China 0.13 Chau (The company is stepping into the growth phase, recording positive profit for only
600713 CH Equity China 0.01
600833 CH Equity China 0.12 1 year). We use the same top-down approach for choosing peers, spotting firms with
9627 JP Equity
3034 JP Equity
Japan
Japan
0.02
0.01
similar model in economies with same pattern for pharmaceutical industry (mainly
3341 JP Equity Japan 0.00 Asia). We then adjust the P/S multiples through market filter and financial performance
7679 JP Equity Japan 0.01
2664 JP Equity Japan 0.01 filters to have an expected P/S of 0.77 for FRT’s pharmaceutical retail (Appendix.D6).
DCPJ South Africa 0.07

High Fig.40: Risk matrix INVESTMENT RISKS

[M1] Market Risk | High Cyclicality Risk
As the technology retail market is highly cyclical, demand for electronic devices follows
the business cycle. Thus, a decrease in economic growth or income level will negatively
affect the consumption and hence affect the revenue of FRT. We estimate 5% decrease
Likelihood
Industry
risks
in growth of main technology segments will decrease our target price by 5%.
Mitigation: With FRT’s strong resources base and distinctive strategy prioritizing
customer experience, we expect FRT can maintain its leading position in main business
Market Operational segments (leader in laptop and pharmaceutical segment, strong position in smartphone
risks risks
segment), allowing the company to stay strong in case of economic downturn.
Low
[M2] Market Risk | Interest Rate Risk
High
Impact FRT is highly susceptible to interest rate volatility, due to its high levels of short-term
debts from foreign banks. Thus, regulations to control soaring inflationary pressure
Fig.41: Risk matrix
(Fig.42) could spur banks’ lending rate to rise and thereby, affect FRT’s interest
High
expense & WACC. Our analysis shows that a 1% increase in the average lending
interest rate will result in a price of VND 177,300 (2.2% downside from target price).
I3
I2 Mitigation: We believe that this is the risk that FRT has to accept, especially when
Likelihood
Long Chau pharmacy chain is expanding aggressively. Also, as FRT has just recorded
M1 I1 positive profit recently, we are confident that when Long Chau reaches a certain scale,
M2 its earning will soon help relieve its debt burden.
O1 [I1] Industry Risk | Fast-changing Technology Risk
Fast-changing technology decreases the life cycle of products when brands keep
Low Impact High
producing new products with added features in a short period (Fig.43). This pose a
threat to FRT’s gross margin as inventory becomes obsolete and is often proceeded
Fig.42: Inflation surprises [Index]
(2020-2021)
with lower price. Also, the company also incur additional for continuously purchasing
new technology products. This risk will have high impact on FRT as 1% increase in
100
80 COGS will result in a price of 150,800VND (downgrade 17% from our target price).
60 Mitigation: FRT is capable of forecasting and updating market demand, thus the
40 inventories imported are always up to date. Therefore, this risk can be mitigated.
20
0 [I2] Industry Risk | Fierce Competition Risk
-20 Fierce competition among pharmacy chains could hinder Long Chau’s expansion efforts
-40
(FPT Shop as well). The uncontrollable dominance from Pharmacity or the emergence
of An Khang chain backed by MWG could easily seize revenue from Long Chau,
Emerging & Developing nations
especially as this industry is yet to be fully consolidated. This risk is addressed in our
World
bear scenario, leading to FRT’s valuation price of VND 171,600.
Mitigation: With FRT’s careful expansion strategy, also aiming at customer experience
Source: WorldBank, Team analysis
simultaneously, we believe that FRT, backed by FPT Co., will not only survive but
Fig.43: World replacement cycle length dominate in this industry.
of smartphones [years] (2017-2025)
[I3] Industry Risk | Pharmacist Shortage Risk
3
Our analysis shows that by 2029, Vietnamese pharmacist resource growth cannot keep
2.8 pace with that of the demand, as only Long Chau’s demand itself will make up 50% of
2.6 the total market demand basing on its current plan, let alone other pharmacies. This risk
will affect FRT’s forecast revenue growth, since Long Chau stores cannot reach
2.4
expected expansion: Reaching only 80% Long Chau’s target store openings in our
2.2 forecast period will result in a price of VND 169,700 (7% downside from target price).
Mitigation: As previously analyzed, FRT has a very quality pharmacist training
standards, applying state-of-art technologies, together with support from its prestigious
Consumer Enterprise
medical partners. This advantage will help FRT become an attractive destination for
Source: Counterpoint, Team analysis pharmacist, especially when the pharmacist supply is forecasted to be in a shortage.
Fig.44: Gap analysis for number of [1] Operational Risk | Sales Cannibalization Risk
pharmacist and demand for pharmacist
60 of FPT Long Chau [’000] 62
Sales cannibalization could be a self-threat of FRT, especially when Long Chau is
50% expanding rapidly. This could lead to consequent revenue loss, since one store could
29 32 snatch customers from another. Our sensitivity analysis shows that a 5% drop in
18 22 25
1 2 4 8 11 15 sale/store growth over the forecasted period will release a price of only VND 158,300.
Mitigation: Our research shows that FRT has a well-planned expansion strategy
2019 2021F 2023F 2025F 2027F 2029F
# Vietnam Pharmacist Source: GSO, Team analysis

Est. # Long Chau Pharmacists

regarding both FPT Shop &
Long Chau, compared to
MWG (Fig.44) (Appendix.B4).
Moreover, as FRT is aiming its
expansion in less competitive
regions, like the Northern and
the Central Vietnam, we
believe that this risk will not
pose a serious threat to FRT .

APPENDIX NETWORK
C - INDUSTRY AND E - GOVERNANCE

A - FINANCIALS B - BUSINESS D - VALUATION
COMPETITION AND ESG
1. Income Statement 1. Geospatial analysis 1. Technology retail value 1. DCF valuation key 1. CFA’s Governance
chain assumptions – Tech. scorecard
retail
2. Balance Sheet 2. Store analysis – Long 2. Pharmaceutical retail 2. DCF valuation key 2. Board of Directors
Chau store layout value chain assumptions – Pharma.
retail
3. Cash Flow Statement 3. Store analysis – FPT 3. Domestic competitive 3. DCF valuation - FCFF 3. Board of Managment
Shop vs. thegioididong. com positioning
4. Key Financial Ratios 4. Locational Overlap Rate 4. Porter’s five force 4. Beta calculation
analysis analysis
5. Contributions in added 5. HCMC store footprint 5. Peer selection methods
values
6. Piotroski’s F-score 6. Relative valuation
7. Altman’s EM Z-score 7. WACC calculation
8. Beneish’s M-score 8. Scenario analysis
9. SOTP valuation
10. Monte Carlo Simulation
APPENDIX – GLOSSARY
Abbreviation Full term Description

a business partner that has entered into a contractual relationship with Apple
AAR Apple Authorized Resellers
Computer Inc., to sell software and/or hardware products
Apple Authorized
AASP Service Provider a business that provides repair services for Apple products
APR Apple Premium Reseller offers a full service for professional and business customers, from hands-on
demonstrations and Apple-certified training courses, to affordable leasing and
financing options through Apple Financial Services
Enterprise Resource
ERP Planning (ERP) process used by companies to manage and integrate the important parts of
their businesses
a drug that is available only with written instructions from a doctor or dentist to
ETC Ethical drugs (ETC)
a pharmacist
GHG Greenhouse Gas gas that contributes to the greenhouse effect by absorbing infrared radiation
HCMC Ho Chi Minh city Vietnam's most populated key city, home to 9.1 million people (2021)
Information and Communications
ICT Technology is the infrastructure and components that enable modern computing
a chain store such as hypermarkets, supermarkets, and minimarkets whose
MT Modern Trade
operations are more organized than general trade
OMS Order Managment System a digital way to manage the lifecycle of an order
OTC Over-the-counter (OTC) drugs drugs can be bought without a prescription
stores that are owned by individuals and usually cater to local customer
TT Traditional Trade requests

APPENDIX A.1 – INCOME STATEMENT

VND Billion 2017A 2018A 2019A 2020A 2021A 2022F 2023F 2024F 2025F 2026F
Gross Revenue 13,795 15,890 16,989 14,800 22,620 29,437 38,063 47,074 56,244 65,308
%yoy growth 17.7% 15.2% 6.9% -12.9% 52.8% 30.1% 29.3% 23.7% 19.5% 16.1%
Deductions (649) (591) (355) (139) (125) 0 0 0 0 0
Net Revenue 13,147 15,298 16,634 14,661 22,495 29,437 38,063 47,074 56,244 65,308
%yoy growth 21.1% 16.4% 8.7% -11.9% 53.4% 30.9% 29.3% 23.7% 19.5% 16.1%
COGS (11,330) (13,255) (14,523) (12,620) (19,343) (24,840) (31,687) (38,642) (45,542) (52,506)
%of Net Revenue 86.2% 86.6% 87.3% 86.1% 86.0% 84.4% 83.2% 82.1% 81.0% 80.4%
Gross profit 1,816 2,044 2,111 2,041 3,152 4,597 6,376 8,432 10,702 12,803
%yoy growth 28.8% 12.5% 3.3% -3.3% 54.4% 45.9% 38.7% 32.2% 26.9% 19.6%
%Gross Profit Margin 13.8% 13.4% 12.7% 13.9% 14.0% 15.6% 16.8% 17.9% 19.0% 19.6%
SG&A (1,454) (1,583) (1,768) (1,964) (2,657) (3,755) (5,174) (6,671) (8,208) (9,737)
%yoy growth 23.2% 8.9% 11.7% 11.0% 35.3% 41.4% 37.8% 28.9% 23.0% 18.6%
%of Net Revenue 11.1% 10.3% 10.6% 13.4% 11.8% 12.8% 13.6% 14.2% 14.6% 14.9%
Operating Profit 362 460 343 77 495 841 1,202 1,761 2,495 3,066
%yoy growth 57.4% 27.2% -25.6% (77.4% 539.5% 70.0% 42.9% 46.4% 41.7% 22.9%
%Operating Profit Margin 2.8% 3.0% 2.1% 0.5% 2.2% 2.9% 3.2% 3.7% 4.4% 4.7%
Financial Result (28) (58) (70) (63) 51 (79) (96) (111) (177) (204)
Financial Incomes 54 43 78 71 198 183 254 328 357 424
Financial Expenses (82) (101) (148) (134) (146) (262) (350) (439) (535) (628)
Interest expenses (79) (96) (135) (114) (132) (232) (307) (387) (470) (551)
Other Profit and Loss 29 32 5 14 8 17 24 28 36 43
EBIT 442 530 413 142 686 1,012 1,438 2,065 2,824 3,456
%yoy growth 32.7% 20.0% -22.1% -65.6% 383.0% 47.4% 42.1% 43.6% 36.7% 22.4%
%EBIT Margin 3.4% 3.5% 2.5% 1.0% 3.1% 3.4% 3.8% 4.4% 5.0% 5.3%
EBT 363 435 278 28 554 780 1,131 1,678 2,354 2,904
%yoy growth 40.0% 19.7% -36.1% -89.8% 1849.3% 40.7% 45.0% 48.4% 40.3% 23.4%
%EBT Margin 2.8% 2.8% 1.7% 0.2% 2.5% 2.6% 3.0% 3.6% 4.2% 4.4%
Income Tax (73) (87) (74) (18) (110) (156) (226) (336) (471) (581)
%Tax rate 20.2% 20.0% 26.7% 64.1% 19.9% 20.0% 20.0% 20.0% 20.0% 20.0%
Net Income 290 348 204 10 444 624 905 1,342 1,883 2,323
%yoy growth 39.7% 20.0% -41.4% -95.0% 4244.8% 40.5% 45.0% 48.4% 40.3% 23.4%
%Net Profit Margin 2.2% 2.3% 1.2% 0.1% 2.0% 2.1% 2.4% 2.9% 3.3% 3.6%
EBITDA 443 531 414 143 690 1,033 1,476 2,120 2,894 3,541
%yoy growth 32.3% 19.9% -22.1% -65.3% 381.0% 49.7% 42.9% 43.6% 36.5% 22.4%
%EBITDA marrgin 3.4% 3.5% 2.5% 1.0% 3.1% 3.5% 3.9% 4.5% 5.1% 5.4%
APPENDIX A.2 – BALANCE SHEET

Cash and cash equivalents 638 948 852 702 1,105 1,691 4,526 5,830 9,431 10,959
Short-term financial investments 0 4 495 788 1,821 1,821 1,821 1,821 1,821 1,821
Short-term receivables 1,016 1,207 1,196 1,498 1,985 3,502 3,381 5,180 4,907 6,736
Inventories 1,723 2,506 3,384 1,827 4,930 5,691 8,621 9,455 12,380 13,288
Other short-term assets 131 150 247 145 380 507 675 853 1,038 1,223
Total current assets 3,509 4,815 6,173 4,960 10,222 13,210 19,023 23,139 29,577 34,025
Long-term receivables 76 84 105 116 137 137 137 137 137 137
Property, plant, & equipment 5 5 7 9 16 251 470 664 834 980
Intangible assets 41 40 42 42 156 122 120 118 117 115
Long-term financial investments 0 0 0 0 0 0 0 0 0 0
Other long-term assets 240 223 267 261 255 255 255 255 255 255
Construction in progress 0 0 0 0 0 0 0 0 0 0
Total non-current assets 362 352 421 428 564 765 982 1,175 1,343 1,487
Total Assets 3,871 5,168 6,594 5,388 10,786 13,975 20,005 24,313 30,920 35,512
Payables 1,499 706 1,288 1,215 2,336 2,474 3,712 3,874 5,102 5,280
Short-term loans and debts 1,173 2,947 3,698 2,486 6,047 7,899 11,101 13,310 16,600 18,676
Bonus and welfare funds 12 12 19 17 15 16 17 18 19 20
Current liabilites 3,075 4,009 5,308 4,162 9,107 11,254 16,051 18,730 23,540 26,121
Long-term loans and debts 0 0 0 0 0 0 0 0 0 0
Other long-term payables 0 0 0 0 0 0 0 0 0 0
Non-current liabilities 0 0 6 0 0 0 0 0 0 0
Total liabilities 3,075 4,009 5,314 4,162 9,107 11,254 16,051 18,730 23,540 26,122
Share premium 0 0 0 0 0 0 0 0 0 0
Share capital 400 680 790 790 790 1,185 1,185 1,185 1,185 1,185
Undistributed earnings 396 454 484 424 872 1,537 2,769 4,398 6,195 8,206
Owner’s equity 796 1,159 1,279 1,225 1,679 2,721 3,954 5,583 7,380 9,391
Non-controlling interest 0 0 0 0 0 0 0 0 0 0
Total resources 3,871 5,168 6,594 5,388 10,786 13,975 20,005 24,313 30,920 35,512
APPENDIX A.3 – CASH FLOW STATEMENT

Cash at the beginning of the year 1,458 638 948 852 702 1,105 1,691 4,526 5,830 9,431
Net income 290 348 204 10 444 624 905 1,342 1,883 2,323
Depreciation & Amortization 1 1 1 1 4 21 38 54 69 84
Change in Net Working Capital (59) (1,717) (279) 1,540 (1,758) (1,982) (1,215) (2,166) (1,133) (2,231)
Others (54) (18) (51) (34) (164) (126) (168) (179) (185) (185)
Cash flow from operating activites 179 (1,387) (126) 1,518 (1,474) (1,463) (441) (948) 635 (8)
Disposals of fixed assets 0 0 0 0 0 0 0 0 0 0
Purchase of fixed assets (52) (0) (4) (3) (2) (262) (254) (246) (238) (229)
Gain (Loss) in investments 280 (124) (693) (451) (1,828) 0 0 0 0 0
Other investing activities 35 20 49 58 144 0 0 0 0 0
Cash flow from investing activites 263 (105) (647) (396) (1,686) (262) (254) (246) (238) (229)
Paid dividends 0 0 (69) (79) 0 (39) (142) 0 0 0
Gain (Loss) in capital 0 25 (7) 18 10 0 0 0 0 0
Change in debts and loans (1,262) 1,777 752 (1,212) 3,554 1,851 3,202 2,210 3,290 2,075
Other financing activities 0 0 0 0 0 1,785 2,049 1,763 1,427 898
Cash flow from financing activites (1,262) 1,802 676 (1,273) 3,564 3,596 5,109 3,973 4,717 2,974
Net chang in cash for the year (819) 310 (96) (151) 404 585 2,836 1,303 3,602 1,528
Cash at the end of the year 638 948 852 702 1,105 1,691 4,526 5,830 9,431 10,959

APPENDIX A.4 – KEY FINANCIAL RATIOS

2017A 2018A 2019A 2020A 2021A 2022F 2023F 2024F 2025F 2026F
Profitablity ratios
Gross profit margin 13.8% 13.4% 12.7% 13.9% 14.0% 15.6% 16.8% 17.9% 19.0% 19.6%
EBITDA margin 3.4% 3.5% 2.5% 1.0% 3.1% 3.5% 3.9% 4.5% 5.1% 5.4%
EBIT margin 3.4% 3.5% 2.5% 1.0% 3.1% 3.4% 3.8% 4.4% 5.0% 5.3%
NI margin 2.2% 2.3% 1.2% 0.1% 2.0% 2.1% 2.4% 2.9% 3.3% 3.6%
Return on Assets (ROA) 6.8% 7.7% 3.5% 0.2% 5.5% 5.0% 5.3% 6.1% 6.8% 7.0%
Return on Equity (ROE) 44.2% 35.6% 16.7% 0.8% 30.6% 28.3% 27.1% 28.2% 29.1% 27.7%
ROIC 16.3% 13.3% 5.5% 0.3% 10.8% 9.2% 10.1% 11.8% 13.8% 14.5%
Liquidity ratios
Current ratio 1.1 1.2 1.2 1.2 1.1 1.2 1.2 1.2 1.3 1.3
Quick ratio 0.6 0.6 0.5 0.8 0.6 0.7 0.6 0.7 0.7 0.8
Interest coverage 5.6 5.5 3.1 1.3 5.2 4.4 4.7 5.3 6.0 6.3
Solvency (Financial Leverage)
Net Debt to Equity 0.8 2.0 1.9 0.8 2.1 2.0 1.4 1.2 0.8 0.7
Net Debt to Asset 0.1 0.4 0.4 0.2 0.4 0.4 0.3 0.3 0.2 0.2
Net Debt to EBITDA 1.2 3.8 5.7 6.9 4.5 4.2 3.2 2.7 1.9 1.7
Short-term debt/asset 0.3 0.6 0.6 0.5 0.6 0.6 0.6 0.5 0.5 0.5
Liability/asset 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7
Efficiency ratios
Account receivable turnovers 61.9 56.3 62.5 62.8 177.6 35.4 30.2 27.4 25.6 24.5
Account receivable days 5.9 6.5 5.8 5.8 2.1 10.3 12.1 13.3 14.2 14.9
Account payable turnovers 9.0 13.9 16.7 11.7 12.7 12.2 12.3 12.4 12.5 12.6
Account payable days 41 26 22 31 29 30 30 29 29 29
Inventories turnovers 6.2 6.3 4.9 4.8 5.7 4.7 4.4 4.3 4.2 4.1
Inventories days 59 58 74 75 64 78 82 85 88 89
Cash Conversion Cycle 24 38 58 50 37 59 65 69 73 75
Working Capital turnover 40.6 24.7 19.9 17.6 23.5 19.2 15.5 12.8 10.8 9.4
Working Capital days 9 15 18 21 16 19 24 29 34 39
Dupont Analysis
ROE (avg.) 44.2% 35.6% 16.7% 0.8% 30.6% 28.3% 27.1% 28.2% 29.1% 27.7%
Profit margin 2.2% 2.3% 1.2% 0.1% 2.0% 2.1% 2.4% 2.9% 3.3% 3.6%
Asset turoner (avg.) 3.1 3.4 2.8 2.4 2.8 2.4 2.2 2.1 2.0 2.0
Equity multiplier (avg.) 6.5 4.6 4.8 4.8 5.6 5.6 5.1 4.6 4.3 4.0
APPENDIX A.5 – CONTRIBUTION IN ADDED VALUES
VND Billion 2021 2022F 2023F 2024F 2025F 2026F
Gross Revenue 7,820 6,818 8,626 9,011 9,170 9,064
%Technology Retail 65% 38% 33% 31% 29% 28%
%Pharmaceutical Retail 35% 62% 67% 69% 71% 72%
COGS 6,723 5,497 6,846 6,955 6,899 6,964
Gross profit 1,111 1,445 1,780 2,056 2,270 2,100
SG&A 693 1,099 1,418 1,497 1,536 1,529
EBIT 545 325 427 628 758 633
Net Income 434 180 281 438 541 441

APPENDIX A.6 – PIOTROSKI F-SCORE MODEL

Piotroski F-Score Model by Professor Joseph D. Piotroski is widely usded to assess a company’s financial health and
position in the industry. We applied this model in this research to see if FRT is performing well among its peers in recent
years. The model is established based on 9 binary signals to measure three areas of the firm’s financial condition:
profitability, financial leverage/liquidity, and operating efficiency. Each signal is realized as good (bad) with an indicator
variable of 1 (0). Finally, the aggregate signal measure, F_SCORE, is sum of the 9 fundamental signals.
F-SCORE = F-ROA + F-CFO + F-ΔROA + F-ACCRUAL + F-ΔLEVER + F-ΔLIQUID + EQ_OFFER + F-ΔMARGIN + F-ΔTURN
Signal Definition by Professor Joseph D. Piotroski Indicator

Profitability
ROA (P) Net income before extraordinary items / beginning year total asset F_ROA = 1 if ROA > 0, = 0 otherwise
CFO (P) Cash flow from Operation / beginning year total asset F_CFO = 1 if CFO (P) > 0, = 0 otherwise
∆ROA Current year’s ROA (P) – Prior year’s ROA (P) F_∆ROA = 1 if ∆ROA > 0, = 0 otherwise
ACCRUAL CFO (P) – ROA (P) F_ACCRUAL= 1 if CFO (P) > ROA (P), = 0 otherwise
Leverage, liquidity, and source of funds
∆LEVER Change in Long-term debt / avg. total asset ratio from prior year F-ΔLEVER = 0 if ∆LEVER > 0, 1 otherwise
∆LIQUID Change in Current asset / current liability from prior year F-ΔLIQUID = 1 if ΔLIQUID > 0, 0 otherwise
EQ_OFFER EQ_OFFER = 1 if the firm’s number outstanding shares does not increase from prior year
Operating efficiency
∆MARGIN Current year’s gross margin – Prior year’s gross margin F-ΔMARGIN = 1 if ΔMARGIN > 0, 0 otherwise
∆TURN Chage in sales / beginning’s total assets ratio from prior year F-ΔTURN = 1 if ΔTURN > 0, 0 otherwise
F-SCORE = SUM OF 9 INDICATOR VARIABLE
FRT’s F-Score from 2018-2021 FRT’s F-Score Interpretation from 2018-2021

FRT’s Poitroski F-Score 2018 2019 2020 2021
2018
ROA (P) 1 1 1 1
CFO (P) 0 0 1 0
∆ROA 1 0 0 1 2019
ACCRUAL 0 0 1 0
∆LEVER 1 1 1 1 2020
∆LIQUID 1 0 1 0
EQ_OFFER 0 0 1 1
2021
∆MARGIN 0 0 1 1
∆TURN 1 0 0 1 0 1 2 3 4 5 6 7 8 9
F-SCORE 5 2 7 6
Weak Average Strong FRT's F-Score
FRT vs Technology Retail Peers FRT vs Pharmacy Retail Peers

F-SCore F-SCore
9 9
8 8
7 7
6 FRT 6 FRT
5 5
4 MWG 4
3 3
2 2
1 1
0 0
0 500 1000 1500 2000 2500 3000 3500 4000 4500 0 500 1,000 1,500 2,000 2,500
Market Cap (Million USD) Market Cap (Million USD)
Conclusion: From the F-Score assessment, our view is that FRT’s performance is better than most of its peers in
technology retail and pharmaceutical retail industry
Wolves of Nguyen Tri Phuong

APPENDIX A.7 – ALTMAN Z-SCORE MODEL

We use the Altman Emerging Market Score Model (EM Z- Score Model) to assess the bankruptcy profitability of FRT.
The model is applicable to FRT because it is modified from the original of Altman model to best assess non-manufacturing
firm operating in emerging markets.
[1] The formula
EM Z - score = 3.25 + 6.56A + 3.26B + 6.72C + 1.05D

In which,
A = Current Assets - Current Liabilities / Total Assets
B = Retained Earnings / Total Assets
C = Earnings Before Interest and Taxes / Total Assets
D = Book Value of Equity / Total Liabilities
[2] Interpretation
EM Z – score < 1.1 1.1 < EM Z – score < 2.6 2.6 < EM Z – score
Distress Zone Grey Zone Safe Zone
Have high probability of bankruptcy Have moderate chance of bankruptcy, not high
but not excluded Have low or negligent probability of bankruptcy
FRT’s EM Z-score Coeff. 2017 2018 2019 2020 2021

3.25
A = Current Assets - Current Liabilities / Total Assets 6.56 0.11 0.16 0.13 0.15 0.10
B = Retained Earnings / Total Assets 3.26 0.10 0.09 0.06 0.06 0.08
C = Earnings Before Interest and Taxes / Total Assets 6.72 0.11 0.10 0.06 0.03 0.06
D = Book Value of Equity / Total Liabilities 1.05 0.26 0.29 0.24 0.29 0.18
EM Z - score = 3.25 + 6.56A + 3.26B + 6.72C + 1.05D 5.36 5.55 4.99 4.92 4.81
[3] Result
FRT has EM Z-score > 2.6 in all past year, meaning that with current financial strength, the probability of FRT is negligent.
APPENDIX A.8 – BENEISH M-SCORE
We use the Beneish’s M-score, with 8 variables to assess if FRT is manipulating its historical earnings or not. After
calculation, if the Beneish M-score is less than the -2.22, then it suggests that the company under consideration is not a
manipulator. If Beneish M-score is more than -2.22, then it provides the signal that the company can be the manipulator.
Our rating is based on 2019 onwards, after FRT’s acquisition od Long Chau.
[1] The formula
M-score = −4.84 + 0.92 × DSRI + 0.528 × GMI + 0.404 × AQI + 0.892 × SGI + 0.115 × DEPI −0.172 × SGAI − 0.327 × LVGI + 4.679 × TATA.
[2] Interpretation
FRT’s M-score Coeff. 2019 2020 2021

-4.84
Days Sales in Receivables Index (DRSI) 0.092 1.1 0.7 0.3
Gross Margin Index (GMI) 0.528 1.1 0.9 1.0
Asset Quality Index (AQI) 0.404 0.9 1.2 0.7
Sales Growth Index (SGI) 0.892 1.1 0.9 1.5
Depreciation Index (DEPI) 0.115 1.1 0.7 1.0
Sales General and Administrative Expenses Index (SGAI) -0.172 1.0 1.3 0.9
Leverage Index (LVGI) -0.327 1.0 0.8 1.2
Total Accruals to Total Assets (TATA) 4.679 0.1 -0.3 0.2
Beneish M - score -3.0 -4.7 -2.3
[3] Result
FRT has Beneish M-score < -2.22 from 2019, meaning that FRT is not a manipulator is its earning in 2019-2021/

APPENDIX B.1 – GEOSPATIAL ANALYSIS – DRUG RETAILERS IN HO CHI MINH CITY

Despite being ranked 2nd biggest drug retailer in Vietnam, Long Chau drug chains‘ 1-kilometer radius per store
directly challenges many competitors specifically Pharmacity and An Khang
Long Chau Traffic density (Daily average)
An Khang Long Chau store 1km
High Normal
radius
Pharmacity
Long Chau’s 141 stores distributed in 22 administrations of

HCMC show massive coverage, within one kilometer radius,
Long Chau’s branches compete directly with local
pharmacies, hospital and most importantly, other drug Mật độ tập trung dân
số
retailers such as: An Khang and Pharmacity. Via our
analysis, per Long Chau store, there are at least one drug
retailer in the one-kilometer radius. Furthermore, the stores
are well-positioned to avoid sales cannibalization, while
maintaining a functional supply chain.
The main competitor of Long Chau - Pharmacity, uses a different approach targeting at major locations around
Ho Chi Minh, to establish awareness and soon, economies of scale
1 2
1 Vinhome Central Park Vista Verde condominiums,

complex, Binh Thanh Dist. Dist.2
3 2
3 4
The “Cash-burning” strategy of Pharmacity involves retailing

at the most strategic and favorable locations. Furthermore,
the chain chooses high-income residential area, shop
houses, and gas station to increase visibility and dominate
the convenience store segments. This strategy, however, will
max out the company capital expenditure, and less likely to
lead to a positive earnings. Notably this business model is
Ben Thanh Gas Station, Dist. Thao Dien ward, Dist. 2
non-competitive, because it’s segmented for a target 1
group of customers that’s different from Long Chau’s.

APPENDIX B.2 – STORE ANALYSIS – DIRECT COMPETITION WITH TRADITIONAL PHARMACIES

Long Chau stores are designed with signature layout: Service counter, no (few) medicine shelf and a sizeable
parking space, all of which are to boost purchase time, and traffic
3 3
1 1 1 3
2
2
2
1 Servicing counter and qualified pharmacists ready to consult and prescribe customers
2 Sizeable and convenient parking space 3 Promotions showed via banners
After multiple field visits at many Long Chau stores, we affirm the store layout is a direct competition with traditional
private drug stores in the surrounding area. This is to show Long Chau’s grand strategy to acquire market share from both
Traditional Trade drug retailers and Modern Trade drug retailers.
APPENDIX B.3 – STORE ANALYSIS : NECK-AND-NECK COMPETITION WITH THEGIOIDIDONG.COM

Using store data, we are able to map out all FPT Shop stores and thegioididong.com stores across Ho Chi Minh
city and Hanoi, integrating data analytics tools we conclude a direct competition between the two chains at their
physical outlets
Traffic density (Daily average)
FPT Shop High Normal
thegioididong.com
We apply geospatial analytics tools and Python coding to map the number of FPT stores that are positioned next to
thegioididong.com, our model concludes a 21 pairs of FPT Shop – thegioididong.com across Ho Chi Minh, meaning that
21% of FPT Shop stores in Ho Chi Minh city are directly competing with thegioididong.com on the same street, same
corner, or same area. thegioididong.com is, however, downsizing its operations, with number of store declining throughout
the years. The doors is now open for FRT to take the lead and assert its dominance in the ICT Retail market.

APPENDIX B.4 – OVERLAP ANALYSIS – WHO IS RISKIER TO CANNIBALIZATION?

We look at the store locations of more than 937 stores of Long Chau, FPT Shop, Pharmacity, and
thegioididong.com in Ho Chi Minh city, of which we applied a spatial assessment model to visualize overlapping
store clusters, ultimately FRT’s Long Chau chain and FPT Shop demonstrate supiror location management with
lowe overlap rate:
% overlap % overlap
(1km radius) (1km radius)
81% 35%
Pharmacity stores in Ho Chi Minh city Long Chau stores in Ho Chi Minh city
% overlap % overlap
(1km radius) (1km radius)
82% 33%
thegioididong.com stores in Ho Chi Minh city FPT Shop stores in Ho Chi Minh city
APPENDIX B.5 – LONG CHAU’S HO CHI MINH CITY FOOTPRINT VERSUS OTHER PLAYERS
# stores
141 442 87
% of total store 26% 42% 35%
Population density [people/km2] (2020)
115 42,669

APPENDIX C.1 – VALUE CHAIN ANALYSIS | TECHNOLOGY RETAIL
Value chain
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
AUTHORIZED
PHYSICAL STORE
RETAILERS
Market leaders: MWG, Traditional stores like

FRT, CellphoneS, … Thegioididong, FPT
Shop, …
MANUFACTURERS ICT WHOLESALERS
CONSUMERS
Mainly from Market leaders:
factories in China DGW, FPT, PET AUTHORIZED
RETAILERS E-COMMERCE
Smaller stores selling Selling through own
hand-carried or old websites or e-
phones commerce platforms
APPENDIX C.2 – VALUE CHAIN ANALYSIS | PHARMACEUTICAL RETAIL
Value chain Hospitals

Still limited due to the State’s budget, yet is improving with
Local mafr. (36%) no. of hospital nationwide reached 1,316, operating with Consumers
capacity of 260,009 beds (2.67 beds per ‘000 population) ETC & OTC channel consumption
# players 200 in 2020 in Vietnam [VND trillion]
Drug retailers
Traditional retail
DHG PME Pharma wholesalers
9%
Local Distributor (33%) •• Grocery
Wet markets
stores 2016 2020
CAGR
5% TRA 27 43 OTC
Modern retail 12%
4% IMP ~ 1200 players 78
3% DBD • Hypermarkets/
3% • CPC1
Supermarkets 131 ETC 14%
• Duy Tan 106
75% ... • Department stores/
FDI Distributor (67%) Shopping centers
Others
174
~ 300 players • Convenience
Specialty stores ETC drug consumption
Importer (64%) • DKSH Online retail
• Zueling Pharma breakdown [%]
CAGR
• Mega We Care • E-commerce
# players 20 ... 28 24 Generic -2.5%
Market share (2021)
Traditional
55% Trade 72 76 Branded 0.9%
20% Modern
Trade
25% Long Chau
2016 2022F

APPENDIX C.3 – PLAYERS’ NATIONAL COMPETITIVE POSITIONING PER REGION

To have a better view at competition landscape in Vietnam, we compile data from top 6 major drug retailers in
Vietnam that also segmented themselves in the convenience drug retail sector.
North Vietnam
Population [’000] #pharmacists
Red river
delta 22,920 16,995
# of stores 184 106 12
Northern
Midlands &
Mountains
12,726 7,545
# of stores
30 9 5
Central Vietnam
North &
South Central 20,343 15,535
Coast
# of stores 116 95 17 17
Central
Highlands 5,932 1,902
# of stores 34 24 12 3
South Vietnam
18,343 7,655
Southeast
# of stores 580 221 146 27 13 10
Mekong Delta
# of stores
17,319 10,178
128 90 87 17 2
Ø 16,264 Ø 9,968
Thanks to the expansive strategy of FRT, Long Chau has risen to the position of the second biggest drug chain in
Vietnam. Long Chau is now the market challenger to Pharmacity, however, due to the difference between the
segmentations, Pharmacity is also competing with other convenience stores, and retailers that sell hygiene and personal
care products, while Long Chau target directly at traditional private drug stores, biting a bigger piece of this lucrative
market. 1,047
566
Total stores 262
85 15 10
605
421
Total stores
173
minus 65 3 0
HCMC
Noticeably, Ho Chi Minh has the most attractive demographics for any companies operating in this industry, our high-level
analysis shows that Pharmacity is leading the number of stores in 5/6 economic zones, however, with 42% of company’s
total stores are located Ho Chi Minh city, while this number is 26% for Long Chau. Long Chau is rapidly bridging the gap

in other economic zones with its expansion plans challenging, and from our analysis, will soon dethrone Pharmacity in
upcoming times.

APPENDIX C.4 – PORTER’S FIVE FORCES ANALYSIS
Competitive rivalry
BARGAINING POWER OF SUPPLIERS
TECHNOLOGY RETAIL - 4
• Suppliers are well-known brands with distinctiveness
in products. Therefore, retailers usually have to Bargaining Threat of
accept the price quoted when buying from supplier power of new
and have to sell the products with higher price to gain customers entrants
profits.
PHARMACEUTICAL RETAIL - 3
• FDI and favorable economics condition favor the drug

supply
• As pharmacy chains usually offer a large amount Bargaining Threat of

from supplier, they will get more power, which means power of substitutes
suppliers
less power from the supplier 1 2 3 4 5
Lowest threat Biggest threat
Technology Retail Pharmaceutical Retail
BARGAINING POWER OF CUSTOMERS THREAT OF SUBSTITUTES
TECHNOLOGY RETAIL - 5 TECHNOLOGY RETAIL - 3

• Customers have the scope for switching from different • Customers has more alternative options instead of
retailers as there are many retailers. traditional retail model. They now have different
• Customers can actively choose brands with channels (in-store and online), payment methods
competitive prices or compatible with their needs (installment, down payment, instant payment),
delivery (traditional and home delivery).
PHARMACEUTICAL RETAIL – 3
• As the market is very competitive, pharmacies will PHARMACEUTICAL RETAIL – 4
apply many strategies in favor of customers to gain • For the pharmacy retail industry operating mainly in
market share. Thus, the customers’ bargaining power the OTC channel, ETC is considered a key
is high. substitute.
• However, in the long run, when the market is • Recent regulations from the Government and the
consolidated and there are only few players left, the increasing insurance coverage rate among
customers’ bargaining power will soon drop. Vietnamese population will more favor the ETC and
hospital channel.
COMPETITIVE RIVALRY THREAT OF NEW ENTRANTS
TECHNOLOGY RETAIL – 4 strategies to dominate its peers

• There are many retail brands offering similar products,
but the demand is unable to catch up, so companies
in this industry are offering low-price products and
launch so many intensive promotion campaigns to
stay competitive.
• All top players in the industry have strong backup
(Pharmacity with Mekong Cap, LC with FPT Group,
An Khang with MWG, etc)
• All are involved in the race for market share
• Rapid expansion growth, fast penetration, many
TECHNOLOGY RETAIL – 2
• Capital requirement is high as business needs
to purchase a big amount of supply to benefit
from discounts.
• Giants keep gaining market share through
intense pricing strategies and promotions.
• Government has stricter policies on hand-
carried, unauthorized products.
• Cash-burning race from giants will make no room
for mom-and-pop stores or newcomers
• Also, Customer usually buy medicine on prestige,
and brand image. Also, favorable locations are
often taken by old players.

APPENDIX D.1 – DCF VALUATION’S KEY ASSUMPTIONS | TECHNOLOGY RETAIL
Items Assumptions
Store openings: We forecast that the number of existing stores in 2026F will be 847 (832 FPT Shop, 15
F.Studio). Regarding the expansion in the next 5 years, we expect FRT to have 200 more FPT Shop stores
(expanding its coverage to other provinces, not just cities) and not open more F Studio (because FRT has once
failed to open 200 stores and dominance in Apple mono store is threaten as Apple expands partnership with
other brands). We assume that more stores opened will cause sales cannibalization among stores, so we
forecast that the rate of new store openings will decline gradually over the projected 5 years, with a total of 70
new store openings in 2022F and only 10 in 2026F.
Revenue growth | Laptops and tablets (excluding Macbook) (main growth of Technology Retail): With the
leading position in the laptops segment, acquiring 21% of the market (according to Fitch Solution), we forecast
the laptop segment of FRT grows at a CAGR of 10% until 2026F. From there, the proportion of revenue
increases from 28% to 35.52% in 2026F. Our assumption is completely consistent with the company's business
strategy to focus on laptop segment.
Revenue Revenue growth | Smartphones (excluding iPhone): The smartphone segment in Vietnam is reaching
saturation, and thus, it becomes extremely competitive. Therefore, the company is switching its focus to new
products with higher margins such as Xiaomi or Huawei, …. Based on current industry situation and company
strategies, we forecast the smartphone segment to grows at a CAGR of 5% until 2026F, contributing around
28.15% of total revenue.
Revenue growth | Apple (main growth segment of Technology Retail): With the success in 2021, Apple
products are still a potential revenue source in the future for FRT. However, we still hold a conservative view on
this segment because FRT’s dominance in Apple mono stores is threaten by many newcomer. Therefore, we
forecast that this segment grows at CAGR of 5% until 2026F, and also reduce its contribution in revenue from
40% to 28.22% by 2026F. We believe our assumption is in line with the strategy of the company to diversify the
contribution of products, rather than focus on distinctive category.
 Overall, we forecast the SSSG (%) will grow by an average of 5.14% during 2022F-2026F.
We forecast the gross profit margin of laptop segment, which has a high gross profit margin of 12% in 2021, to
reach 15% in 2026F. Meanwhile, the smartphone segment is forecast to gain a gross profit margin of 18% as
Gross Profit Margin the company actively seeks high-margin products such as those from China (Xiaomi, Huawei). On the other
hand, Apple segment's gross margin has long been stable at 10% historically, so we forecast this segment's
gross margin will also stay the same. Overall, the company's total gross profit margin will reach 14.03% in
2026F.
A significant amount of cash will be transferred to CAPEX in the coming years due to the expansion plan of FPT
CAPEX Shop. We have determined that the amount required to open a store is VND 587 million in 2017 based on
company historical data. In addition, the cost to open a store will also increase with inflation, Based on Vietnam's
average inflation, we expect a 2.5% increase in the cost of opening a store each year. Therefore, we project
Capex over the next 5 years at 137 billion for 200 new stores, an average of 685 million per store.
APPENDIX D.2 – DCF VALUATION’S KEY ASSUMPTIONS | TECHNOLOGY RETAIL
Items Assumptions
Stores opening: We hold an aggressive view Long Chau’s expansion capacity and forecast that Long Chau will
reach 2090 stores by 2026F, and 3634 stores by the end of 2031F. Regarding the expansion strategy in the
coming years, we assume that the company will focus only small pharmacies (with an area of 50-60m 2), not
medium and large ones. Moreover, we also assume Long Chau stores will be traditionally formatted, and try to
dominate the market shares of mom&pop stores. Therefore, we forecast the company will open about 350 more
stores each year and gradually reduce it to 300 by 2031F, with the goal of reaching around 20-30% market
Revenue share of the pharmaceutical retail segment.
SSSG: We assume that the consumer’s behaviour will change after the pandemic. They will less likely spending
much time and money for hospital for common diseases, but instead buy medicine or self-treat at home.
Besides, we also based on Fitch Solution's analysis of OTC and ETC drug consumption growth rate, which is
9.25% and 10.83% CAGR, respectively, during the period 2018 – 2026 to consolidate or forecast. Overall, we
drive the final forecast that Long Chau's SSSG will continue to grow, reaching 8% in 2022 and gradually
decreasing to 2% in 2027F then maintaining at 2% until 2031F.
As Long Chau has huge advantage in high SKU and high market share, the bargaining power towards suppliers
Gross Profit Margin is relatively high. Therefore, we forecast the gross profit margin to reach 21% in 2022F, gradually increase to
25% in 2026F, and remain the same till 2031F.
Based on our analysis, the amount required to open a large drug store (150m 2) is more than 1 billion VND, a
medium drug store (80-100m2) is about 800 million VND and a small drug store (50-60m2) is 600 million VND. In
addition, the cost to open each store will also increase with inflation. Based on Vietnam's average inflation, we
CAPEX
expect a 2.5% increase in the cost to open a new store each year. According to the company's strategy to open
only small stores (mom&pop model) in the near future, we forecast the Capex needed is VND 2,220 billion for
3234 new stores openings in the next 10 years, with an average of VND 686 million per store.


APPENDIX D.3 – DISCOUNTED CASH FLOW VALUATION: FCFF

We use a 5-year DCF model for the technology retail segment and a 10-year DCF model for Long Chau.
Technology Retail: VND Billion 2021A 2022F 2023F 2024F 2025F 2026F Technology Retail: VND Billion
Net income 440 561 688 815 899 1,006
Cumulative PV of FCFF 2,142
Non-cash charge 35 6 9 10 11 12
After-tax interest expense 90 149 181 216 253 292 Terminal value 9,494
Capex (2) (47) (37) (28) (18) (7) PV of terminal value 6,092
Working capital investment (1,018) (374) (447) (480) (336) (457) Firm value 8,234
FCFF (455) 296 393 534 809 846 Cash and bank depostis 4,341
Debts 4,740
WACC 10% 10% 10% 10% 10% Equity Value 7,835
Discount period (years) 0.65 1.65 2.65 3.65 4.65
Discount factor 0.94 0.85 0.78 0.71 0.64 FRT Ownership % 100%
Present value (PV) of FCFF 278 335 415 571 543 Attributable Equity Value 7,835
Pharmceutical retail: VND Billion 2021A 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F Pharmaceutial retail: VND Billion
Net income 4 63 217 527 984 1,317 1,573 1,831 2,092 2,356 2,687
Cumulative PV of FCFF (1,942)
Non-cash charge 0 15 29 44 59 74 89 105 120 135 151
After-tax interest expense 20 46 80 116 152 184 215 249 287 327 306 Terminal value 27,124
Capex (1) (216) (219) (222) (224) (227) (228) (229) (231) (232) (236) PV of terminal value 10,807
Working capital investment (873) (1,734) (936) (1,865) (981) (1,959) (925) (2,015) (987) (2,075) (1,065) Firm value 8,865
(850) (1,826) (828) (1,399) (11) (611) 724 (60) 1,281 512 1,843
FCFF 4 63 217 527 984 1,317 1,573 1,831 2,092 2,356 2,687 Cash and bank depostis 145
Debts 1,307
WACC 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Discount period (years) 0.65 1.65 2.65 3.65 4.65 5.65 6.65 7.65 8.65 9.65 Equity Value 7,703
Discount factor 0.94 0.85 0.78 0.71 0.64 0.58 0.53 0.48 0.44 0.40 FRT Ownership % 85.07%
Present value (PV) of FCFF (1,716) (708) (1,086) (8) (392) 422 (32) 618 224 734 Attributable Equity Value 6,553
APPENDIX D.4 – BETA CALCULATION

Based on 5-year Beta of FRT’s peers in 2 segments: technology retail & pharmaceutical retail, we calculate the unlevered
Beta of 1.08 & 0.66 spectively. Then, we relevered these betas and received outcomes of 1.27 & 0.7. Finally, based on
Blume’s assumptions that Beta tends tends to regress towards the average level of the market, we adjust the Beta again
and receive betas of 1.18 & 0.8 for technology retail and pharmaceutical retail segment respectively.
Adjusted Beta (*) = Regression Beta (0.67) + 1.00 (0.33)

BETA CALCULATION: TECHNOLOGY RETAIL (FPRT SHOP) RELEVERED
AND ADJUSTED BETAa
Ticker Name Country Beta
MWG VN Equity The Gioi Di Dong Vietnam 0.96 Unlevered beta 1.08
DGW VN Equity Digiworld Corporation Vietnam 1.06 Net Debt / Equity 0.22
PET VN Equity PetroVietnam General Services JSC Vietnam 0.84 Tax rate (%) 19.63%
COM7 TB Equity Com7 PCL Thailand 1.31
ERAA IJ Equity Erajaya Swasembada Tbk (ERAA) Indonesia 1.66 Levered beta 1.27
REDI IN Equity Redington India India 1.03
1373 HK Equity International Housewares Retail Co Ltd HongKong 0.69 Adjusted beta (*) 1.18
Average 1.08
BETA CALCULATION: PHARMACEUTICAL RETAIL (LONG CHAU)
Ticker Name Country Beta
RRHI Robinsons Retail Holdings Inc Phillippines 0.5
KAEF IJ Equity Kimia Farma Persero Tbk Indonesia 1.18
002727 CH Equity Yunnan Hongxiang Yixintang Pharmaceutical Co Ltd China -0.47

RELEVERED AND ADJUSTED BETA
603883 CH Equity LBX Pharmacy Chain JSC China 0.54
Unlevered beta 0.66
600713 CH Equity NanJing Pharmaceutical Co Ltd China 0.81
600833 CH Equity Shanghai No1 Pharmacy Co Ltd China 1.06 Net Debt / Equity 0.06
9627 JP Equity Ain Pharmaciez Inc Japan 1.13 Tax rate (%) 2.06%
3034 JP Equity Qol Co Ltd Japan 0.31
3341 JP Equity Nihon Chouzai Co Ltd Japan 0.91

Levered beta 0.7
7679 JP Equity Yakuodo Co Ltd Japan 0.55
2664 JP Equity Cawachi Ltd Japan 0.56
3148 JP Equity Create SD Holdings Co Ltd Japan 0.5 Adjusted beta (*) 0.80
9267 JP Equity Genky Drugstores Co Ltd Japan 0.83
DCPJ Dis-Chem Pharmacies South Africa 0.89
Average 0.66

APPENDIX D.5 – COMPARABLE PEERS SELECTION METHODOLOGIES
Filter I II III Filter III

Business Segmentations I Filter II
Comparable
Key relevant markets business model (ICT
> Vietnam retail)
Technology retail > Philipines Relevant business > Company 1
> Indonesia positioning > Company 2
> Japan Down-stream > …
> China retail value chain
> South Africa ICT retail and
> Thailand Pharmaceutical
> Hongkong retail Comparable
> India business model Shortlist of
Pharmaceutical retail (Drug retail) attractive
> Company 1
> Company 2
comparable
> … peer group
To choose the right market
To choose the business To choose the right company
model Relevant business Main revenue source
> The main revenue source of the
Relevant market positioning comparables should be from
Criteria
> Matching GDP growth, > Companies whose source of respective sector of FRT
population, and economic revenue come from Modern
Key financial measures
cycle Trade channel
> Operations sharing resemblance
> Matching trade and retail Key differentiators to the operations of FRT
policies aligned with the > ICT Retail and Drug Retail > Same revenue growth
tech. retail and (And other relevant Retail
pharmaceutical retail format)
segment > Nationwide foot print
APPENDIX D.6 – RELATIVE VALUATION

We use P/E multiple and P/S multiple valuation for FRT’s technology retail segment and Long Chau respectively, adjusted
from the market multiple. Then, we continue to adjust these multiples from FRT’s financial performance among its peers.
Our key measures in financial performance are [1] Growth factors; [2] Probability factors; and [3] Risk factors.
TECHNOLOGY RETAIL Growth factor Probability factor Risk factor RELATIVE ASSESSMENT Adj. P/S Statistics
Q1 11.47
(Adjusted P/E) (CAGR 2019-2021) (Avg. 2019-2021) (Avg.2019-2021) Historic 2017 2018 2019 2020 2021 Median 11.97
Q3 13.23
Revenue NI to sha Risk Market P/E Relative P/E P/E P/E P/E P/E Bear Spread 0.50x
Beta Ticker Country GPM ROE* ROIC* Bull Spread 1.26x
growth reholder index* P/E (LTM) P/E (LTM) 2017 2018 2019 2020 2021
0.96 MWG VN Equity Vietnam 10.40% 13.56% 21.32% 26.21% 21.10% 2.23 14.47 21.25 1.47 18.29 13.01 13.16 13.59 19.70
10.58 8.39 5.81 13.79 16.56 Attributable equity value
1.06 DGW VN Equity Vietnam 58.00% 100.74% 6.82% 28.08% 29.09% 2.31 14.47 15.58 1.08
Earning Forward 12M 614
0.84 PET VN Equity Vietnam 33.44% 51.00% 5.5% 10.1% 6.8% 1.60 14.47 14.69 1.02 8.19 6.57 5.74 10.53 12.36 P/E 11.97
1.31 COM7 TB Equity Thailand 22.00% 44.93% 13.1% 42.2% 30.6% 1.88 19.88 36.20 1.82 31.96 20.95 26.24 31.45 37.33 Implied Equity Value 7,350
(bn. VND)
1.66 ERAA IJ Equity Indonesia 14.20% 84.15% 10.0% 11.4% 8.8% 2.45 13.92 8.31 0.60 6.28 8.03 19.51 11.46 9.38
FRT Ownership % 100%
1.03 REDI IN Equity India 7.34% 18.44% 1.9% 13.7% 14.8% 1.62 23.72 14.83 0.63 9.48 12.19 8.01 5.18 9.82 Attributable Equity Value 7,350
(bn. VND)
0.69 1373 HK Equity HongKong 7.63% 47.15% 45.9% 21.8% 29.5% 1.86 10.93 10.52 0.96 14.43 10.89 12.41 9.00 7.67
1.08 Average peers 14.20% 47.15% 10.01% 21.84% 21.10% 1.88 1.08 0.91 0.72 0.84 0.87 1.00
Relative to peers 0.93x 0.93x 0.91x 1.03x 0.97x 1.03x 1.04x
FRT (FPT Shop) 6.48% 33.85% 12.80% 18.18% 24.63% 2.00
Target P/E adjusted from market 14.47 15.64 13.10 10.49 12.20 12.54 14.52
Target P/E adjusted from financial performance 0.93x 14.60 12.24 9.79 11.39 11.71 13.56
PHARACEUTICAL RETAIL Growth factor Probability factor Risk factor RELATIVE ASSEMENT
Adjusted P/S (CAGR 2019-2021 (Avg. 2019-2021) 2019-2021 Historic 2017 2018 2019 2020 2021
Revenue Market
Beta Ticker Country CFO GPM Risk index* P/S Relative P/S P/S P/S P/S P/S Adj. P/S Statistics
growth P/E (LTM) P/S(LTM) 2017 2018 2019 2020 2021 Q1 0.68
0.5 RRHI Phillip. -0.56% -20.64% 22.53% 1.46 22.49 0.53 0.02 1.16 0.84 0.77 0.68 0.65 Median 0.77
1.18 KAEF IJ Equity Indo. 16.27% -66.00% 36.73% 2.98 13.92 0.64 0.05 2.45 1.71 0.74 2.36 1.05 Q3 0.82
-0.47 002727 CH Equity China 22.10% 39.90% 39.81% 1.84 12.34 0.79 0.06 1.37 1.10 1.26 1.52 1.56 Bear Spread 0.08x
0.54 603883 CH Equity China 19% 25% 33.44% 2.05 12.34 1.57 0.13 2.25 1.42 1.57 1.81 1.28 Bull Spread 0.06x
0.81 600713 CH Equity China 14% 6.49% 3.34 12.34 0.11 0.01 0.19 0.14 0.13 0.12 0.11
1.06 600833 CH Equity China 10% -42% 18.52% 1.03 12.34 1.45 0.12 1.99 1.73 1.69 1.37 1.49
1.13 9627 JP Equity Japan 6% 3% 15.98% 0.51 27.6 0.64 0.02 0.99 0.93 1.14 0.73 0.72 Attributable equity value
0.31 3034 JP Equity Japan 8% 53% 12.73% 1.13 27.6 0.24 0.01 0.42 0.51 0.40 0.30 0.36 Sales forward 10,569
P/S forward 0.77
0.91 3341 JP Equity Japan 4% 19% 17.50% 1.01 27.6 0.12 0.00 0.22 0.24 0.18 0.19 0.13
Implied Equity Value 8,117
0.55 7679 JP Equity Japan 7% -21% 22.93% 1.40 27.6 0.30 0.01 0.83 0.57 0.43 0.46 0.40 (bn. VND)
0.56 2664 JP Equity Japan 0% -26% 22.36% 0.84 27.6 0.16 0.01 0.22 0.16 0.15 0.23 0.19 FRT Ownership % 85.07%
0.5 3148 JP Equity Japan 11% -5% 27.67% 0.86 27.6 0.54 0.02 0.67 0.77 0.52 0.67 0.60 Attributable Equity Value 6,905
0.83 9267 JP Equity Japan 20% 71% 22.00% 1.16 27.6 0.32 0.01 0.69 0.38 0.41 0.40 0.32 (bn. VND)
0.89 DCPJ Sth. Africa 0% 66% 23.25% 1.27 14.86 1.11 0.07 1.13 1.52 1.04 0.78 0.73
0.8 Average peers 8.93% 2.85% 22.45% 1.22 0.04 0.07 0.05 0.05 0.05 0.04
Relative to peers 1.06x 2.55x 1.81x 0.98x 1.55x
FRT (FPT Shop) 177.62% 86% 20.15% 2.44
Target P/S adjusted from market 14.47 0.56 0.95 0.77 0.67 0.78 0.63

Target P/S adjusted from financial performance 1.06x 0.60 1.01 0.82 0.72 0.82 0.67
(*) ROE (%) = Net income attributed to common shareholder / (Total Equity - Minority interest); ROIC (%) = Net Income / (Total Asset - Cash & Cash Equivalent - Shorterm Investment-Payables)
Risk Index = (Days Sales Outstanding + Days of Inventory on Hand) / DPO * (1-Operating Margin)

APPENDIX D.7 – WACC CALCULATION

We calculate the WACC to be 10% for both Technology Retail segment and Pharmacy Retail segment.
Vietnam Market Risk Premium: Professor Aswath Damodaran has estimated the Vietnam MRP to be 8.21%.
Unlevered Beta. Based on the betas from peers over a 5-year period, we calculate an unlevered beta of 1.08x for
Technology Retail and 0.66x for Pharmaceutical Retail. We then relever them, reflecting the leverage structure of each
segment, and arrive at a beta of 1.27x for Technology Retail and 0.70x for Pharmaceutical Retail. Finally, we base on
Blume's assumption that betas will tend to eventually converge to the market average level, adjust the beta using formula
Adjusted Beta = Regression Beta (0.67) + 1.00 (0.33) to arrive a beta at 1.18x for Technology Retail segment and 0.80x
for Pharmaceutical Retail segment.
Cost of equity: We use the CAPM model to estimate the cost of equity of 11.83% for Technology Retail segment and
8.70% for Pharmaceutical Retail segment.
Cost of debt. Based on FRT’s liabilities and current loan payments, we estimate the cost of debt of 3.27% for Technology
Retail 3.27% and 2.42% for Pharmaceutical Retail.
WACC: With Cost of Capital, Pre-tax Cost of Debt, Tax Rate and expected capital structure, we first calculate the WACC
for of 6.9% and 5% both technology and pharmaceutical retail. Then, we adjust for the difference inflation rate between
VND & USD, resulting in an adjusted WACC of 7.5% and 5.6% for the two segments. However, this figure is relatively low
compared to the rate of return required by investors in the current market, and does not reflect the risk level of the
company's future cash flows. Therefore, we use the average growth rate of the Vietnam Stock Market Index (VNI), which
is 12.5% as a benchmark (50% weight) to better adjust our WACC (50% weight). We then arrive at a WACC of 10% and
9.0% for technology and pharmaceutical retail segment, finally choosing a 10% WACC as a representative for both.
WACC calculation (Technology Retail) WACC calculation (Pharmaceutical Retail)
Risk-free rate (Rf) 2.13% Risk-free rate (Rf) 2.13%
Equity risk premium (MRP) 8.21% Equity risk premium (MRP) 8.21%
Beta (B) 1.18 Beta (B) 0.80
Cost of equity 11.83% Cost of equity 8.70%
Pre-tax Cost of Debt 3.27% Pre-tax Cost of Debt 2.42%
Tax Rate 19.63% Tax Rate 2.06%
Target D/(D+E) 53.92% Target D/(D+E) 0.59
WACC 6.9% WACC 5.0%
VND Long-term Inflation 2.50% VND Long-term Inflation 2.50%
USD Long-term Inflation 1.90% USD Long-term Inflation 1.90%
Inflation Differential 0.60% Inflation Differential 0.60%
Adjusted WACC 7.5% Adjusted WACC 5.6%
Average market CAGR 12.5% Average market CAGR 12.5%
Average WACC 10.0% Average WACC 9.0%
APPENDIX D.8 – SCENARIO ANALYSIS
200,000 VND 193,800
180,000 VND 181,300
160,000 VND 171,600
VND
140,000 141,900
120,000
100,000
80,000
60,000
40,000
20,000
0
5/5/2020 5/5/2021 5/5/2022

APPENDIX D.8 – SCENARIO ANALYSIS

TECHNOLOGY RETAIL
Technology Retail | Revenue 2022F 2023F 2024F 2025F 2026F
FPT Shop store openings
Best Case 100 80 60 40 20
Base Case 70 55 40 25 10
Worst Case 50 38 26 14 0
%Revenue growth (Laptops)
Best Case 12% 12% 12% 12% 12%
Base Case 10% 10% 10% 10% 10%
Worst Case 8% 8% 8% 8% 8%
%Revenue growth (Smartphones)
Best Case 7% 7% 7% 7% 7%
Base Case 5% 5% 5% 5% 5%
Worst Case 4% 4% 4% 4% 4%
%Revenue growth (Others)
Best Case 10% 10% 10% 10% 10%
Base Case 8% 8% 8% 8% 8%
Worst Case 6% 6% 6% 6% 6%
F.Studio store openings
Best Case 0 0 0 0 0
Base Case 0 0 0 0 0
Worst Case 0 0 0 0 0
%Revenue growth (iPhone)
Best Case 6% 6% 6% 6% 6%
Base Case 5% 5% 5% 5% 5%
Worst Case 4% 4% 4% 4% 4%
Technology Retail | Fixed Assets 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F
%Inflation (Construction prices)
Best Case 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Base Case 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
Worst Case 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
PHARMACEUTICAL RETAIL
Pharmaceutical Retail | Revenue 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F
Long Chau store openings
Best Case 400 389 378 367 356 345 334 323 312 300
Base Case 350 344 338 332 326 320 314 308 302 300
Worst Case 300 300 300 300 300 300 300 300 300 300
%Revenue growth per store
Best Case 10% 9% 7% 6% 4% 3% 3% 3% 3% 3%
Base Case 8% 7% 6% 4% 3% 2% 2% 2% 2% 2%
Worst Case 6% 5% 4% 3% 2% 1% 1% 1% 1% 1%
Pharmaceutical Retail | Fixed Assets 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F
%Inflation (Construction prices)
Best Case 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Base Case 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
Worst Case 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%

APPENDIX D.9 – SUM- OF-THE-PART VALUATION

SUM-OF-THE-PARTS VALUATION
Valuation Method Implied Equity Value (Bn. VND) Weight (%) Value (Bn. VND) Effective Interest Ownership Attributed Value to FRT (Bn.VND)
DCF - FCFF 7,835 50%

Technology Retail (FPT Shop) 7,592 100%
7,593
Multiple – P/E 7,350 50%
DCF - FCFF 7,703 50%

Pharmacy Retail (Long Chau) 85.07%
7,910 6,729
Multiple – P/S 8,117 50%
Total Equity Value (FRT) (Bn. VND) 14,322

Discount (%) 0%
Discounted Equity Value (Bn. VND) 14,322
Shares Outstanding (Million) 78,981,792
Target Price (VND/Share) 181,300
Current Price 141,900
Upside/downside to current price 28%
APPENDIX D.10 – MONTE CARLO SIMULATION

[1] We perform a Monte Carlo simulation analysis to determine the sensitivity of the model towards key hypothetical
variables. We changed the predictors of new store openings and revenue growth for each business segment.
Statistics Forecast values (SOTP Val) Statistics Forecast values SOTP Val (cont'd)
Trials 100,000 0% 172,274
Base Case 184,629 10% 179,443
Mean 187,511
20% 181,660
Median 187,291
Standard Deviation 6,459 30% 183,641
Variance 41,719,224 40% 185,480
Skewness 0.7750 50% 187,291
Kurtosis 7.15 60% 189,038
Coeff. of Variation 0.0344
70% 190,835
Minimum 172,274
Maximum 312,241 80% 192,784
Range Width 139,967 90% 195,408
Mean Std. Error 20 100% 312,241
Source: Team analysis Source: Team analysis
[2] Result: after running simulations with 100,000 iterations, we observe that there is a 100% probability of yielding the
price higher than 20% above the current price of VND 141,900 on 6 May, 2022. From the Sensitivity Check, we can also
conclude that the most sensitive variable in the model is the number of new stores opening of Long Chau and annual
revenue growth (%) per store. This is completely in line with FRT's expansion strategy as well as Long Chau's
competitive advantage in the pharmaceutical retail segment.
Monte Carlo simulation

Sensitivity Check
2000
New Long Chau
74%
stores opened
1500 18%
%growth in
revenue
6%
1000 New FPT Shop
stores
1%
%growth in mobile
500 revenue
1%
%growth in
0 laptop
172,457 188,569

APPENDIX E.1 – EVALUATION OF FRT’S QUALITY OF CORPORATE GOVERNANCE

To evaluate the company’s quality of corporate governance,
each committee of the board is evaluated on a scale of 1 to 4 Executive
based on the roles that they have to fulfill and criteria Committee
corresponding to these roles as enumerated in CFA Institute
Corporate Governance Manual for Investors. The following table
summarizes the analysis:
Legend: Shareholders’
Compensation Right
1 - The company did not follow the criteria at all,
Committee Protection
2 - The company did not follow the criteria,
3 - The company followed the criteria,
4 - The company has excellent policies on this criteria.
Audit Committee
CFA INSTITUTE FRAMEWORK CORPORATE GOVERNANCE
EXECUTIVE COMMITTEE
Criteria Description Rating Company Policies
Boards must be willing to and

Independence capable of scrutinizing management 3 At least 1/3 of the Board is independent members
- (Article 5, Clause 4)
performance and setting reasonable
compensation
Corporate practices must reflect the 4 The Board’s fiduciary duties, responsibilities,
Accountability Board’s answerability to its owners and accountabilities are clearly stated
Directors must be responsive to All basic shareholders’ rights are guaranteed,
shareholders’ wishes, which can be especially regarding information access, voting
Responsiveness expressed through elections or votes on 3
rights, financial rights, and participation in
shareholder
important decision-making processes
proposals, and must act accordingly
The Board currently has 5 members that have
Directors should add value to worked at FRT for more than 5 years and 6
Competence the corporation with their specific 4 executive members that are experts with
skills or expertise in a particular field extensive experiences in the fields of finance,
business, investment, law... (Article 6, Clause 1-4)
There is a careful screening and detailed electoral
Elections Annually elect directors 3 process during annual shareholder meetings
Board Adequate attendance at Board and
Attendance 4 All Board members attend all the meetings (9/9)
committee meetings
Reasonable number of board There are 8 directors to the board for the year,
as
Directorship 4 stipulated in the Articles of Incorporation, with 3
directorships
advisory board members
Elections Majority voting in director elections 3 Directors are elected through majority voting
Related party transactions are fully disclosed. The
Related Party No materialistic related fair value for transactions and leasing terms
Transactions party transactions 3 are evaluated objectively by external property
consultants
Board of at least 5 but no more than 15
Board Members members 4 The Board consists of 11 members
Independent Board must have greater than 2

Members independent directors or 20% 2 out of 11 members of the Board is
4 independent, accounting for 45.5%
independent members of the
board. Ms. Nguyen Bach Diep holds the Chairwoman
Roles of CEO and Chair should be
Role Delegation 3 position and Mr. Hoang Trung Kien holds the
separated
CEO position
Established Executive, Audit, FRT does have established Executive, Audit,
Committees Compensation, Nominating, and Compliance Committee

Compensation and Compliance Committee
, Nominating,
Average score 3.5

AUDIT COMMITTEE
The consolidated financial statements has given a true and fair

Auditor’s opinion should be impartial and view in all crucial aspects upon the related documents and
professional Independence is records, in accordance with the Accounting Standards,
Independent
compromised when the author receives Vietnamese Enterprises Accounting System and the legal
Audit
provisions related to the preparation and presentation of
4 financial statements.; The committee monitors the external
significant payment for non-audit auditor’s independence and objectivity
activities
Independent Board's Audit Committee should be The audit committee or the Supervisory Board is led by
Audit independent 4 Mr.Nguyen Dinh Hung – Head of the Supervisory Board
Company’s financials should have

PwC Vietnam was one of two auditing firms whose service
integrity (Items that raise concerns
quality was rated "Good" in 2019 by the State Securities
include auditor changes,
Financial Commission. Statements are publicly disclosed with notes
inconsistency over years, material 4 to help investors understand how accounts were settled.
Integrity
weaknesses in the company’s The
controls, restatements, and excessive committee also ensures that the external auditor has adequate
fees paid for non-audit work) quality control procedures.
Selection Company should allow shareholders to The appointment, reappointment, or removal of the external
of
Auditor 4 auditor is recommended by the audit committee, approved by
ratify the selection of auditor
the Board, and ratified by shareholders
Average score 4
COMPENSATION COMMITTEE
Performance metrics should Compensation is determined in annual general

Performance
encourage executives to make 3 meeting and offers attractive bonuses for completing
Metrics
decisions that benefit shareholders and exceeding the after-tax profit plan
Performance The Board Charter is publicly available and disclosed in the

Performance Metrics should 2
company annual report, and approved in annual general
Metrics
be communicated to meeting
shareholders
Performance The Boards did have shares payment policy as part of its
A portion of executive 3
current compensation for Directors and Officers
Metrics
compensations should be in the form
of equity
Average score 2.6
SHAREHOLDER RIGHTS’ PROTECTION
Election One share, one vote 4 1 share – 1 vote is applied
Shareholders are entitled to dividends subject to the Board’s

Right to Dividend 4
discretion
Absence of supermajority vote 4 The company reserves the voting requirement prescribed in
the relevant laws, including those prescribing supermajorities
requirements
Minority shareholders also have the rights to propose the holding
Shareholder Right of shareholders to call special
Rights meetings Information
4
4 Appraisal rights

of and inclusion of items that relate directly
mee to the business corporation, recognized Shareholders are entitled to access company materials
tings by the Board without restrictions. They also can exercise their right to
dissent and require payment in the fair value of their shares
Average score 4
OVERALL RATING 4.0

APPENDIX E.2 – FPT RETAIL'S BOARD OF DIRECTORS
NGUYEN BACH DIEP

Chairman of BOD
HOANG TRUNG KIEN TRINH HOA GIANG NGUYEN DAC VIET DUNG LE HONG VIET
Member of BOD, CEO Member of BOD, EVP Outside Director Outside Director
Name Position Education level Appoint Experience
• 1998 - 2001: Assistant to the Director of Retail Sales FRT

• 2001 - 2003: Deputy Director - Business Unit
Bachelor of • 2003 - 2008: Deputy General Director - FPT Mobile
Administration • 10/2008 - 2009: General Director - Ivoice Telephone Company
Nguyen Chairman of
Business at Ho Chi 2017 • 2009 - 2011: General Director - FPT Telecom in the South
Bach Diep BOD
Minh City Open • 2011 - 2012: General Director - FPT Retail Co., Ltd
University • 2012 - 2017: General Director – FRT JSC
• 2017 to 2020: Chairman of BOD, General Director FRT
• 2020 to present: Chairman of BOD
• 01/2000 - 12/2006: Sales - FPT Software Solution Company
• 2007 - 2010: Vice President of 4T Center, Deputy Director of Internet Data
Center, Deputy General Director of FPT Internet Data Co., Ltd., Director of
Master of Business HN 1 Branch, FTN Company, Director of Project Department, Director of
Administration and Region 1, FPT Telecom JSC.
Hoang Member of
Information Systems 2018 • 07/2011 - 06/2012: Director of Region 2, FPT Telecom JSC
Trung Kien BOD & CEO
at Free University of • 07/2012 - 2016: Deputy General Director of FPT Telecom JSC
Brussels • 2017: Deputy General Director of FPT Information System
• 2018: Deputy General Director of FPT Information System Company,
Member of BOD of FRT
• 2020: Member of BOD, CEO
• 1994 - 2001: Lecturer at Faculty of Tourism, Hanoi Open University
Bachelor at University
• 1997 - 2001: Meritus Westlake Hanoi Hotel
of Languages and
Trinh Hoa Member of • 2001 - 2003: Human Resources Director of VKO Trade Center
International Studies 2012
Giang BOD • 2003 - 2007: In charge of FPT Mobile showroom system
(VNU), Thuongmai
University. • 2007 - 2011: Sales Director, Deputy General Director of FRT
• 2012 - present: Member of the BOD, Deputy General Director of FRT
• 1996: Graduated from Faculty of Information Technology, University of
Science and Technology, Hanoi
• 1996 - 1999: programmer at FPT Information System Co., Ltd
Nguyen IT Engineer at Hanoi
Outside University of Science • 1999 -2002 : Head of Development for US and Canadian markets FPT
Dac Viet 2020
Director and Technology. Software JSC
Dung
• 2002 - 2007: Director of R&D Center of FPT Telecom.
• 2007 – 09/2009 : Deputy General Director of FPT Telecom.
• 28/5/2020 – present: Member of the BOD of FRT
• 2008 - 2009: Microsoft virtualization specialist, Singapore
• 2008 - 2009: Technology Director of FPT Corporation in Asia Pacific – FAP
Software Engineer at • 2010 - 2011: Technology Director of GNC (Global Notes Compete), under
Le Hong Outside University of Sydney FPT Software Company
Viet Director 2018 • 2011 - 2012: CEO of Smart OSC Joint Stock Company and Obis JSC
(Australia)
• 2012 - 2015: Technology Director of FPT Software Company
• 2015 - 2018: CTO of FPT Corporation
• 2018: Member of the BOD of FRT

APPENDIX E.3 – FPT RETAIL'S BOARD OF MANAGEMENT
TRINH HOA GIANG HOANG TRUNG KIEN NGUYEN VIET ANH

Member of BOD, EVP Member of BOD, CEO EVP
NGUYEN DO QUYEN HOANG CAO CHUNG NGO QUOC BAO TRAN THANH HA
PHAM DUY HOANG NAM
COO CHRO CXMO CIO
CFO
Name Position Education level Appointed day Experience
Member of BOD, • Member of BOD and CEO, FPT Retail

Hoang Trung Kien Master of BA and Information
• Deputy General Director, FPT
CEO Systems at Free University of 2018
Information System Company
Brussels
• Deputy General Director, FPT Telecom
Bachelor at University of • Member of the BOD and EVP, FPT

Member of BOD, Languages and International Retail
Trinh Hoa Giang 2012 • HR Director, VKO Trade Center
EVP Studies (VNU) and
• Lecturer at Faculty of Tourism, Hanoi
Thuongmai University.
Open University
• EVP, FPT Retail

• National Sales Director, Apple South
Master of Business Asia Pte Ltd
Administration Marketing at • CFO and National Sales Director, Nokia
Nguyen Viet Anh EVP 2016
National University of • National Director of Logistics, L’OREAL
Singapore (NUS) Group
• Head of Financial Analysis for Asia,
Procter & Gamble Vietnam
Bachelor of Finance &

Nguyen Do Quyen COO Banking at Banking 2014 • COO, FPT Retail
Academy of Vietnam
Pham Hoang Duy
Bachelor at National
Nam CFO Economics University (NEU) 2020 • CFO, FPT Retail
Bachelor at Thuongmai
Hoang Cao Chung CHRO University • CHRO, FPT Retail
2021 • Vice Principal, FPT University
Bachelor at FTU, Mini-MBA

in Customer Center
Management at Rutgers
University, MBA at Boston
Ngo Quoc Bao CMXO Before 2017 • CMXO, FPT Retail
University, Post-graduate
Data Science and Business
Analytics University of
Texas at Austin.
• CIO, FPT Retail

Bachelor of Mathematics • Head of IT Department of FPT
Tran Thanh Ha CIO at University of Natural 2020 Corporation
Sciences - VNU • Director of Business Region 2 and

Customer Care
Center.

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RMIT Research Challenge 2022

Team: The Wolves of Nguyen Tri Phuong (NTP)

Wolves of Nguyen Tri Phuong 1

Recommendation: Buy FRT: PRESCRIPTION FOR SUCCESS

Wolves of Nguyen Tri Phuong 1

Wolves of Nguyen Tri Phuong 2

Fig.01: FRT Revenue break-down by BUSINESS DESCRIPTION

Fig.05: Ownership Structure

Gross value 9.70

Wolves of Nguyen Tri Phuong 3

Wolves of Nguyen Tri Phuong 4

Fig.10: Household possession rate (%) INDUSTRY OVERVIEW | TECHNOLOGY RETAIL

Wolves of Nguyen Tri Phuong 6

Fig.15: Vietnam’s medicine sale

Wolves of Nguyen Tri Phuong 8

Fig.20: Computer hardware products

Wolves of Nguyen Tri Phuong 10

75% 68% 55% 6.8%

2015 2017 2020

Source: Team analysis

2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F

Source: Company data, team analysis

Fig.29: Profitability ratios [%]

GPM EBITM NPM

Wolves of Nguyen Tri Phuong 11

Wolves of Nguyen Tri Phuong 12

Fig. 31: CCC & DIO comparison [days]

Wolves of Nguyen Tri Phuong 13

Wolves of Nguyen Tri Phuong 14

Fig.36: Scenarios (Bear-Base-Bull)

Source: Team analysis

High Fig.40: Risk matrix INVESTMENT RISKS

# Vietnam Pharmacist Source: GSO, Team analysis

Wolves of Nguyen Tri Phuong 16

Wolves of Nguyen Tri Phuong 17

C - INDUSTRY AND E - GOVERNANCE

7. Altman’s EM Z-score 7. WACC calculation

8. Beneish’s M-score 8. Scenario analysis

10. Monte Carlo Simulation

Abbreviation Full term Description

Wolves of Nguyen Tri Phuong 18

APPENDIX A.1 – INCOME STATEMENT

APPENDIX A.2 – BALANCE SHEET

APPENDIX A.3 – CASH FLOW STATEMENT

Wolves of Nguyen Tri Phuong 19

APPENDIX A.4 – KEY FINANCIAL RATIOS

APPENDIX A.5 – CONTRIBUTION IN ADDED VALUES

VND Billion 2021 2022F 2023F 2024F 2025F 2026F

Gross Revenue 7,820 6,818 8,626 9,011 9,170 9,064

%Technology Retail 65% 38% 33% 31% 29% 28%

%Pharmaceutical Retail 35% 62% 67% 69% 71% 72%

COGS 6,723 5,497 6,846 6,955 6,899 6,964

%Technology Retail 68% 40% 35% 34% 33% 31%

%Pharmaceutical Retail 32% 60% 65% 66% 67% 69%

Gross profit 1,111 1,445 1,780 2,056 2,270 2,100

%Technology Retail 47% 36% 24% 20% 18% 18%

%Pharmaceutical Retail 53% 64% 76% 80% 82% 82%

SG&A 693 1,099 1,418 1,497 1,536 1,529

%Technology Retail 34% 25% 20% 19% 18% 17%

%Pharmaceutical Retail 66% 75% 80% 81% 82% 83%

EBIT 545 325 427 628 758 633

%Technology Retail 76% 69% 47% 32% 20% 29%

%Pharmaceutical Retail 24% 31% 53% 68% 80% 71%