Investment viewpoint: IT sector still thrives

The broadband internet segment would still maintain a positive growth rate despite the pandemic.

Over the past two years, software businesses have been hard hit by the Covid-19 pandemic. Most businesses have to arrange for their employees to eat, stay, work on-site or online. In particular, negotiating, signing contracts, and selling goods also faced many difficulties. However, enterprises in this field have made efforts to maintain stable growth, becoming the bright spot of the Vietnam economy.

Not only that, Vietnamese software outsourcing and exporting enterprises are also facing many big opportunities. According to MarketLine's forecast, in the next 4 years, the world software market will continue to grow at an average rate of 11.3% and is expected to reach $969 billion by 2024. In 2021, the value of the software market is forecast to reach 685 billion USD, up 8.2% YoY.

The software outsourcing segment grew well in 8M21 with a sharp increase in new shipments and the prospect of growing demand from businesses post-pandemic, promising a strong growth in 2021.

Meanwhile, Vietnam's digital transformation has also seen stronger movements from businesses like FPT Corporation (FPT) with strong domestic technology revenue or Electronics Communications Technology Investment Development Corporation (ELC) with smart transportation projects.

Mr. Phan The Dung, General Director of RikkeiSoft, assessed that in the coming time, the IT market will recover strongly, especially for digital transformation in some fields such as retail and e-commerce, finance - banking, online education, online healthcare ... However, Covid-19 is unpredictable, so enterprises should set up several development scenarios, plans for risk hedging while overcoming the shortage of highly qualified human resources.

KB Securities said the growth potential of the outsourcing segment would remain positive due to: (1) Worldwide high demand given a shortage of personnel in all countries while a large number of employees is the decisive factor to the software outsourcing segment, not the gray matter; (2) Great competitive advantage thanks to Vietnam's lower labor cost than other countries.

“The gross profit margin of the software export segment is expected to improve in the medium term thanks to (1) Many high-value contracts with international partners; (2) an increasing need for the digital transformation of domestic enterprises”, KB Securities emphasized.

In the meantime, the broadband internet segment would still maintain a positive growth rate despite the pandemic. By the end of July 2021, the total number of Fiber to the Home (FTTH) subscribers reached 17,415 million (10.5% YTD and 15.8% YoY). As of July 2021, 1,654 thousand subscribed to FTTH (31.5%). KB Securities expected this figure to continue to grow in the coming time thanks to great potential in the provinces.

This stock company maintained a positive stance for the information technology industry in 4Q with some notable stocks like FPT, ELC, and CMC Corporation (CMG).