Chairman of FRT – Nguyen Bach Diep: Long Chau does not invest money regardless, still looking for new opportunities
“Long Chau does not intend to open stores continuously, but will expand both in size and efficiency. The Company does not invest and spend money regardless, but has to stay awake to stop,” shares the FRT Chairman Nguyen Bach Diep at the General Meeting of Shareholders on the afternoon of April 16.
On the afternoon of April 15, 2022, FPT Digital Retail Joint Stock Company (FPT Retail, HoSE: FRT) has held the Annual General Meeting of Shareholders in 2022.
Profits 2022 plans increased sharply by 30%
The meeting unanimously approves the plan of VND 27,000 billion in revenue – an increase of 20%, and a profit before tax of VND 720 billion – an increase of 30% compared to the results in 2021. To achieve this goal, FPT Retail will simultaneously implement action plans on all chains: FPT Shop, F.Studio by FPT and Long Chau.
With FPT Shop, FRT will base on the successful model of the past year to continue opening more than 70 new laptop centers in order to maintain its position as the No. 1 laptop retailer in the market. At the same time, the Company will also open up to 100 new stores of FPT Shop to increase its coverage in densely populated districts.
In addition, in 2022, FRT will introduce new services and products into the system, including: Testing PC Gaming selling points to perfect the computer ecosystem; Researching and deploying virtual mobile network business model; Joining the FPT Corporation ecosystem by bringing to each household all FPT Corporation products in general and FRT products in particular…
With Long Chau chain, the Company will accelerate the expansion of its coverage to 63 provinces and cities in order to improve its position in the pharmaceutical market. It is expected that the Company will open at least 300 new stores, bringing the total number of stores to about 700-800 by the end of 2022. At the same time, FPT Long Chau will continue to invest in infrastructure and logistics system in order to serve the rapid growth of the number of stores and optimization of goods.
Dividents of 2021 divided by 60% in cash and stock
In 2021, FRT’s consolidated revenue increases by 53.4% to VND 22,494.96 billion and profit after tax reaches VND 443.9 billion, 44 times higher than that of 2020.
With the above results, FRT will pay dividend of 2021 in cash at the rate of 5% and stock dividend at the rate of 50%. In addition, the plan to pay dividend of 2022 in cash at the rate of 10% is also approved.
In addition, FPT Retail will issue shares under the employee selection program (ESOP) based on the business results in 2022 at the value of 10,000 VND/share. Accordingly, after the Company exceeds the growth threshold of 20%, for every additional growth of 10%, the employees will be entitled to 1% ESOP (which means that in 2022, if the Company’s profit grows by 30%, it will issue 1% ESOP), the maximum expected issuance rate is 2% of the number of outstanding shares at the time of issuance.
Looking for new overlap opportunity
At the meeting, the shareholders and the Board of Directors of FRT has detailed discussions related to the Company’s operation plan.
What is FPT Shop’s driving force in 2022 in the context when the epidemic is controlled?
General Director Hoang Trung Kien: When the epidemic broke out, the studying and working from home became popular, resulting in high demand to buy computers, which was a great opportunity for companies like FRT. Depending on how well each company exploits that opportunity, FRT has exploited it well and actively in operation in the context of difficult transportation.
And in 2022, the epidemic is controlled, there will certainly be a decline after the demand of workinng from home, but in the long term, there is still a good opportunity because every year, about 200,000 students have needs for computer, in addition, 1 million young people go to school every year. The demand for tenology devices will be increased, forming a new habit where teachers prepare lessons by computer, students learn by computer, etc. The device life cycle is only about 2-3 years, there will be needs for upgrading also.
Currently, MWG is also deploying the Topzone chain, will the growth rate of FPT Shop be affected when facing competition?
Mr. Hoang Trung Kien: By the end of the first quarter of 2022, Xiaomi has new distributors and has risen to the second position in market share in Vietnam. The more participants the market has, the more competitive it becomes. However, in general, the whole market all benefits, the consumers can buy at better prices, the retailers also have to improve the service quality.
After 2 years of Covid-19, the supply chain has been disrupted, the trade closes causing the amount of Apple hand-carried products to decrease, which gives large retailers the opportunity to gain the market share.
FRT will continue to invest in F.Studio, which is a long-term strategy. The market share of ungenuine products declines, so FRT has exploited this opportunity when cooperating with Apple in Vietnam.
Do the market and FRT have shortage of products due to the war between Russia and Ukraine?
The supply chain is having problems. However, FPT Shop is a big partner of phone and laptop companies in the long term so we have priority. Currently, there is nothing serious about the supply chain.
F-Studio has been open for a long time but the speed of promoting the store is not significant, are there any plans to promote it this year to increase competition?
In addition to F-Studio, there are many other participants in the chain of specialized stores. In this year’s plan, F-Studio will expand in store size and increase quantity. Moreover, which experience to bring to the customers is also very important.
How much percentage does Xiaomi’s profit account for in FPT Shop’s profit? How is the production of electronic components that FRT has just registered?
Xiaomi is the most complete ecosystem of products. FRT realizes the potential of Xioami in Vietnam, FRT is one of the partners to bring the ecosystem to Vietnam, its revenue accounts for 7-10% of the total revenue in 2022.
FRT only serves the business strategy in the domestic market, not for exportation.
What is the medium-term driving force of FRT other than pharmaceuticals and retail?
Chairman Nguyen Bach Diep: Two years ago, FRT realized our problem was not having an overlap for growth. Therefore, pharmaceuticals is the second business segment to drive the growth of FRT. FRT is always interested in opportunities, potential industries, generating good profits. In the future, we will continue to look for new business opportunities and business lines.
Working in the retail industry is about looking for overlap opportunities, the Company’s strategy department is conducting a series of studies to choose what the Company’s next industry will be. Nothing more can be shared yet.
As for the pharmaceutical segment, Long Chau does not intend to open stores continuously, but to expand both in size and efficiency, not investing and spending money regardless, we have to stay awake to stop. However, in return, the pharmaceutical segment has many new directions such as healthcare, examination, sales, production, etc. In the immediate future, the expansion of coverage should be focused at this stage.
“Long Chau does not invest and spend money regardless, we have to stay awake to stop”.
How much profit does FRT expect Long Chau to contribute in 2022? When An Khang Pharmacy expands, will it affect Long Chau?
Ms. Nguyen Bach Diep: In 2022, Long Chau is expected to reach VND 50-100 billion in profit depending on the speed of opening new stores and investment.
The pharmaceutical market is still very large in nature, the whole Vietnam market has about 57,000 pharmacies, while Long Chau, Pharmacity or An Khang pharmacies together have about 3,000 stores, which is still a very small number for anyone to enter, it will not affect our growth.
The pharmaceutical market used to be a bit messy when the goods were mostly hand-carried, but when the large retailers enter, they will provide professional management and better service, this is the good factor for the customers to use genuine products, which is also good for the market in general.
How is the competition between Pharmacity and Long Chau in 2025?
Ms. Nguyen Bach Diep: Each chain has different orientations, Pharmacity is about convenience, and Long Chau is about medicine, so this is difficult to answer immediately. Of course, Pharmacity has been ahead for a long time and has the largest number of stores in the market, and Long Chau takes that as our motivation. Long Chau features the efficiency and is trying to increase the revenue per store, so far it is the highest in the market, we will not expand at all costs.
When opening Long Chau stores in tier 2 and 3 cities, will the gross profit margin be lower than that in the main cities?
Ms. Nguyen Bach Diep: The provinces, cities and districts are also developing very well. Long Chau is supplying wide ranges of products in different segments and the profit are all good, so the gross profit margin is not affected.
How much revenue does Long Chau’s store need to break even? What is the labor cost of Long Chau chain?
Ms. Nguyen Bach Diep: Depending on many factors, the big difference is the size of the store and the rent in each area, it fluctuates greatly from VND 500 million to VND 2 billion for a store to break even. Long Chau even has a store with a revenue of nearly VND 10 billion, so the breakeven point of VND 2 billion is not too big.
With many different store concepts, the revenue target per store of FPT Shop and Long Chau will grow by 20-30% in 2021. The average revenue of old FPT Shop is VND 2.5 billion, while Long Chau’s is VND 1.1 billion; in 2022, that of old FPT Shop will be up to VND 3 billion, and for Long Chau, VND 1.5 billion.
The cost of Long Chau’s locations accounts for one third, labor cost of one third, and the rest are other costs.
What is the secret to Long Chau’s good profit in 2021?
Ms. Nguyen Bach Diep: Retailing requires great synthesis, despite good products, the pharmacists cannot give poor advice because the consumers will not come, or the customers cannot have bad shopping experience, etc. Ultimately, the customers will only come to the store that gives them the best experience, FRT prioritizes the customers.
Does FRT intend to IPO Long Chau?
Ms. Nguyen Bach Diep: FRT will consider and evaluate carefully which plan is most beneficial to the shareholders. At the appropriate time, the Board of Directors will consider whether to merge Long Chau into FPT Retail or to offer it separately.
Profit in first quarter of 2022 is 5 times higher than same period.
Can you update the revenue and profit of FRT in first quarter of 2022?
Chief Financial Officer Pham Duy Hoang Nam: FRT expects the consolidated revenue in the first quarter will grow by 65%, profit will be 5 times higher than the same period last year, reaching 28% of the target plan for the whole year. FRT is confident to complete the business plan of 2022.
Does FPT plan to divest from FRT in the period of 2022-2025?
Ms. Nguyen Bach Diep: The Chairman of FPT says that we have no plans to divest from FRT.
The bright spot of FRT in 2021 is Long Chau, but the financial activities still witness strong development, the financial profit contributes more than 20% of the total profit, what are the reasons?
Chief Financial Officer Pham Duy Hoang Nam: In 2021, FRT has made dramatic difference in financial activities by applying technology in cash flow, so it has better working capital, thereby having idle cash flow to business on the basis of competitive loan interests. This story continues to be maintained in 2022 and incurs financial profits, but the differences may vary.
According to Minh An, Vietnamdaily
Published April 16th, 2022