The Lifeline of FPT Long Châu
Established in 2012, FRT is an affiliate of FPT Group, aiming to manage the large retail chain FPT Shop, which specializes in selling phones, laptops, and other tech products. FPT Shop has a market share of about 15-20%, ranking second in the national retail sector. However, in recent times, the tech retail market has become saturated, and FPT Shop has shown signs of "losing steam" with continuous losses.
Analysts note that FRT seems to be "letting go" of FPT Shop, leading to slower recovery processes, especially amidst fierce competition. This has caused the chain to continue reporting negative revenue growth and further losses in the first quarter.
In 2017, FRT acquired the Long Châu pharmacy chain, which at that time had only four stores. However, within six years, by the end of 2023, FPT Long Châu had expanded to over 1,600 pharmacies, becoming the largest pharmacy retail chain in Vietnam by the number of stores.
Not only has it grown in quantity, but amid the overall retail downturn, the pharmaceutical chain has also emerged as a bright spot and a growth driver for FRT. In 2023, the chain brought in VND 15,888 billion in revenue, up 66%, with an average revenue per pharmacy per month of VND 1.1 billion.
By the end of the first quarter of this year, FRT recorded a net revenue of VND 9,042 billion, an increase of 17%. This marked the first time FRT reported a profit after three quarters of losses, primarily driven by the FPT Long Châu chain, which accounted for VND 5,534 billion in revenue, or 61%, with an average revenue of VND 1.2 billion per pharmacy per month.
The "Ace" Card
From the figures mentioned above, it is clear that FPT Long Châu is currently the "ace" of FRT. This is evident in the ambitious plan to open 400 new stores in 2024. Notably, at the recent General Meeting of Shareholders, Nguyễn Bạch Điệp, Chairwoman of FRT, announced the development of FPT Long Châu towards a comprehensive healthcare strategy, starting with the expansion into vaccine immunization centers.
To complete this ecosystem, FRT's management has stated they will privately offer up to 10% of their shares to raise capital, alongside seeking strategic partners for joint development.
The vaccination market in Vietnam is still relatively new, primarily focused on hospitals and public health centers. However, in the past five years, especially after the COVID-19 pandemic, private vaccination centers like VNVC, Vinmec, and Nhi 315 have emerged, indicating the potential of this sector.
A Series of Serious Incidents
This new direction for FRT seemed to be running smoothly until a series of incidents occurred. Recently, the Hà Đông District Health Center (under the Hanoi Department of Health) reported on the inspection and supervision of vaccination activities at 18 facilities in the area. Among them, two FPT Long Châu centers were found to have multiple issues needing rectification.
Similarly, the Ho Chi Minh City Department of Health also reported inspection results for the FPT Long Châu vaccination center in Tân Phú District. According to the report, the center did not meet the necessary conditions for vaccination facilities, lacked proper equipment for handling post-vaccination reactions, and failed to comply with the Ministry of Health's vaccine storage requirements.
A similar situation occurred at the FPT Long Châu vaccination center in Bình Dương. The Bình Dương Department of Health found that the vaccination safety procedures were inadequate, with no room for monitoring post-vaccination reactions and no proper storage facilities for vaccines according to GSP standards.
Previously, the Phú Yên Department of Health announced the removal of the FPT Long Châu vaccination center in Tuy Hòa City from the list of eligible vaccination facilities in May. The reason was that the center did not meet one of the fixed vaccination facility conditions. Besides being fined, the center was also suspended from all activities for one month.
More serious were the two cases of anaphylactic shock reported after vaccinations at FPT Long Châu in Ho Chi Minh City. Although both cases have stabilized and been discharged, these incidents have caused significant concern among FRT shareholders, especially given the company's rapid growth trajectory.
Many argue that FRT's leadership is too ambitious with their high targets for FPT Long Châu. This sector is entirely different from their core technology retail business, requiring not just technology but deep expertise in medical fields. Without proper risk management, FRT may face future incidents that could negatively impact their stock prices.
In conclusion, while FPT Long Châu has proven to be a critical growth driver for FRT, the recent issues highlight the risks of rapid expansion into new sectors without adequate preparation and risk management. The coming months will be crucial for FRT as they navigate these challenges and seek to stabilize and grow their new ventures while maintaining shareholder confidence.
