Ramssol Group Berhad - Another decent quarter
Tue, 12-Nov-2024 06:17 am
by Kenneth Leong • Apex Research

Counter

RAMSSOL (0236)

Target Price (RM)

0.86

Recommendation

Buy

Summary

  • Ramssol’s CNP of RM4.4m (+202.2% yoy, +0.1% qoq) in 3QFY24, bringing 9MFY24 CNP to RM12.9m (+123.9% yoy), came in-line, accounting to 75.4% and 79.1% of ours and consensus forecasts at RM17.1m and RM16.3m respectively. 

  • Tweaked our CNP forecast higher by +1.4%/+3.9% for FY25F/FY26F to RM19.4m/RM21.6m to account for the recent contract secured for the AIintegrated healthcare system in Thailand. 

  • Re-iterate BUY recommendation with a lower target price of RM0.86, based on 21.0x P/E multiple pegged to revised fully diluted FY25F EPS of 4.0 sen post earnings revision and adjustment for enlarged share capital with additional 21.9m shares exercised under ESOS.

 

Company Update

  • Results review. 3QFY24 core net profit (CNP) at RM4.4m (+202.2% yoy, +0.1% qoq), was driven by stronger contribution from human capital management (HCM) solutions segment that was boosted by collaboration and recurring of HCM software subscriptions and licenses distributorship. Revenue for the quarter grew to RM19.5m (+218.2% yoy, +12.4% qoq).

     

  • Results in line. 9MFY24 CNP at RM12.9m (+123.9% yoy) came within our expectations, making up to 75.4% of our core net profit forecast at RM17.1m and was at 79.1% of consensus forecasted net profit of RM16.3m.

     

  • Operations Highlights. During the quarter, contribution from Malaysia market makes up to RM18.5m or 95.3% of total revenue. Meanwhile, Ramssol has entered into several collaborations and partnership including the RM35.6m contract to undertake an artificial intelligence (AI) healthcare solutions project for a hospital by Multi Distribution Services Company Ltd.

     

  • Industry Highlights. Oracle’s intention to establish its initial public cloud region in Malaysia with a capex of US$6.5bn underscores the potential addressable market of Malaysian organisations in updating applications, transferring workload to the cloud, and experimenting with data, analytics, and AI.

     

  • Outlook. Earnings growth will be anchored by (i) progressive rollout of products and development in the human capital management under PeopleTech, (ii) contribution from newly acquired GeekStart that was completed on 24 Sep 2024 and (iii) introduction of four EXCEL courses in 2024 as oppose to only one in 2023 to boost EduTech segment.

     

  • Valuation. Tweaked our CNP forecast higher by +1.4%/+3.9% for FY25/FY26 to RM19.4m/RM21.6m to account for the recent contract secured for the AI-integrated healthcare system in Thailand. Re-iterate our BUY recommendation, but with a slightly lower TP of RM0.86 post earnings revision and adjustment on enlarged share capital with additional 21.9m shares exercised under ESOS.

     

  • Risk. Potential vulnerability of security breaches, intrusion, or compromise of sensitive data. Slower-than-expected new projects kick-off.

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