Ramssol Group Bhd - 1Q25: Within expectation
Mon, 05-May-2025 08:06 am
by Jayden Tan • Apex Research

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RAMSSOL (0236)

Target Price (RM)

0.78

Recommendation

Hold

Executive Summary

  • Ramssol reported 1QFY25 core net profit of RM5.8m, accounting for 33% of our FY25F estimate and 32% of consensus, which is in line with expectations as billings from multiple 4QFY24 projects were recognised this quarter. 

  • YoY CNP rose +39.9% on the back of stronger Human Capital Management (HCM) solution sales in Malaysia and Thailand. QoQ CNP surged +841.9% from a seasonally weak base.

  • Maintain our FY25F/FY26F CNP forecasts unchanged as we expect continued strength from HCM and Geekstart (Thailand), though remain cautious on other non-core segments that may impact bottomline and rising operating costs.

  • Reiterate HOLD with unchanged TP of RM0.78, based on 21x FY25F EPS of 4.0 sen, reflecting fair valuation and appraised with three-star ESG rating.

 

Results within expectation. Ramssol reported a CNP of RM5.8m for 1QFY25, representing 33% of our forecast and 32% of street’s full-year estimate. We deem the performance in line with expectations as billings from multiple projects for 4QFY24 were recognised in the current quarter under review.

 

YoY. In 1QFY25, CNP increased by 39.9% yoy, while revenue rose by 25.6%, primarily driven by stronger sales of Human Capital Management (HCM) solutions. Growth was supported by improved contributions from both Malaysia (EBIT +26.1%) and Thailand (EBIT +127%) operations.

 

QoQ. CNP surged by 841.9% qoq, coming off a seasonally weak base in the preceding quarter. Revenue also rose by 73.3% qoq. 

 

Outlook. Over the near term, we expect Ramssol’s Human Resource software solutions and its 51%-owned Thailand subsidiary, Geekstart, continue to perform well, supported by a healthy orderbook and the successful expansion into the Thailand market. Geekstart, acquired last year, has opened new growth avenues and underpinned Ramssol’s recent decision to establish a new office in Thailand to strengthen its presence. However, beyond the core Human Resources solutions, we remain skeptical over the profitability and market share growth of other business segments such as Marketing Tech, Auto Tech, and Edu Tech, given the intense competitive landscape. Furthermore, the rollout of new product offerings is expected to lead to higher operating costs and increased amortisation of intangible assets, potentially impacting near-term margins.

 

Earnings Revision. We are keeping our FY25F and FY26F CNP forecasts unchanged, as the current performance remains aligned with our expectations.

 

Valuation. We maintain our HOLD recommendation on Ramssol with an unchanged target price of RM0.78, as we believe the current share price has already factored in the strong financial growth and appears fairly valued. Our valuation is based on a 21.0x P/E multiple applied to the revised fully diluted FY25F EPS of 4.0 sen, incorporating a three-star ESG rating.

 

Risks. Potential vulnerabilities include security breaches or data compromises, along with the risk of encountering stiffer market competition than expected.

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Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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