Ramssol Group Berhad - Kicking off the year with a blast
Wed, 24-Apr-2024 07:38 am
by Kenneth Leong • Apex Research

Counter

RAMSSOL (0236)

Target Price (RM)

0.7

Recommendation

Buy

  • Results review. 1QFY24 core net profit jumped 98.9% yoy to RM4.2m, driven by the higher human capital management (HCM) solutions segment particularly from Malaysia and Thailand markets. Revenue for the quarter expanded 123.5% yoy to RM14.4m.

  • Results above expectations. Reported 3MFY24 core net profit at RM4.2m surpassed our expectations, making up to 40.9% of our core net profit forecast at RM10.2m and was at 46.9% of consensus forecasted net profit of RM8.9m. The variance is mainly attributed to the stronger-than-expected HCM solutions segment contribution. Revenue for the quarter accounts to 26.9% of our expectations.

  • Operations Highlights. In 1QFY24, Ramssol has entered into a memorandum of understanding (MoU) with Institut Koperasi Malaysia (IKMa) as well as TÜV SÜD Academy in Singapore focusing on compliance best practices and anti-corruption regulatory awareness (EnGo) which deemed earnings accretive towards the Education Technology business segment. Meanwhile, the official launch of Rider Gate platform on 14 February 2024 will serve as another key revenue driver in quarters ahead. The move will mitigate the risk of reliance towards HCM solutions business segment.

  • Industry Highlights. Outlook for human capital management (HCM) industry to remain fairly promissing as businesses gradually transforms traditional human resource functions into efficient workforce management. Along with the centralised global cloud-based solutions, businesses will be able to streamline processes and optimise operations in bid to focus onto core business.

  • Outlook. Apart from the bread-and-butter business under the HCM segment, key focus lies onto (i) EduTech – collaboration with education service providers, (ii) MarTech – to replicate the success of concert live stream in Malaysia cinema, partnering TGV cinemas and (iii) AutoTech – onboarding more bike dealers to capture additional market share.

  • Valuation. Raised our forecast to RM15.9m and RM17.0m for FY24F and FY25F respectively after taking into account over the stronger-than-expected HCM solutions business contributions. Re-iterate our BUY recommendation on RAMSSOL with a higher target price of RM0.70, by pegging 18.0x P/E multiple to fully diluted FY25F EPS of 3.9 sen.

  • Risk. Potential vulnerability of security breaches, intrusion, or compromise of sensitive data, systems, or networks. New ventures may kick off slower-than-expected could delay cash flow generation.
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