Summary

• Ramssol mainly provides Human Capital Management services under its PeopleTech business segment, and has recently expanded with new PeopleTech products, as well as new segments namely, EduTech, MarketingTech and AutoTech.

• Going forward, we forecast the core PATMI to grow at 40.6-75.9% to RM6.6-9.3m for FY23-24f, underpinned by the (i) Ramssol-GoSaas JV, to secure new projects with the Oracle ERP and SCM systems, (ii) ongoing projects to be maintained and renewed, as well as (iii) increasing demand for its EXCEL programs & EnGo platform with the rising demand in corporate compliance efforts.

• We arrive at a fair value of RM0.455, indicating an upside potential of near to 11.1%, by ascribing the FY24f core EPS of 3.04 sen towards 15x P/E.

Business Overview

Ramssol’s business model comprises of 4 major segments, namely (i) PeopleTech, (ii) EduTech, (iii) AutoTech and (iv) MarketingTech.

RAMS PeopleTech

• Ramssol provides Human Capital Management (HCM) services designed to streamline and optimise Human Resource (HR) processes for organisations of all sizes. Their expertise encompasses 3 key areas: 1) consultation, design and implementation of the organisation’s HR workflow processes and configuration, 2) sale of third-party software licensing, as well as 3) technical support, maintenance, and after-sale services.

• Ramssol recognises a commission on the sale of software licenses depending on the size of the project and total man hours required for implementation. The company offers a wide range of HCM software options, including premium solutions such as Oracle for those seeking extensive features, as well as more cost-effective alternatives for other clients. Generally, clients are required to renew the software licenses on an annual basis.

RAMS EduTech

• Ramssol Edutech provides corporate liability and anti-corruption training. Their flagship program, "EXCEL," developed in collaboration with the Malaysia AntiCorruption Academy (MACA), offers a comprehensive curriculum delivered through live seminars. To further enhance learning and engagement, Ramssol Edutech has recently introduced "EnGo," an interactive platform where users complete exercises and receive certification upon successful completion.

• Pay per use concept. Ramssol charges a fee for the live seminars and charges a ‘per user’ fee for use of the EnGo platform. Some potential clients include public listed companies (PLCs), government-linked companies (GLCs), etc.

RAMS AutoTech

• In-house digital motorcycle marketplace. Rider Gate is Ramssol’s upcoming new inhouse digital solution to automate the motorcycle marketplace, inventory and warehousing management through a digital platform. The platform charges fixed fees that will be booked on each transaction of new/used motorcycles, accessories and related services conducted through the platform.

RAMS MarketingTech

• Ramssol provides digital media services specialising in corporate and commercial videos. Clients are charged based on packages subscribed, e.g. Corporate marketing solutions, Concert Sponsorships Promotions, which helps clients to gain corporate recognition. Furthermore, Ramssol provides concert livestreaming, which customers purchase a ticket to watch the live concert in a cinema.

Recent Developments and Outlook

RAMS PeopleTech – Recent Developments & Outlook

• Ramssol-Laiye Pte Ltd collaboration. On 1-Jun-2023, Ramssol secured an exclusive distributorship agreement with Laiye Pte Ltd for the distribution of AI-Robotic Process Automation (AI-RPA) software in Malaysia and other Southeast Asian (SEA) markets. Ramssol will serve as the exclusive distributor and service partner, responsible for sales, marketing, branding, and support services.

• Ramssol-GoSaas Inc agreement. Ramssol entered into a collaboration agreement on 11-Oct-2023 with GoSaas Inc to provide Oracle Fusion Cloud Solutions mainly in the areas of Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and Human Capital Management (HCM) to clients in Malaysia and SEA. Ramssol will market and promote the products in the region and appoint GoSaas for the implementation of the products following a successful sale. This move helps Ramssol to bridge the expertise barrier in providing ERP & SCM systems solutions by tapping into the technical experience of GoSaas.

• Strategic opportunities to expand their market reach. Additionally, we think Ramssol's collaboration with GoSaas to offer Oracle-based ERP and SCM systems should present an opportunity to expand their market reach and establish a stronger foothold in these lucrative segments. By leveraging on GoSaas's expertise and market presence, Ramssol can effectively penetrate these new markets and generate additional revenue streams.

• Assuming that Ramssol is able to retain existing clients, as well as securing new clients in the future through their existing and new product offerings, they are likely to benefit from the potential growth in ERP and HCM services markets as shown in Fig#1 and Fig#2, as demand for these services is projected to grow globally in tandem with the digitalisation effort from corporates going forward.

• The Southeast Asia ERP software market is anticipated to grow with a CAGR of 7.07% over 2016—2028. The market which registered a revenue of around USD370m in 2016, is estimated to cross USD840m by the end of 2028. (Fig #1).

• Meanwhile, the global human capital management market is exhibited to grow from USD25.53bn in 2022 to USD46.85bn by 2029, exhibiting a 7-year CAGR of 9.1%. (Fig #2).

RAMS EduTech – Recent Developments & Outlook

• Law enforcement training and consultancy. On 20-Sep-2023, Ramssol took a 10% stake in Elmu Education Group Sdn Bhd (ELMU) which provides education, training, and consultancy programmes on law enforcement, including anti-corruption training for business. Since the beginning of the collaboration, Ramssol have conducted several courses with corporations and expects to conduct more courses in the coming months.

• Going mass once it is mature. Additional offerings catering to mass market will be introduced going forward namely, EnGo, which is the first digital learning platform that targets employees of businesses as well as university students, aiming to enforce a comprehensive understanding of governance principles in the workforce.

• Rising demand in the anti-corruption space and compliance efforts. The increasing emphasis on anti-corruption and governance by governments, as well as organisations ramping up their compliance efforts, may translate to higher demand for the EduTech services. The demand for comprehensive training and education services in their flagship program "EXCEL" will increase, while their ability to deliver effective training and instil a culture of ethical behaviour through the “EnGo” platform will be highly sought after by organisations seeking to mitigate risks and maintain a strong reputation.

RAMS AutoTech – Recent Developments & Outlook

• Experienced figure in the automotive sector. The company has recently appointed En Amirudin as the Director for AutoTech, capitalizing on his 30 years of experience in the automotive industry.

• Preparing the launch by 2023 year-end. Southeast Asia is recognised as one of the largest motorbike markets globally. At present, Ramssol is in the final stages of preparing its platform, with a target launch date by 2023 year-end. To ensure a comprehensive ecosystem for its platform, Ramssol has secured partnerships with insurance providers, inspection agencies, and loan financing institutions.

• Remain prudent in our forecast. Given the launch is in year-end, we remain prudent in our forecasts for the time being, as we have yet to see Rider Gate’s ability to capture substantial market share from other online motorcycle marketplaces such as ‘mudah.my’, ‘imotorbike.my’.

RAMS MarketingTech – Recent Developments & Outlook

• Branching out to digital media. On 14-Feb-2023, Ramssol acquired 51% in Infinite Loop Media Sdn Bhd which is a digital media agency specialising in creative content and a creative multimedia production studio specialising in corporate and commercial videos. It also functions as the internal marketing arm for the group.

• Partnership with TGV. On 4-Oct-2023, Ramssol signed a memorandum of agreement with TGV Cinemas Sdn. Bhd to bring concerts and prestigious events into the cinemas. The collaboration includes the promotion of events through Infinite Loop’s and TGV’s marketing channels and premieres at TGV’s cinemas.

• Bridging the gap. Gathering from the increasing demand for corporate awareness and the challenges fans face in attending artist concerts (e.g., ticket availability and travel restrictions), we expect Ramssol to be able to secure greater sales for the packages and offer greater number of concert cinema showings to contribute to its revenue in the coming periods.

• Going forward, we forecast the revenue to grow at a 2-year CAGR of 57.3% for FY22-FY24f. Meanwhile, we expect the core PATMI to expand by 75.9% and 40.6% to RM6.6-9.3m for FY23f-24f.

• The growth is supported by (i) the Ramssol-GoSaas JV, securing new projects with the Oracle ERP and SCM systems, (ii) the ongoing projects to be maintained and renewed, (iii) the increasing demand for corporate compliance to boost engagements in the EXCEL programs & EnGo platform, and (iv) the concert cinema showings as an alternative to capture the demand from concert-goers.

Valuation

• Fair value at RM0.455. Given that we have projected Ramssol to grow in their top and bottom line going forward, underpinned by their ongoing developments, we arrived at a fair value of RM0.455, ascribing a P/E multiple of 15x towards its FY24f core EPS of 3.04 sen. Do note that the assigned P/E is at a discount to the average Bursa Professional Services industry P/E of 48.3x given its smaller market cap positioning of Ramssol.

• Still below its 2-year average P/E of 37.8x. Over the long run, we do not rule out that Ramssol may trade nearer towards its 2-year average of P/E of 37.8x, should all the above-mentioned catalysts be executed well in the next 2 years.

Source: Mplus Research - 6 Nov 2023