• FY23 core net profit of RM6.7m was below expectations, at 83.2% of our estimate due to higher-than-expected intangibles amortisation in 4Q23.

• HCM business remained resilient, with revenues in Malaysia, Thailand and Indonesia showing yoy growth.

• Reiterate Hold recommendation on Ramssol, with a GGM-derived TP of RM0.40. We expect RiderGate to begin contributing from FY24F onwards.

Core net profit below expectations on higher D&A expenses

• Ramssol reported an FY23 core net profit of RM6.7m, which was below expectations, at 83.2% of our FY23F estimate and 88.2% of Bloomberg consensus ’ forecast. This was largely due to a higher-than-expected amortisation of intangible assets in 4Q23 of RM0.5m (FY23: RM0.7m; FY22: RM0.2m), stemming from R&D of the RiderGate platform and contract assets for the group’s EduTech segment.

HCM business showing resilience

• FY23 revenue grew 9.7% yoy to RM30.6m, largely in line, at 95.5% of our FY23F estimate. The growth was attributable to stronger sales from the group’s human capital management (HCM) and student management solution segments, both domestically and regionally (Fig 3). Notably, the group generated higher revenues from its HCM advisory service, which provided additional payroll process customisation and cloud system upgrades for its Indonesian clients. With the launch of RiderGate in Feb 24, we expect revenue and earnings contributions to begin from FY24F, as discussed in our report “Contributions from new ventures priced in ”, dated 2 Nov 2023.

Reiterate Hold with unchanged TP of RM0.40

• We reiterate our Hold recommendation on Ramssol, with an unchanged GGM-derived TP of RM0.40, employing an FY25F ROE of 11.4%, cost of equity of 10%, and long- term growth rate of 6.0%. We believe Ramssol’s current share price accurately captures the potential incremental earnings from its RiderGate business. Key upside/downside risks include: 1) stronger-/weaker-than-expected ability to secure HCM projects regionally (i.e. in Thailand and Indonesia), 2) better-/weaker-than-expected synergies from the GoSaaS collaboration, and 3) stronger-/weaker-than expected growth in RiderGate’s markets.

Source: CGS-CIMB Research - 29 Feb 2024