Maintain BUY

Our recent meeting with the management reaffirms our strong outlook for the company. Aside from ongoing rollout of DarwinBox to its new clients, business diversification from the EduTech and the new venture dubbed Rider Gate could fuel the group’s growth moving forward, partially cushioning the decline in its digital communication solutions as the workforce transits back to physical workplace setting. Maintain Buy with an unchanged TP of MYR0.60, based on 12.7x FY23E PER.

DarwinBox rollout gaining traction

Sales traction for DarwinBox has been encouraging, with management hinting the total orderbook have roughly doubled from MYR20-30m to ~MYR55m as at 3Q22. Management also plans to increase its DarwinBox consultants from 26 to ~40 to cater for the growing demand, especially among the SME segment. Revenue recognition could likely materialise from 3Q22 onward, thus driving a stronger financial performance for Ramssol in the 2H22, in our opinion.

Tapping on the motorcycle industry thru Rider Gate

Rider Gate is Ramssol’s new in-house digital solution to liberalise the local motorcycle industry by automating the marketplace, inventory and warehousing management through a single digital platform. The potential lies on the recurring fixed fees that will be booked on each transaction of new/used motorcycles, accessories and related services done through the platform. Ramssol eventually plans to roll out Rider Gate to other major motorcycle dealers in Malaysia. It plans to do an equity fund-raising to fund the platform development, which management guided could cost MYR18-20mil across two phases.

New venture could cushion decline in Lark

The potential revenue contribution from Rider Gate could partially offset the decline in Lark, in our view. According to MASAAM, approximately 500k new motorcycles were sold in each of 2020 and 2021. This excludes the used motorcycle market, which the management alluded to be 50-60k in total number of transactions a month. We retain our earnings forecasts for now, pending the outcome of the placement exercise.

Source: Maybank Research - 13 Oct 2022