Sequential Turnover Improvement; Maintain BUY

Although RAMSSSOL’s PeopleTech segment saw better-than-expected earnings growth in 2Q23 on the back of improved HCM solution sales, its other segments’ landmark initiatives have yet to provide meaningful earnings contribution. Pending management updates at the upcoming analyst briefing, we maintain our earnings forecasts. Project execution remains a key risk. Our TP of MYR0.46 is pegged to 12.7x FY24E PER.

Results Above Expectations

Excluding unrealised FX gains (+MYR0.1m), RAMSSOL registered a 2Q23 core net profit of MYR2.1m (+92% YoY, flat QoQ). Cumulatively, 1H23 CNP came in at MYR4.2m – nearly double YoY (1H22: MYR2.1m), beating both ours/consensus FY23 estimates at 58%/62% respectively. We believe the outperformance was largely driven by the increased rollout of its human capital management (HCM) solutions under the PeopleTech segment.

DarwinBox Drives Growth in PeopleTech Segment

Although details are scant at this juncture, 2Q23 group turnover growth of 57% QoQ/56% YoY is likely attributable to increased domestic DarwinBox sales as sequentially, Malaysia revenue grew an impressive 125% QoQ. This was the culmination of various Oracle and Lark-centric project rollouts that management had alluded to in 1Q23, in addition to its stated efforts to aggressively market DarwinBox in the quarter. Noting however that revenue for the latter may be lumpy and recognised on a milestone basis, we opine that the outperformance may not follow through into 2H23.

EduTech Seeing Take-up, But RiderGate Yet to Launch

Earnings contribution from its AutoTech segment remained limited in 1H23 as development of its RiderGate initiative was only recently completed and management is still in the process of forming collaborations with key stakeholders (government and insurance/fintech companies) prior to its slated soft launch in 3Q23. Meanwhile, we also gather that cohort courses for its EduTech training programs (inc. the digital anti-corruption course for government agencies) continues to see smooth progress/take-up rates.

Source: Maybank Research - 17 Aug 2023