1H24 Likely to Fare Better; Maintain BUY

Notwithstanding a surprisingly soft earnings locally in 4Q23, we expect earnings delivery from RAMSSOL’s PeopleTech and AutoTech segments to pick-up pace in 1H24. Pending briefing updates, we maintain FY24-25E earnings and introduce FY26E. Rolling-forward valuation, we raise our TP to MYR0.50 (+4sen). Our TP is now pegged to 14.5x FY25PER, at -0.5SD to LT mean (previously 12.7x FY24E PER, at mean). BUY maintained.

Results Miss Expectations

RAMSSOL registered 4Q23 core earnings of MYR0.8m (+48% YoY, -44% QoQ). This took cumulative 12MFY23 core net profit to MYR6.4m (+59% YoY) - below expectations, at 91%/80% of both ours/street’s FY23E. We believe the earnings shortfall was due to muted delivery from its PeopleTech segment in MY, albeit partially offset at group level by surprisingly strong ID-led sequential growth (+MYR4m) in the segment.

PeopleTech: ID Mitigated MY Shortfall in 4Q23

4Q23 group turnover grew 29% YoY/28% QoQ, underpinned by (i) higher human capital mgmt (HCM) sales in ID from a slew of additional payroll customisation processes, cloud hosting and system upgrades; and (ii) continued momentum in its EduTech segment, via the provision of AMLA compliance programs for corporates. EBITDA margins also came in 18ppts stronger YoY, owing to the absence of substantial work done for SG-based clients in the quarter. Its FY23 ETR saw an uptick of 4ppts, primarily from scope expansion for its overseas projects executed throughout the year.

Rider Gate Slowly Ramping Up as Group Diversifies

We remain upbeat on the prospects of its Rider Gate platform (online marketplace for used motorcycles) under the AutoTech segment moving into FY24. QtD-1Q24, we understand the platform has generated c.MYR6m in transaction value from facilitating the B2B sales of c.1.4k used bikes. Being the only platform of its kind in MY and with mgmt guidance of PBT segmental margins in the region of c.30%-range, we expect it to accrete meaningfully to the group’s bottom-line through the remainder of FY24.

Source: Maybank Research - 29 Feb 2024