Results Beat Expectations

RAMSSOL’s 1Q24 core earnings came in at MYR4.2m (+99% YoY, +416% QoQ). The results were above expectations, soundly beating both ours/street’s FY24E at 47% respectively. This was RAMSSOL’s second best quarterly earnings delivery on record since its listing in Jul 2021, with the outperformance primarily being driven by its PeopleTech segment.

Malaysia and Thailand Drive Outperformance

1Q24 group turnover grew 124% YoY/84% QoQ, underpinned by robust HCM solutions sales. This was primarily from work performed in relation to the segment’s digital transformation consulting, business process mapping and distributorship of HCM licenses in Malaysia and Thailand. Turnover growth was particularly strong in both countries, with Malaysia registering growth of +179% YoY/+152% QoQ whilst Thailand came in +230% YoY/+2,975% QoQ. There was also strong EBITDA margin expansion (+4.2ppts YoY/+3.1ppts QoQ), which we believe stemmed from the high-profit margin nature of the HCM license distributorship business.

AutoTech Expected to Accrete Positively in FY24

The significance of the group’s AutoTech contribution to overall earnings in 1Q24 remains unclear at this juncture. As the largest domestic online B2B marketplace for used motorcycles, we remain upbeat on AutoTech’s prospects for FY24E owing to strong mid-quarter guidance previously (c.MYR6m transaction value involving 1.4k transactions; 30% PBT margin). Meanwhile, the group is positioning to roll out a slew of initiatives under its PeopleTech and MarketingTech segments in 2H24.

Risk Statement

There are several risk factors that may have some implication to our recommendation, target price and earnings forecasts for RAMSSOL. These include heavy reliance on HCM software vendors in the provision of its HCM services to clients, and risk of security breaches on its applications. In addition, elevated development and administration costs to meet project milestones may necessitate further equity fund-raising exercises.

Source: Maybank Research - 24 Apr 2024