RHB Investment Research Reports

Ramssol - Tech-Enabled Human Capital Management Provider

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Publish date: Mon, 15 Jul 2024, 10:00 AM
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Malaysia

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  • MYR1.04 FV reflects 21x FY25F P/E. Ramssol's human capital management (HCM) solutions should expand greatly, with: i) New offerings for diverse clients, ii) higher engineer capacity from the GoSaaS partnership, and iii) recurring HCM software subscriptions. Its latest partnerships should spur workflow automation within enterprise systems while contributions from education technology (EduTech) and marketing technology (MarTech) units should drive growth. Ramssol's niche expertise in select industries and stellar earnings growth make its 13.7x FY25F P/E a steal (peer average: 21x).
  • Leading one-stop HCM systems provider. It offers a range of world-class HCM systems tailored for enterprises of varying sizes, including Oracle, Darwinbox, and ZingHR. As Oracle shifts its focus to vendor-based payroll solutions, and many top-tier HR platforms avoid developing proprietary payroll systems due to significant compliance investments, Ramssol is seizing opportunities with its exclusive distribution partnership with Ramco across South-East Asia. Its product Ramco is the only cloud payroll system capable of seamless integration with Oracle, Darwinbox, SAP SuccessFactors, and Workday. To further enhance its HCM offerings, Ramssol also provides the Disprz Learning Management System (LMS), which features artificial intelligence (AI)-driven personalisation and content curation.
  • Ramssol's strategic partnership with GoSaaS Inc USA, a leader in Oracle solutions, aims to deliver Oracle Fusion Cloud Solutions for HCM and enterprise resource planning (ERP) to clients in Malaysia and South-East Asia. Ramssol is responsible for the sales and marketing of Oracle’s business solutions through its wide network of distributorship resellers, while GoSaaS manages the implementation process. This collaboration addresses Ramssol’s engineer capacity constraints by leveraging GoSaaS' manpower, enabling the former to double its HCM sales for Oracle and allocate resources to other HCM systems – which allow for a new income stream in its recurring subscription model.
  • Robust growth in EduTech and MarTech. In Edutech, Ramssol – via its exclusive distributorship of EnGo – offers online compliance training certified by the Malaysian Anti-Corruption Commission (MACC), as well as physical anti-corruption courses conducted by MACC officers under the EXCEL programme. Four EXCEL courses are expected to be conducted this year, vs just one in 2023. In MarTech, iStudio reported a 195% YoY earnings increase after acquisition, driven by improved service rates, quality enhancements, and additional consulting services. Ramssol introduced Marketing-as-a-Service, offering monthly subscriptions, and has partnered exclusively with TGV to livestream concerts with four upcoming events.
  • Valuation. Based on an ascribed P/E of 21x on FY25F earnings, we derive a fair value of MYR1.04. Key risks: Suspension of principals’ distributorships, increase in overhead costs, lack of long-term contracts and dependency on skilled engineers.

Source: RHB Research - 15 Jul 2024

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