Expect better ESG disclosures moving forward; BUY

We review Ramssol’s ESG practices using our proprietary scoring methodology (see page 3) and assign it an average overall score of 53 (out of 100). Ramssol scored below average (31/100) in our quantitative assessment, about average in qualitative (50/100), and full-marks (100/100) for ESG target-setting. Our FY24-26E earnings forecasts, BUY call, and MYR1.00 TP (pegged to 17x FY25E PER @ LT mean) are unchanged.

“E”: Room for improvement

Ramssol scored poorly in its “E” metrics as it only began tracking environmental metrics last year. As such, only emissions (Scope 1/2) and energy usage metrics were disclosed in FY23. Nonetheless, mgmt has pledged to commence reporting of other “E”-related metrics in FY24, such as waste and water management. It will also start reporting Scope 3 emissions data from FY26 onwards. Encouragingly, Ramssol has set proactive Scope 1/2 emissions targets for 2030 utilising its 2023 baseline.

“S”: Prioritising local procurement

Ramssol’s “S” score was about average. Positives include a growing share of women in managerial roles (FY23: 46% vs. FY21: 17%) and spending on local suppliers (FY23: 99% vs. FY21: 80%). Meanwhile, improvement in the tracking of employees training hours and customer satisfaction metrics could help boost its “S” score moving forward. We also like that mgmt has set granular metrics for training and development by 2025, including mandatory minimum training hours for all staff and targeted OSH training.

“G”: Above average MD/Board compensation ratio

Ramssol’s score was mixed for its “G” (governance-related) indicators. Whilst it has an impeccable record for cyber-security breaches and maintain independent Board representation above the 50% mark since FY21, its MD/CEO and Board compensation - as a percentage of reported net profit - were well above the industry average at 13%/24% respectively in FY23. Ramssol’s “G” score could also improve further if it is able to increase female Board representation from the 29% in FY23.

Source: Maybank Research - 9 Oct 2024