Business as usual; BUY maintained

3Q23 results were satisfactory, primarily supported by ongoing domestic projects in the PeopleTech segment. Looking to the quarters ahead, we expect the group’s auto and marketing segments to pick-up pace in topline contribution. Pending briefing updates, we maintain FY23-25E earnings. Maintain BUY rating & TP of MYR0.46 (pegged to 12.7x FY24E PER; unchanged).

Results within expectations

RAMSSOL registered a 3Q23 core net profit of MYR1.4m (+6% YoY, -31% QoQ). Cumulatively, 9M23 core earnings of MYR5.6m (+61% YoY) were within our expectations, at 77% of our FY23E. As 2H tends to be seasonally softer owing to the milestone-based billing nature of its human capital management (HCM) projects, our FY23E forecast is maintained.

Milestone completion limits overseas turnover

RAMSSOL registered a 11% YoY decline in group turnover to MYR6.1m in 3Q23. This was primarily due to lower revenue accrued in Singapore (-94%) and Thailand (-91%) from negligible billings as its HCM projects had achieved critical billable milestones in the previous quarter. The decrease in revenue from its other geo-segments was partially offset by 9% growth in Malaysia-based HCM revenue as domestic sales of its flagship DarwinBox product continued to see encouraging take-up. Operationally, limited foreign ops in 3Q23 also helped boost EBITDA margins by 12ppts YoY.

Anticipating AutoTech to be FY24E growth driver

Although its PeopleTech segment continues to spearhead most of the group’s growth, contributions from its other divisions (AutoTech, EduTech, MarketingTech) are expected to positively accrete moving into FY24. Following the successful soft launch in Oct of its Rider Gate platform, an online marketplace for used motorcycles, we remain upbeat on the AutoTech segment’s prospects. Being the only platform of its kind locally and with mgmt guiding for margins to be in the c.30%-range, we expect it to contribute meaningfully to group earnings from 2Q24 onwards.

Source: Maybank Research - 1 Dec 2023