Robust demand for HCM seen to buoy Ramssol Group earnings


CGS-CIMB Research expects RGB to deliver stronger quarter-on-quarter results in the forecast fourth quarter of financial year 2022 due to seasonally stronger results and higher progress billings.

PETALING JAYA: Ramssol Group Bhd (RGB) is expected to chart stable earnings growth underpinned by stronger demand for human capital management (HCM) solutions in Asean and maiden contribution from its anti-corruption Excel programme, says CGS-CIMB Research.

“We expect RGB to deliver stronger quarter-on-quarter results in the forecast fourth quarter of financial year 2022 (FY22), thanks to seasonally stronger results and higher progress billings.

“We expect net profit to climb 38.2% year-on-year (y-o-y) in FY23 and 18.5% in FY24,” said CGS-CIMB Research in a recent report.

But profit is projected to fall 42.2% y-o-y for FY22 on the back of slower progress billings and higher operational expenditure.

It said revenue of the human resources solutions provider’s core business segment, Peopletech (previously known as HR Tech), is projected to advance 20% to 30% y-o-y in FY23.

This division has an order book of RM40mil in the next 12 months.

Apart from being a certified reseller of key third-party HCM software like Oracle and Sage, RGB also develops in-house HCM technology such as Feet’s and Profile.la.

Moreover, the group also collaborates with partners like Darwinbox and Laiye for more recurring revenue streams.

“We observe tie-ups by RGB with partners such as Darwinbox that is involved in the digitalisation of small and medium enterprises (SMEs), and Laiye, which focuses on smart automation technology.

“These partnerships are driven by the ongoing digitalisation effort by more companies and demand for a variety of product offerings to cater to a wider clientele,” said CGS-CIMB Research.

Moreover, RGB continues to drive growth in its Edutech segment by offering enforcement and compliance-related education courses.

The group is targeting a y-o-y revenue growth of more than 100% in FY23.

This is derived from RGB’s low base earnings during the nine months ended Sept 30, 2022.

“The courses provided include corporate liability and anti-corruption courses such as Excel, a programme powered by the Malaysia Anti-Corruption Academy.

“RGB is the exclusive certified provider for Excel in Malaysia. At the moment, the group is in talks with various enforcement agencies,” said the research outfit.

CGS-CIMB Research added that RGB plans to introduce three main packages for its Edutech division in FY23, namely, Excel-Corp that caters to government-linked companies and public limited companies, Excel-Lite for SMEs, as well as an e-learning system.

With the development of Rider Gate, a mobile application platform for GT-Max Motors (M) Sdn Bhd, RGB’s autotech sector is also expected to make contributions to the group’s revenue, upon the application’s completion.

CGS-CIMB Research has maintained an “add” call for RGB with a target price of 45 sen based on a price-to-earnings ratio of 12 times.

This is a 42.9% discount compared with its local peers in the IT solutions space.

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