HOME-GROWN human capital management (HCM) solutions and technology provider Ramssol Group Bhd which is en route to a listing on the ACE Market of Bursa Malaysia has been accorded a fair value of 79 sen or 75% above its initial public offering price (IPO) of 45 sen by Mercury Securities Sdn Bhd.
The research house derived its target price from the forward price-to-earnings ratio (PE) of 20.7 times (a 30% discount from the technology sector’s forward PE of 29.6 times due to unimpressive growth of the HCM industry) and FY2021F earnings per share (EPS) of 3.8 sen.
Ramssol Group which started its corporate journey in 2010 aims to raise RM25.1 mil from its IPO on July 13 to partly fund its regional business expansion across Malaysia, Singapore, Thailand, Vietnam, and Indonesia.
From the RM25.1 mil proceeds, RM2.5 mil will be allocated for business expansion into the Philippines while RM6.3 mil will be allocated for the expansion of Feet’s as well as that of third-party collaboration platform, Lark, in Southeast Asia.
Additionally, the company is allocating RM4.1 mil for research & development (R&D) expenditure, RM7.6 mil for working capital and the remaining RM4.6 mil for listing expenses.
For a starter Mercury Securities is impressed with Ramssol Group’s proven project track record and experienced management.
“Ramssol has provided HCM and student management solutions to established organisations and educational institutions such as CapitaLand, Megatech, and the ExportImport Bank of Thailand,” noted the research house.
“Led by its managing director and CEO Cllement Tan Chee Seng who has over 14 years of experience in the HCM solutions field, the group is well-positioned to leverage its track record to secure more orders from notable organisations.”
Other plus points of the company include:
Regional presence in Southeast Asia (SEA): Its Philippines’ business expansion could eventually develop into a significant source of revenue and profits for Ramssol due to the sizable business process outsourcing industry in the country. This expansion will strengthen Ramssol’s position as a HCM specialist in SEA and enhance its value proposition to MNCs and other major organisations.
High margin applications to support growth momentum: HCM technology applications contributed RM9.1 mil or 35.9% of total revenue in 2020 from marginal contribution in 2019. Moreover, they also registered high gross profit margin of 90.4% due to the scalability of the technology.
Ramssol will be allocating 25.3% or RM6.3 mil of its IPO proceeds to expand its Feet’s application and Lark collaboration platform in SEA.
Aiming to increase sales of software licenses: The sale of software licenses creates cross-selling opportunities and positions the group as a one-stop HCM and student management solutions provider.
Risk factor-wise, Mercury Security has this to say: “Dependant on third-party software to implement HCM and student management solutions. Ramssol could potentially lose market share to new solutions introduced by competitors.” – June 29, 2021
