Greetings, fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial performance of YGL CONVERGENCE BERHAD (Ygl), a Malaysian technology and solar solutions provider. Their recent quarterly report for the period ended 31 March 2025 presents a fascinating mix of challenges and triumphs, painting a picture of a company navigating a dynamic market while strategically positioning itself for long-term growth.
While the latest quarter saw a dip in certain key metrics, the full-year cumulative performance tells a much more compelling story of significant growth in profitability. This report isn’t just about numbers; it’s about Ygl’s resilience and strategic direction in both its software and solar segments. Let’s unpack the details and see what’s truly driving this convergence.
Unpacking the Numbers: A Tale of Two Timelines
Ygl’s financial performance presents a dual narrative: a softer quarter but a robust cumulative year. Understanding both is key to a holistic view.
Quarterly Performance (3 Months Ended 31 March 2025 vs 31 March 2024)
The first quarter of the financial year ending 31 March 2025 saw a moderation in performance compared to the same period last year. This was primarily attributed to lower revenue across the board, particularly in the solar segment.
Current Quarter (31 March 2025)
Revenue: RM2,576,849
Gross Profit: RM563,489
Profit Before Tax: RM309,448
Net Profit Attributable to Owners: RM145,450
Basic Earnings Per Share: 0.05 sen
Previous Corresponding Quarter (31 March 2024)
Revenue: RM5,219,868
Gross Profit: RM1,520,855
Profit Before Tax: RM1,089,577
Net Profit Attributable to Owners: RM604,750
Basic Earnings Per Share: 0.22 sen
The Group’s revenue for the quarter decreased by 50.6%, leading to a corresponding drop in gross profit and net profit. This was largely driven by a significant slowdown in the solar segment during this specific quarter, as we’ll explore further below.
Cumulative 12-Month Performance (Year Ended 31 March 2025 vs 31 March 2024)
While the quarterly numbers show a decline, the cumulative 12-month performance paints a much brighter picture, demonstrating strong year-on-year growth in profitability, indicating that the recent quarter’s slowdown might be an anomaly rather than a trend for the full year.
| Metric | 12 Months Ended 31 March 2025 (RM) | 12 Months Ended 31 March 2024 (RM) | Change (%) |
|---|---|---|---|
| Revenue | 12,705,012 | 11,822,226 | +7.5% |
| Gross Profit | 4,853,314 | 3,757,614 | +29.1% |
| Profit Before Tax | 2,120,348 | 661,710 | +220.5% |
| Net Profit Attributable to Owners | 1,773,333 | 251,324 | +605.6% |
| Basic Earnings Per Share (sen) | 0.65 | 0.09 | +622.2% |
The impressive 605.6% surge in net profit attributable to owners for the full year highlights Ygl’s underlying profitability and efficient management. This growth was primarily fueled by higher overall revenue and the absence of certain impairment provisions that impacted the previous year’s figures.
Segmental Deep Dive
Ygl’s business is primarily divided into two segments: Software and Solar. Their individual performances offer valuable insights.
Software Segment
The Software segment showed resilience and a remarkable turnaround in profitability:
- Quarterly Revenue: Decreased by 14.5% to RM1,082,608 (from RM1,265,853 in Q1 FY2024).
- Quarterly Net Profit from Operations: A significant turnaround to RM211,885 (from a net loss of RM174,548 in Q1 FY2024). This was mainly due to an increase in other income during the quarter.
- Cumulative 12-Month Revenue: Increased by 16.6% to RM6,740,187 (from RM5,778,627 in FY2024).
- Cumulative 12-Month Net Profit from Operations: A strong swing to RM1,247,180 (from a net loss of RM213,996 in FY2024), driven by higher revenue and income.
The software division’s return to profitability, especially on a cumulative basis, is a key positive takeaway, indicating a strengthening core business.
Solar Segment
The Solar segment experienced a challenging quarter, but its cumulative performance remained substantial:
- Quarterly Revenue: Decreased sharply by 62.2% to RM1,494,241 (from RM3,954,015 in Q1 FY2024).
- Quarterly Net Profit from Operations: Decreased to RM403,552 (from RM940,894 in Q1 FY2024), directly linked to the lower revenue.
- Cumulative 12-Month Revenue: A slight decrease of 1.3% to RM5,964,825 (from RM6,043,599 in FY2024).
- Cumulative 12-Month Net Profit from Operations: Decreased to RM898,990 (from RM988,709 in FY2024), also reflecting the lower revenue.
The significant quarterly decline in solar revenue indicates project-based fluctuations or timing differences in project completions, which is common in the solar installation business. However, the cumulative performance shows the segment still contributing significantly to the Group’s top line.
Financial Health Check
Ygl’s balance sheet indicates a healthy financial position:
- Net Assets Per Share: Increased to 6.47 sen as at 31 March 2025, up from 5.77 sen as at 30 March 2024, reflecting growth in shareholders’ equity.
- Cash and Cash Equivalents: Stood at RM6,811,615. While lower than the previous year, the Group effectively managed its cash flow, with net cash generated from operating activities at RM598,691 for the 12-month period.
- No Borrowings: A strong positive indicator of financial stability, as the Group reported no outstanding borrowings or debt securities.
- Contract Liabilities: Increased to RM1,958,385, representing technical support income received in advance, which is a positive sign of future revenue.
Navigating the Future: Risks and Prospects
Ygl is not resting on its laurels. The company is actively addressing market dynamics and positioning itself for future growth.
Software Segment: Innovation in a Challenging Environment
The global economic landscape, especially with escalating trade tensions and tariffs, presents a complex environment. While Ygl’s proprietary software remains tariff-free, many of its customers could be impacted, potentially slowing demand for Enterprise Resource Planning (ERP) solutions. However, Ygl sees this as an opportunity to differentiate itself:
- Demand for Efficiency: The need for operational efficiency and cost reduction remains strong, driving demand for advanced solutions.
- Technological Edge: Ygl is integrating Artificial Intelligence (AI), automation, and machine learning (ML) into its smart warehouse, smart manufacturing, and core enterprise software offerings. This aligns with Industry 4.0 trends and aims to help customers navigate complexities and achieve greater productivity.
- New Ventures: The recent incorporation of Ygl Haltech Sdn Bhd (76% equity) on 18 April 2025 signifies a strategic move to expand product and service offerings into a wider market, aiming to create new revenue streams for the Group.
Solar Segment: Riding the Renewable Energy Wave
Malaysia’s commitment to renewable energy provides a robust tailwind for Ygl’s solar segment. The government’s ambitious targets of 31% renewable energy capacity by 2025 and 40% by 2035, with solar energy as a crucial component, underpin strong market potential. Ygl is focusing on:
- Abundant Resource: Malaysia’s equatorial climate ensures consistent, high solar radiation, making solar power a viable and attractive option.
- Incentive Awareness: The company is working to raise awareness about government incentives like Feed-in Tariff (FiT), Net Energy Metering (NEM) Scheme, and the “Solar for Rakyat Incentive Scheme” (SolaRIS). These initiatives are crucial for accelerating the transition towards a net-zero emission economy as outlined in the National Energy Transition Roadmap (NETR).
- Sustainable Solutions: Ygl’s solar panel systems offer residential and business customers a sustainable alternative for electricity needs, simultaneously reducing their carbon footprint.
Summary and Outlook
YGL CONVERGENCE BERHAD’s latest report presents a mixed but ultimately positive narrative. While the immediate quarter’s performance saw a slowdown, particularly in the solar segment, the cumulative 12-month results demonstrate significant growth in revenue and, more importantly, a remarkable surge in profitability. This highlights the underlying strength and efficiency of the Group’s operations over a longer period.
The Software segment’s return to profitability is a strong indicator of its potential, driven by strategic focus on advanced technologies like AI and Industry 4.0. The Solar segment, despite its quarterly fluctuations, remains well-positioned to benefit from Malaysia’s aggressive renewable energy targets and supportive government incentives. The incorporation of Ygl Haltech Sdn Bhd also signals proactive expansion into new markets and revenue streams.
Key positive factors from this report include:
- Substantial increase in cumulative 12-month net profit attributable to owners (+605.6%).
- Software segment’s strong turnaround from loss to profit on both quarterly and cumulative bases.
- Healthy balance sheet with no borrowings and increased net assets per share.
- Strategic positioning in high-growth areas (AI-driven software and renewable energy).
- Proactive expansion into new market segments with the new subsidiary.
Looking ahead, Ygl’s strategic investments in technological advancement and its alignment with national energy transition goals suggest a promising outlook. The company appears to be well-equipped to capitalize on the increasing demand for smart solutions and sustainable energy in Malaysia and beyond.
What are your thoughts on Ygl’s performance? Do you believe their focus on AI and Industry 4.0 in software, coupled with the robust growth prospects in Malaysia’s solar sector, will enable them to sustain this positive momentum? Share your insights in the comments below!
