YBS International Berhad: Navigating Growth and Challenges in a Dynamic Landscape

Greetings, fellow investors and market watchers! Today, we’re diving deep into the latest unaudited financial results of YBS International Berhad for the twelve months ended 31 March 2025. This report offers a fascinating glimpse into the company’s journey, revealing significant revenue growth and strategic maneuvers, even as it grapples with a challenging operating environment. One of the standout highlights is the remarkable strengthening of its balance sheet, driven by a substantial revaluation gain on its land and buildings. Let’s unpack the details and see what this means for the company’s future trajectory.

Unpacking the Core Financials: A Mixed Bag of Performance

YBS International Berhad’s latest report showcases a robust top-line performance, but the bottom line tells a more complex story.

Overall Financial Performance

The Group demonstrated commendable revenue growth for both the quarter and the full financial year.

For the current quarter, revenue increased by 9.1% to RM30.34 million, primarily driven by higher market demand in the Electronic Manufacturing Services (EMS) segment.

On a full-year basis, revenue surged by 20.4% to RM118.63 million from RM98.55 million in the preceding year, indicating strong overall market demand for the Group’s products and services.

Gross profit also saw a significant improvement:

The current quarter’s gross profit jumped by 90% to RM3.63 million, mainly due to higher revenue from the Electronic Manufacturing Services segment.

For the full year, gross profit increased by 31.9% to RM14.25 million.

Despite the top-line strength, the Group’s profitability faced headwinds, particularly over the full year:

The Group significantly reduced its loss before tax in the current quarter by 84.1% to RM0.94 million, largely attributable to lower share option expenses incurred (RM0.37 million in 2025 vs. RM4.29 million in 2024).

However, for the full financial year, the loss before tax widened by 11.5% to RM8.89 million, primarily due to an increase in staff costs and other operating costs in line with increased revenue.

Consequently, the loss after tax and loss per share also reflect these trends:

Segmental Performance: A Closer Look

YBS International Berhad operates across four key segments. Their performance highlights the diverse demands within their operational landscape.

• Precision Engineering and Plastic Injection Moulding: This segment saw its revenue increase by 18.9% to RM4.73 million in the current quarter and 12.4% to RM19.02 million for the full year, driven by higher market demand from existing customers.
• Precision Machining and Stamping: While current quarter revenue decreased by 5.5% to RM11.32 million, the full-year revenue for this segment grew by 12.6% to RM48.59 million, also attributed to higher market demand.
• Electronic Manufacturing Services (EMS): This was a star performer, with current quarter revenue soaring by 123.7% to RM9.71 million and full-year revenue skyrocketing by 262.5% to RM31.66 million. This significant increase is due to higher demand from both new and existing customers.
• Paper Products: This segment faced headwinds, with current quarter revenue dropping by 39.0% to RM4.58 million and full-year revenue declining by 34.9% to RM19.37 million, primarily due to lower customer demand.

Strengthening the Financial Foundation: Balance Sheet and Cash Flow

The Group’s financial position has significantly strengthened, providing a more robust base for its operations.

Total assets grew substantially to RM227.80 million from RM162.38 million. More impressively, equity attributable to owners of the Company almost doubled to RM138.20 million from RM72.60 million. This significant increase was largely driven by a net gain on revaluation of land and buildings amounting to RM45.91 million, along with an increase in share capital from employee share option exercises and a private placement.

Consequently, net assets per share attributable to owners of the Company increased from RM0.28 to RM0.47.

On the cash flow front, the picture is dynamic:

The Group recorded net cash used in operating activities of RM5.82 million for the full year, a shift from a positive inflow of RM10.60 million in the previous year. This indicates higher working capital requirements or lower operational cash generation.

Net cash used in investing activities increased to RM5.84 million (from RM3.86 million), reflecting ongoing capital expenditure, including the acquisition of additional shares in a subsidiary.

However, a significant positive inflow was seen in financing activities:

Net cash from financing activities turned strongly positive at RM16.08 million, primarily driven by proceeds from the issuance of shares through a private placement and drawdowns of term loans and bankers’ acceptances.

Overall, the net effect was a healthy increase in cash and cash equivalents:

This led to cash and cash equivalents standing at RM20.84 million at the end of the financial year.

Strategic Outlook: Risks, Prospects, and Corporate Maneuvers

YBS International Berhad acknowledges the challenging business environment while actively pursuing strategic initiatives to drive future growth.

Future Prospects and Challenges

The Board views the business environment as remaining volatile and challenging. Key factors include:

• Foreign Exchange Risk: Significant movement in the Ringgit Malaysia and United States Dollar exchange rate could lead to foreign exchange gains or losses, impacting the Group’s performance.
• Trade War and Tariffs: The ongoing global trade war and the imposition of tariffs by the United States introduce uncertainty in business and global supply chain planning. The Group is actively working on risk assessment, cost-saving measures, and strategic adjustments to address this impact.

Despite these challenges, the Group remains committed to improving cost efficiency and strengthening its market position.

Key Corporate Proposals

The Group has been highly active on the corporate front, making strategic moves to reshape its portfolio and expand its capabilities:

• Proposed Acquisitions: On 28 May 2025, the Company entered into a master sale and purchase agreement to acquire 100% equity interests in four Allied Precision Technologies companies for up to USD38 million (equivalent to RM164.05 million). These target companies specialize in precision manufacturing and mechanical sub-assembly services. The rationale behind these acquisitions is to expand the Group’s market outreach, strengthen its profile, leverage new technologies, and broaden its customer base in the precision manufacturing industry. The acquisition is pending regulatory approvals and is expected to complete by the second half of the financial year ending 31 March 2026.
• Private Placement: The Company successfully completed two tranches of its private placement, raising funds to finance working capital requirements, the Enovix project, and capital expenditure for the precision machining and stamping segment.
• Disposal of Subsidiary: On 4 February 2025, the Company disposed of its entire 100% stake in Edaran Precision India Private Limited for USD177,272 (equivalent to RM789,569). This strategic disposal allows the Company to deconsolidate a loss-making business entity and re-focus its resources on more profitable segments.

Dividends

The Directors did not recommend any dividend for the financial year under review, and no dividends were paid during the period.

What Lies Ahead for YBS International?

YBS International Berhad is clearly in a phase of significant transformation. While the full-year loss is a point of concern, the underlying revenue growth, strategic acquisitions, and the strengthened balance sheet paint a picture of a company actively repositioning itself for future opportunities. The focus on high-demand segments like Electronic Manufacturing Services and strategic expansion into precision manufacturing through acquisitions could be game-changers.

The coming quarters will be crucial in observing how the Group manages its costs, integrates its new acquisitions, and navigates the global economic uncertainties. Will their strategic adjustments effectively counter the impact of trade tensions and currency fluctuations?

What are your thoughts on YBS International Berhad’s latest performance and strategic direction? Do you think the company can maintain this growth momentum and return to profitability in the next few years? Share your views in the comments section below!