Core Financial Highlights: A Closer Look at the Numbers

Advance Synergy Berhad’s Q1 2025 performance paints a picture of a company diligently managing its operations to improve profitability despite external pressures. Here’s a snapshot of the key figures:

Overall, the Group recorded a 4.6% decrease in revenue, from RM67.2 million in Q1 2024 to RM64.1 million in Q1 2025. However, a significant positive takeaway is the reduction in losses. The Group’s loss before tax narrowed from RM8.0 million in Q1 2024 to RM7.6 million in Q1 2025. Similarly, the net loss attributable to equity holders saw an improvement, dropping from RM8.13 million to RM7.32 million, which translated to a lower basic loss per share of 0.29 sen compared to 0.32 sen in the prior year’s corresponding quarter.

This improvement in the bottom line, despite lower revenue, suggests effective cost management and strategic adjustments across various business units.

Diving Deeper: Performance by Business Segment

Advance Synergy Berhad’s strength lies in its diversified business segments. Here’s how each performed in Q1 2025 compared to Q1 2024:

Investment Holding

This division saw a substantial increase in revenue, soaring to RM7.9 million from RM1.6 million in Q1 2024. This was primarily driven by a significant dividend income of RM6.8 million received from a subsidiary. Consequently, the division turned a profit before tax of RM4.0 million, a notable improvement from a loss of RM2.6 million in the corresponding period last year. It’s important to note that the dividend income from a subsidiary has no impact on the Group’s consolidated results.

Information & Communications Technology (ICT)

The ICT division demonstrated solid growth, with revenue increasing by approximately 12.3% to RM11.9 million from RM10.6 million. This was mainly due to higher revenue from Unifiedcomms and GlobeOSS system sale contracts. Despite the revenue growth being partly impacted by weaker Singapore Dollar exchange rates, the division managed to reduce its loss before tax to RM0.9 million from RM1.3 million. This improvement was largely due to a higher gross profit margin of 56.0%, up from 45.7%, indicating better efficiency in managing lower-margin contracts.

Property Development & Investment

This segment recorded higher revenue of RM10.5 million in Q1 2025, a significant jump from RM5.5 million in Q1 2024, with the property development unit being the primary contributor. As a result, the division’s loss before tax narrowed to RM3.7 million from RM4.6 million.

• Development: The property development unit, Advance Synergy Realty Sdn Bhd (ASR), saw its revenue climb to RM4.8 million, driven by higher sales of terrace houses in Federal Park Phase 2 (nearing completion) and additional shophouse unit sales in Federal Park Phase 1. This led to a minimal loss before tax of RM59,000, a significant improvement from a loss of RM0.6 million in Q1 2024.
• Investment: The property investment unit reported slightly higher revenue of RM5.7 million (Q1 2024: RM5.4 million), mainly from the hospitality unit and Yap Ah Shak House (YASH). The London aparthotel, The Marloes, which commenced full operation in April 2024, contributed to a slight increase in hospitality revenue. The unit’s loss before tax also decreased to RM2.4 million from RM3.0 million, mainly due to lower net operating expenses at some hotels. However, YASH saw a higher loss before tax of RM0.9 million due to increased operating expenses as its new F&B business, Alma Dining, geared up.

Travel & Tours

This division experienced a decline in revenue, recording RM34.8 million in Q1 2025 compared to RM41.4 million in Q1 2024, a 15.9% decrease. The lower revenue led to a reduced profit before tax of RM1.7 million, down from RM2.1 million, though a higher gross profit margin helped mitigate the impact.

Financial Services

The Financial Services division posted higher revenue of RM1.8 million (Q1 2024: RM1.2 million), mainly due to contributions from new consumer and trade financing products launched in 2024. Despite a decline in gross processing volume from its merchants, the division’s loss before tax narrowed to RM1.6 million from RM2.0 million, supported by higher revenue and lower net operating expenses, partly offset by foreign exchange losses.

Others

The “Others” division saw its revenue drop to RM5.8 million from RM9.2 million, primarily due to fewer bus exports by the bus-body fabrication unit caused by chassis supply delays. This resulted in the bus-body fabrication unit reporting a loss before tax of RM0.1 million compared to a profit of RM0.6 million in Q1 2024. The education unit also recorded a slightly higher loss of RM0.2 million due to lower revenue.

Financial Health: Balance Sheet and Cash Flow

As of 31 March 2025, Advance Synergy Berhad’s total assets stood at RM583.8 million, a slight decrease from RM594.6 million at the end of 2024. Total equity also saw a minor reduction to RM403.2 million from RM407.5 million, while total liabilities decreased to RM180.6 million from RM187.1 million. The Group’s cash and bank balances decreased by RM10.8 million to RM54.6 million, reflecting changes in operating, investing, and financing activities. While operating activities generated a positive cash flow of RM1.2 million, this was offset by cash used in investing and financing activities.

Navigating the Future: Risks and Prospects

Advance Synergy Berhad acknowledges the persistent external headwinds that could impact its business, including inflationary pressures, supply chain disruptions, and geopolitical concerns. Despite these challenges, the Group remains focused on cost management and strategic investments to drive better financial performance across its diverse portfolio.

Information & Communications Technology (ICT)

The outlook for Unifiedcomms and GlobeOSS remains challenging due to underperforming contracts, pricing pressures, and delays in new opportunities. However, the division is taking significant steps to strengthen its fundamentals, focusing on product innovation, market diversification, and operational efficiencies. Captii Ventures, the venture investment arm, faces an unfavorable broader market, though improvements are anticipated for startups in specific industries. The division maintains optimism for the future through fiscal discipline and foundational strengthening.

Property Development & Investment

The Property Development Division expects continued strong performance in 2025. The Federal Park Phase 2 project, with 49% of units booked, is nearing completion and is expected to be fully sold by year-end, generating RM57.9 million in revenue. The new Sejijak Project, with an estimated gross development value of RM75 million, is also ready for commencement. These two projects are projected to generate over RM130 million in total gross development value, positioning the unit for profitability from 2025 onwards. Despite a soft property market in Kuching due to escalated costs and financing challenges, ASR plans a cautious approach with new project launches and explores cost-effective designs.

For Property Investment, the hospitality unit anticipates a gradual recovery in travel demand, although growth remains dependent on geographical regions and external pressures like rising costs and staff shortages. While Cherating continues to be popular, it faced slow business in Q1 2025 due to weather and Ramadan. The Marloes in London is fully operational from April 2024, and while UK demand faces uncertainties, the London market is expected to be resilient. The Shanghai hotel’s recovery is slow amid China’s troubled property sector and geopolitical tensions. YASH in Kuala Lumpur, with its revamped F&B and event venues, is expected to generate income potential in 2025.

Travel & Tours

The Travel & Tours division is cautiously optimistic about its 2025 performance, despite potential dampening effects from increasing inflation, higher travel costs, and geopolitical concerns. Its strategy focuses on building its corporate client base for ticketing, group series tours, and incentive groups, while also developing more competitive inbound and outbound travel products and services.

Financial Services

The Financial Services division, comprising Paydee (card & payment services), Nura (Shariah-compliant financing), and Qurex (money services), is focusing on the evolution of its New Payment Application Services (NPAS). This includes delivering innovative B2B payment services and being a partner for e-commerce and social commerce markets. Nura’s Shariah-compliant financing and SME cashflow management products, launched in 2024, are key parts of this offering. The division plans investments in technology, new capabilities, and staff, while Qurex aims to synergize with Paydee for future growth.

Others (Bus-body Fabrication & Education)

The bus-body fabrication unit, Aviva Master Coach Technology Sdn Bhd, remains focused on cost-efficient production and timely delivery, anticipating strong demand from the Australian market. Despite rising costs and supply chain disruptions, Aviva is cautiously optimistic about managing risks and aims to increase production to 20 buses per month over the next two years. The education unit, The Language House (TLH), achieved strategic milestones in Q1 2025 by expanding its program portfolio and international footprint, particularly in East Asia. It plans to launch new online courses and a subscription-based learning model, aiming for growth and long-term sustainability in 2025 by leveraging digital innovation and global partnerships.