Vsolar Group Navigates Challenging Waters: A Deep Dive into Their Q3 FY2025 Performance
The renewable energy sector in Malaysia is a dynamic landscape, buzzing with ambitious targets under the national Energy Transition Plan. Against this backdrop, Vsolar Group Berhad has just released its unaudited consolidated financial statements for the quarter ended 31 March 2025 (Q3 FY2025). This report offers a nuanced picture of the company’s journey, revealing both improved quarterly loss figures and a significant increase in cumulative losses, alongside strategic moves aimed at long-term growth.
For Malaysian retail investors keen on understanding the pulse of companies in the green energy space, Vsolar’s latest report is a crucial read. While the immediate quarter shows a notable reduction in losses, the cumulative figures highlight underlying challenges that warrant closer inspection. Let’s break down the key takeaways.
Core Financial Highlights: A Mixed Bag of Results
Vsolar’s Q3 FY2025 performance presents a fascinating dichotomy between its quarterly and cumulative results. While the group managed to significantly reduce its net loss for the individual quarter, the cumulative nine-month period saw a substantial increase in overall losses.
Revenue and Gross Profit: Quarter-on-Quarter Contraction
For the individual quarter ended 31 March 2025, Vsolar recorded a decrease in revenue and gross profit compared to the same period last year. This was primarily attributed to slower progression in the Solar PV Segment.
Q3 FY2025
Revenue: RM3.57 million
Gross Profit: RM0.19 million
Q3 FY2024
Revenue: RM4.30 million
Gross Profit: RM0.35 million
This represents a 17% decrease in revenue and a 47% decline in gross profit for the quarter compared to the previous year’s corresponding period.
Profitability: Quarterly Improvement, Cumulative Concern
Despite the revenue dip, Vsolar managed to reduce its net loss for the quarter. This improvement was largely driven by an interest income of RM0.26 million and a fair value gain on investments of RM0.21 million, a stark contrast to the RM1.54 million fair value loss on investments recorded in the same period last year.
Q3 FY2025
Loss Before Tax: RM(1.19) million
Loss After Tax: RM(1.19) million
Basic Loss Per Share: (0.24) sen
Q3 FY2024
Loss Before Tax: RM(1.55) million
Loss After Tax: RM(1.80) million
Basic Loss Per Share: (1.12) sen
This shows a 23% reduction in pre-tax loss and a 34% reduction in after-tax loss for the quarter.
However, the cumulative nine-month period tells a different story. While cumulative revenue increased by 30% to RM11.99 million, the cumulative loss after tax ballooned by over 100% to RM5.82 million, compared to RM1.62 million in the same period last year. This significant increase in cumulative loss is a key area of concern.
Segmental Performance: The “Others” Segment’s Impact
A closer look at the segmental information for the cumulative period reveals that while the Solar Energy segment saw a healthy increase in external revenue, the “Others” segment contributed significantly to the overall loss before taxation.
| Segment | External Revenue (31.03.2025, RM’000) | External Revenue (31.03.2024, RM’000) | Loss Before Taxation (31.03.2025, RM’000) | Loss Before Taxation (31.03.2024, RM’000) |
|---|---|---|---|---|
| Solar Energy | 11,965 | 9,247 | (604) | (529) |
| Others | 524 | 495 | (17,247) | (1,707) |
| Elimination | (495) | (495) | 12,030 | – |
| Total | 11,994 | 9,247 | (5,821) | (1,215) |
The “Others” segment, which includes investment holding and IT services, recorded a staggering increase in loss before taxation from RM1.71 million to RM17.25 million. While there was a substantial elimination entry, the underlying losses in this segment are a significant drag on overall performance.
Financial Position and Cash Flow: A Shift in Dynamics
Vsolar’s balance sheet shows a slight decrease in total assets and equity, while total liabilities saw a notable increase, largely due to a jump in trade payables and current liabilities. Net asset per share declined from 24.31 sen to 23.14 sen.
The cash flow statement highlights a shift from cash generation to cash usage. The group used RM4.11 million in operating activities, an increase from RM2.89 million in the previous year’s corresponding period. Crucially, net cash generated from financing activities turned negative at RM(0.39) million, compared to a positive RM25.76 million last year. This swing is largely due to the absence of share application monies received in the current period, which significantly boosted cash in the prior year.
Risks and Prospects: Navigating the Energy Transition
Vsolar acknowledges the challenging macroeconomic environment, marked by global uncertainties and rising operational costs. However, the company is strategically positioning itself to capitalize on Malaysia’s strong commitment to a low-carbon, sustainable energy future.
Malaysia’s Energy Transition Plan, targeting 31% renewable energy by 2025, 40% by 2035, and 70% by 2050, provides a clear roadmap and significant opportunities for players like Vsolar. The company reports actively negotiating projects for the supply and installation of solar PV systems in commercial buildings, which aligns with these national objectives.
A notable strategic move is the completed acquisition of a 1.3MWP Solar PV System in Klang, Selangor. This acquisition is expected to contribute positively to future performance and strengthen Vsolar’s solar energy asset base, signaling a tangible commitment to its core renewable energy business.
The report also details the substantial unutilised proceeds from previous corporate exercises:
- 2020 Rights Issue: RM31.81 million unutilised proceeds, extended for utilisation until July 2025.
- 2021 Private Placement: RM7.37 million unutilised proceeds, extended for utilisation until June 2025.
- 2024 Rights Issue: RM32.61 million unutilised proceeds, earmarked for solar PV leasing projects, with a 24-month utilisation timeframe from April 2024.
The effective deployment of these funds into strategic solar projects will be critical for Vsolar’s future growth and asset expansion. The recent capital reduction of RM100 million, which offset accumulated losses, also reflects a proactive step to improve the company’s financial structure.
However, the significant increase in cumulative losses, particularly from the “Others” segment, and the increased cash burn from operating activities are areas that require close monitoring. The company’s ability to convert its strategic negotiations and unutilised proceeds into profitable ventures will be key to reversing the cumulative loss trend.
Summary and Outlook
Vsolar Group Berhad’s Q3 FY2025 report presents a mixed financial narrative. While the individual quarter showed a commendable reduction in net loss, driven by financial gains, the cumulative nine-month period highlights a concerning increase in overall losses. This dichotomy suggests that while the company can achieve positive short-term financial adjustments, its core operations, particularly within the “Others” segment, face significant challenges that are impacting long-term profitability.
The group’s strategic focus on the solar energy sector, bolstered by national renewable energy targets and recent acquisitions, positions it well for future growth. The substantial unutilised proceeds from past fundraising exercises also offer a strong financial foundation for planned solar projects. However, the execution of these projects and the effective management of operational costs and foreign exchange exposures will be crucial in translating potential into sustained profitability.
Key points to consider for future performance include:
- The continued progression and profitability of the Solar PV Segment.
- Effective management and turnaround of the “Others” segment’s losses.
- Prudent deployment of the significant unutilised proceeds into value-accretive solar projects.
- Mitigation of foreign exchange risks and other operational cost pressures.
Overall, Vsolar is at a pivotal juncture, balancing immediate financial adjustments with long-term strategic investments in a promising sector. Their ability to leverage the positive momentum from their solar initiatives while addressing the underlying challenges will determine their trajectory in the coming years.
