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Acquisitions boost YGL growth

September 29, 2006
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(Business Times (Malaysia) Via Thomson Dialog NewsEdge) ACCOUNTING software maker YGL Convergence Bhd expects double-digit revenue and net profit growth next year, following a string of acquisitions since listing on the Mesdaq market of Bursa Malaysia in July last year.



The Penang-based firm, whose software also helps firms to organise inventory and customer data, is still eyeing more acquisitions and joint ventures in the Asian market, said chief executive officer Yeap Kong Chean.

"That will be our second phase of growth. We have received interesting offers. But in order to acquire, we need to look at the synergies and value that we can bring to each other," he told reporters after signing an agreement to buy a Shanghai-based rival, Computer Processing Services Ltd (CPSL), in Kuala Lumpur yesterday.

Its first phase of expansion was on acquisitions. YGL had allocated RM4.13 million from its initial public offering funds for that.

Of this, it will use RM1.289 million to buy a 60 per cent stake in CPSL, which will result in YGL indirectly owning King's System (Shanghai) Co Ltd. The remaining stake is held by To King, who is currently heading King's System.

The acquisition proposal on King's System includes a profit guarantee of some RM661,500, cumulatively for two financial years ending 2007 and 2008.

King's System has been operating for more than 10 years and its clients include multinationals and listed companies such as Yu Chai, Kelon and Xerox (Shanghai).

The purchase is expected to be finalised by the first quarter of next year.

The firm has also used RM1.3 million to buy a 60 per cent stake in Singapore-based rival, Elitus Asia Pacific Pte Ltd, last December and another RM456,000 to purchase Hong Kong-based rival, SCS Information Technology (HK) Ltd, four months ago. With that, YGL is now one of the largest Asia-based Enterprise Resources Planning (ERP) solutions providers in Asia. It is also the largest player in Baan/LN, a popular ERP product used particularly in manufacturing companies, in Asia.

YGL employs over 100 technology professionals around the region, with more than 100 Tier 1 customer base. It now has regional offices covering Malaysia, Singapore, Thailand, Hong Kong and China.

For the first half of the year ended June 30 2006, its net profit rose more than four fold to RM1.48 million from RM320,000 a year ago.

Revenue was 31 per cent higher at RM3.5 million compared with RM2.67 million before.

Copyright 2006 The New Straits Times Press (Malaysia) Berhad. Source: Financial Times Information Limited - Asia Intelligence Wire


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