YLI Holdings Berhad (KLSE:YLI) Is Making Moderate Use Of Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies YLI Holdings Berhad (KLSE:YLI) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is YLI Holdings Berhad's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 YLI Holdings Berhad had RM17.6m of debt, an increase on RM10.5m, over one year. However, it also had RM13.2m in cash, and so its net debt is RM4.36m.

How Strong Is YLI Holdings Berhad's Balance Sheet?

According to the last reported balance sheet, YLI Holdings Berhad had liabilities of RM30.4m due within 12 months, and liabilities of RM23.2m due beyond 12 months. On the other hand, it had cash of RM13.2m and RM25.9m worth of receivables due within a year. So it has liabilities totalling RM14.6m more than its cash and near-term receivables, combined.

This deficit isn't so bad because YLI Holdings Berhad is worth RM28.8m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since YLI Holdings Berhad will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for YLI Holdings Berhad

Over 12 months, YLI Holdings Berhad made a loss at the EBIT level, and saw its revenue drop to RM52m, which is a fall of 9.1%. That's not what we would hope to see.

Caveat Emptor

Importantly, YLI Holdings Berhad had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable RM53m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through RM11m of cash over the last year. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 3 warning signs for YLI Holdings Berhad (2 can't be ignored!) that you should be aware of before investing here.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.