Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, ASMPT Limited (HKG:522) does carry debt. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.
Check out our latest analysis for ASMPT
What Is ASMPT's Debt?
The chart below, which you can click on for greater detail, shows that ASMPT had HK$3.05b in debt in June 2022; about the same as the year before. But on the other hand it also has HK$4.75b in cash, leading to a HK$1.70b net cash position.
SEHK:522 Debt to Equity History August 2nd 2022
How Strong Is ASMPT's Balance Sheet?
Zooming in on the latest balance sheet data, we can see that ASMPT had liabilities of HK$6.86b due within 12 months and liabilities of HK$3.89b due beyond that. Offsetting this, it had HK$4.75b in cash and HK$5.62b in receivables that were due within 12 months. So its liabilities total HK$383.1m more than the combination of its cash and short-term receivables.
Having regard to ASMPT's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the HK$25.3b company is short on cash, but still worth keeping an eye on the balance sheet. While it does have liabilities worth noting, ASMPT also has more cash than debt, so we're pretty confident it can manage its debt safely.
In addition to that, we're happy to report that ASMPT has boosted its EBIT by 95%, thus reducing the spectre of future debt repayments. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine ASMPT's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. ASMPT may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the most recent three years, ASMPT recorded free cash flow worth 72% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.
Summing Up
We could understand if investors are concerned about ASMPT's liabilities, but we can be reassured by the fact it has has net cash of HK$1.70b. And we liked the look of last year's 95% year-on-year EBIT growth. So is ASMPT's debt a risk? It doesn't seem so to us. 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. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for ASMPT (of which 1 is a bit concerning!) you should know about.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
马克斯说得很好,他不是担心股价波动,而是我担心的是永久亏损的可能性……我认识的每个实际投资者都担心。因此,当你评估一家公司的风险有多大时,聪明的投资者似乎知道债务--通常涉及破产--是一个非常重要的因素。重要的是ASMPT有限公司(HKG:522)确实有债务。但股东是否应该担心它的债务使用情况?
为什么债务会带来风险?
当一家企业无法轻松履行这些义务时,债务和其他债务就会变得有风险,无论是通过自由现金流还是通过以有吸引力的价格筹集资本。如果情况真的变得很糟糕,贷款人可以控制业务。然而,一种更常见(但仍令人痛苦)的情景是,它不得不以低价筹集新的股本,从而永久性地稀释股东。当然,许多公司利用债务为增长提供资金,没有任何负面后果。当我们考虑一家公司的债务用途时,我们首先会把现金和债务放在一起看。
查看我们对ASMPT的最新分析
ASMPT的债务是什么?
下面的图表显示,截至2022年6月,ASMPT的债务为30.5亿港元,与前一年大致相同。你可以点击查看更多细节。但另一方面,它也拥有47.5亿港元的现金,导致其净现金头寸为17.亿港元。
联交所:522债转股历史2022年8月2日
ASMPT的资产负债表有多强劲?
放大最新的资产负债表数据,我们可以看到ASMPT有68.6亿港元的负债在12个月内到期,而38.9亿港元的负债在这之后到期。作为抵消,该公司有47.5亿港元的现金和56.2亿港元的应收账款在12个月内到期。因此,该公司的负债总额为3.831亿港元,比现金和短期应收账款的总和还要多。
考虑到ASMPT的规模,其流动资产与总负债似乎达到了很好的平衡。因此,这家市值253亿港元的公司不太可能出现现金短缺的情况,但仍值得关注其资产负债表。虽然ASMPT确实有值得注意的负债,但它的现金也多于债务,因此我们非常有信心它能够安全地管理其债务。
除此之外,我们很高兴地报告,ASMPT已将其息税前利润提高了95%,从而减少了未来偿还债务的幽灵。当你分析债务时,资产负债表显然是你关注的领域。但最重要的是,未来的收益将决定ASMPT未来维持健康资产负债表的能力。所以,如果你关注未来,你可以看看这个免费显示分析师利润预测的报告。
但我们的最后考虑也很重要,因为一家公司不能用账面利润来偿还债务;它需要冷硬现金。ASMPT的资产负债表上可能有净现金,但看看该业务将息税前收益(EBIT)转换为自由现金流的情况仍很有趣,因为这将影响其对债务的需求和管理债务的能力。在最近三年中,ASMPT记录的自由现金流相当于其息税前利润的72%,考虑到自由现金流不包括利息和税收,这大致是正常的。这种自由现金流使公司在适当的时候处于偿还债务的有利地位。
总结
如果投资者对ASMPT的负债感到担忧,我们可以理解,但我们可以放心的是,该公司拥有17亿港元的净现金。我们喜欢去年息税前利润同比增长95%的表现。那么,ASMPT的债务是一种风险吗?但在我们看来并非如此。当你分析债务时,资产负债表显然是你关注的领域。但归根结底,每家公司都可能包含存在于资产负债表之外的风险。这些风险可能很难发现。每家公司都有它们,我们已经发现ASMPT的2个警告标志(其中1个有点令人担忧!)你应该知道。
如果你对一家增长迅速、资产负债表坚如磐石的公司更感兴趣,那么请立即查看我们的净现金成长型股票清单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。