The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Tsingtao Brewery Company Limited (HKG:168) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.
See our latest analysis for Tsingtao Brewery
How Much Debt Does Tsingtao Brewery Carry?
You can click the graphic below for the historical numbers, but it shows that Tsingtao Brewery had CN¥240.0m of debt in June 2022, down from CN¥450.3m, one year before. However, its balance sheet shows it holds CN¥28.1b in cash, so it actually has CN¥27.8b net cash.
SEHK:168 Debt to Equity History September 11th 2022
How Healthy Is Tsingtao Brewery's Balance Sheet?
According to the last reported balance sheet, Tsingtao Brewery had liabilities of CN¥20.3b due within 12 months, and liabilities of CN¥4.42b due beyond 12 months. Offsetting this, it had CN¥28.1b in cash and CN¥1.10b in receivables that were due within 12 months. So it actually has CN¥4.39b more liquid assets than total liabilities.
This surplus suggests that Tsingtao Brewery has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Tsingtao Brewery boasts net cash, so it's fair to say it does not have a heavy debt load!
The good news is that Tsingtao Brewery has increased its EBIT by 9.7% over twelve months, which should ease any concerns about debt repayment. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Tsingtao Brewery can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Tsingtao Brewery 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. Happily for any shareholders, Tsingtao Brewery actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.
Summing Up
While it is always sensible to investigate a company's debt, in this case Tsingtao Brewery has CN¥27.8b in net cash and a decent-looking balance sheet. The cherry on top was that in converted 140% of that EBIT to free cash flow, bringing in CN¥4.0b. So is Tsingtao Brewery's debt a risk? It doesn't seem so to us. There's no doubt that we learn most about debt from the balance sheet. 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 1 warning sign for Tsingtao Brewery you should know about.
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
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.
伯克希尔哈撒韦的外部基金经理理想汽车·卢直言不讳地说,最大的投资风险不是价格的波动,而是你是否会遭受永久性的资本损失。当你考察一家公司的风险有多大时,考虑它的资产负债表是很自然的,因为当一家企业倒闭时,债务往往会涉及到它。我们注意到青岛啤酒股份股份有限公司(HKG:168)的资产负债表上确实有债务。但股东是否应该担心它的债务使用情况?
什么时候债务是个问题?
债务是帮助企业发展的一种工具,但如果一家企业无法偿还贷款人的债务,那么它就只能听从贷款人的摆布。最终,如果公司不能履行其偿还债务的法定义务,股东可能会一无所有地离开。然而,一种更常见(但仍然昂贵)的情况是,一家公司必须以低廉的股价稀释股东的股份,才能控制债务。然而,通过取代稀释,对于需要资本投资于高回报率增长的企业来说,债务可以成为一个非常好的工具。当我们检查债务水平时,我们首先同时考虑现金和债务水平。
参见我们对青岛啤酒股份的最新分析
青岛啤酒股份背负着多少债务?
你可以点击下图查看历史数据,但它显示,青岛啤酒股份在2022年6月的债务为2.40亿元人民币,低于一年前的4.503亿元人民币。然而,其资产负债表显示,它持有人民币281亿元的现金,因此它实际上拥有人民币278亿元的净现金。
联交所:168债转股历史2022年9月11日
青岛啤酒股份的资产负债表有多健康?
根据最近一次上报的资产负债表,青岛啤酒股份有203亿加元的负债在12个月内到期,44.2亿加元的负债超过12个月到期。作为抵消,它有281亿加元的现金和11亿加元的应收账款在12个月内到期。所以它实际上有43.9亿元人民币更多流动资产超过总负债。
这一盈余表明,青岛啤酒股份的资产负债表比较保守,很可能会毫不费力地消除债务。简而言之,青岛啤酒股份拥有净现金,可以说它没有沉重的债务负担!
好消息是,青岛啤酒股份的息税前利润在12个月内增长了9.7%,这应该会缓解人们对债务偿还的担忧。在分析债务水平时,资产负债表显然是一个起点。但最终,该业务未来的盈利能力将决定青岛啤酒股份能否随着时间的推移加强其资产负债表。因此,如果你想看看专业人士的想法,你可能会发现这份关于分析师利润预测的免费报告很有趣。
最后,企业需要自由现金流来偿还债务;会计利润只是不能削减这一点。青岛啤酒股份的资产负债表上可能有净现金,但看看该公司将息税前利润(EBIT)转换为自由现金流的情况仍然很有趣,因为这将影响其对债务的需求和管理债务的能力。对于任何股东来说,令人高兴的是,青岛啤酒股份在过去三年产生的自由现金流实际上比息税前利润还多。这种强大的摇钱树就像一只穿着大黄蜂西装的小狗一样温暖着我们的心。
总结
虽然调查一家公司的债务总是明智之举,但在这起案件中,青岛啤酒股份拥有278亿元人民币的净现金和体面的资产负债表。上面的樱桃是In将这笔息税前利润的140%转化为自由现金流,带来了人民币40亿元。那么,青岛啤酒股份的债务是一种风险吗?但在我们看来并非如此。毫无疑问,我们从资产负债表中了解到的债务最多。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,我们已经发现青岛啤酒股份的1个警示标志你应该知道。
当然,如果你是那种喜欢在没有债务负担的情况下购买股票的投资者,那么不要犹豫,今天就来看看我们的净现金成长型股票独家名单。
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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。