Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Hainan Haiyao Co., Ltd. (SZSE:000566) makes use of debt. But is this debt a concern to shareholders?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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.
View our latest analysis for Hainan Haiyao
What Is Hainan Haiyao's Net Debt?
You can click the graphic below for the historical numbers, but it shows that Hainan Haiyao had CN¥3.33b of debt in March 2022, down from CN¥3.56b, one year before. However, it also had CN¥1.31b in cash, and so its net debt is CN¥2.03b.
SZSE:000566 Debt to Equity History July 15th 2022
How Strong Is Hainan Haiyao's Balance Sheet?
According to the last reported balance sheet, Hainan Haiyao had liabilities of CN¥4.29b due within 12 months, and liabilities of CN¥1.48b due beyond 12 months. On the other hand, it had cash of CN¥1.31b and CN¥1.55b worth of receivables due within a year. So it has liabilities totalling CN¥2.91b more than its cash and near-term receivables, combined.
This deficit isn't so bad because Hainan Haiyao is worth CN¥5.44b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But it is Hainan Haiyao's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
Over 12 months, Hainan Haiyao made a loss at the EBIT level, and saw its revenue drop to CN¥2.1b, which is a fall of 7.8%. That's not what we would hope to see.
Caveat Emptor
Importantly, Hainan Haiyao had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping CN¥667m. 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. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled CN¥244m in negative free cash flow over the last twelve months. So suffice it to say we do consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should be aware of the 1 warning sign we've spotted with Hainan Haiyao .
At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.
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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.
傳奇基金經理理想汽車·盧曾説,最大的投資風險不是價格的波動,而是你是否會遭受永久性的資本損失。因此,當你考慮到任何一隻股票的風險有多大時,你需要考慮債務可能是顯而易見的,因為太多的債務可能會讓一家公司倒閉。與許多其他公司一樣海南海藥股份有限公司(SZSE:000566)利用債務。但這筆債務對股東來説是一個擔憂嗎?
什麼時候債務是個問題?
一般來説,只有當一家公司無法輕鬆償還債務時,債務才會成為一個真正的問題,無論是通過籌集資金還是用自己的現金流。資本主義的一部分是“創造性破壞”的過程,破產的企業被銀行家無情地清算。然而,更常見(但代價仍然高昂)的情況是,一家公司必須以極低的價格發行股票,永久性地稀釋股東的股份,只是為了支撐其資產負債表。當然,許多公司利用債務為增長提供資金,沒有任何負面後果。當我們考慮一家公司的債務用途時,我們首先會把現金和債務放在一起看。
查看我們對海南海藥的最新分析
海南海藥的淨債務是多少?
你可以點擊下圖查看歷史數據,但它顯示,2022年3月,海南海藥的債務為人民幣33.3億元,低於一年前的人民幣35.6億元。然而,它也有13.1億元現金,因此其淨債務為20.3億元。
深交所:000566債轉股歷史2022年7月15日
海南海藥的資產負債表有多強?
根據最新上報的資產負債表,海南海藥有42.9億元的負債在12個月內到期,14.8億元的負債在12個月後到期。另一方面,它有13.1億元現金和15.5億元的應收賬款在一年內到期。因此,它的負債總額為人民幣29.1億元,比現金和近期應收賬款加起來還要多。
這一赤字並不是那麼糟糕,因為海南海藥價值人民幣54.4億元,因此如果需要的話,可能會籌集到足夠的資本來支撐其資產負債表。然而,仍值得密切關注其償債能力。毫無疑問,我們從資產負債表中瞭解到的債務最多。但海南海藥的盈利將影響未來資產負債表的表現。因此,當考慮債務時,絕對值得關注收益趨勢。點擊此處查看互動快照。
在過去的12個月裏,海南海藥的息税前利潤出現虧損,收入降至21億元人民幣,降幅為7.8%。這不是我們希望看到的。
告誡買入者
重要的是,海南海藥去年出現息税前收益(EBIT)虧損。其息税前利潤損失高達6.67億元人民幣。當我們看到這一點,並回憶起資產負債表上相對於現金的負債時,在我們看來,該公司有任何債務似乎是不明智的。因此,我們認為它的資產負債表有點緊張,但並不是無法修復。另一個值得警惕的原因是,在過去的12個月裏,自由現金流為負2.44億元。因此,可以説,我們確實認為這隻股票是有風險的。在分析債務水平時,資產負債表顯然是一個起點。但歸根結底,每家公司都可能包含存在於資產負債表之外的風險。為此,您應該意識到1個警告標誌我們已經發現了海南海遙。
歸根結底,關注那些沒有淨債務的公司往往更好。你可以訪問我們的這類公司的特別名單(都有利潤增長的記錄)。這是免費的。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。