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. We note that Hunan Lead Power Dazhi Technology Incorporated Company (SZSE:300530) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
When Is Debt Dangerous?
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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.
View our latest analysis for Hunan Lead Power Dazhi Technology
What Is Hunan Lead Power Dazhi Technology's Debt?
As you can see below, at the end of March 2022, Hunan Lead Power Dazhi Technology had CN¥369.4m of debt, up from CN¥313.9m a year ago. Click the image for more detail. However, it does have CN¥160.5m in cash offsetting this, leading to net debt of about CN¥208.9m.
SZSE:300530 Debt to Equity History August 28th 2022
A Look At Hunan Lead Power Dazhi Technology's Liabilities
The latest balance sheet data shows that Hunan Lead Power Dazhi Technology had liabilities of CN¥790.7m due within a year, and liabilities of CN¥920.5m falling due after that. On the other hand, it had cash of CN¥160.5m and CN¥73.0m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥1.48b.
While this might seem like a lot, it is not so bad since Hunan Lead Power Dazhi Technology has a market capitalization of CN¥4.90b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. There's no doubt that we learn most about debt from the balance sheet. But it is Hunan Lead Power Dazhi Technology's earnings that will influence how the balance sheet holds up in the future. 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.
Over 12 months, Hunan Lead Power Dazhi Technology reported revenue of CN¥162m, which is a gain of 32%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.
Caveat Emptor
Even though Hunan Lead Power Dazhi Technology managed to grow its top line quite deftly, the cold hard truth is that it is losing money on the EBIT line. To be specific the EBIT loss came in at CN¥247m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through CN¥185m of cash over the last year. So to be blunt we think it is risky. 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. To that end, you should learn about the 3 warning signs we've spotted with Hunan Lead Power Dazhi Technology (including 2 which don't sit too well with us) .
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.
一些人説,作為投資者,考慮風險的最佳方式是波動性,而不是債務,但巴菲特曾説過一句名言:波動性遠非風險的同義詞。當我們考慮一家公司的風險有多大時,我們總是喜歡看它對債務的使用,因為債務過重可能導致破產。我們注意到湖南先鋒電力大志科技股份有限公司(SZSE:300530)的資產負債表上確實有債務。但更重要的問題是:這筆債務造成了多大的風險?
債務在什麼時候是危險的?
當一家企業無法輕鬆履行這些義務時,債務和其他債務就會變得有風險,無論是通過自由現金流還是通過以有吸引力的價格籌集資本。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,一種更常見(但仍令人痛苦)的情景是,它不得不以低價籌集新的股本,從而永久性地稀釋股東。當然,債務的好處是,它往往代表着廉價資本,特別是當它用能夠以高回報率進行再投資的能力取代公司的稀釋時。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。
查看我們對湖南鉛電大智科技的最新分析
湖南領電大智科技的債務是什麼?
如下所示,截至2022年3月底,湖南領電大智科技的債務為3.694億加元,高於一年前的3.139億加元。單擊圖像瞭解更多詳細信息。然而,它確實有1.605億加元的現金來抵消這一點,導致淨債務約為2.089億加元。
深圳證交所:300530債轉股歷史2022年8月28日
湖南領電大智科技負債狀況透視
最新的資產負債表數據顯示,湖南鉛電大智科技有7.907億元的負債在一年內到期,9.205億元的負債在一年內到期。另一方面,它有1.605億元現金和價值7300萬元的應收賬款在一年內到期。因此,它的負債超過了現金和(近期)應收賬款的總和14.8億元。
雖然這看起來可能很多,但並不是那麼糟糕,因為湖南領電大智科技的市值為49億元人民幣,因此如果需要的話,它可能會通過籌集資本來加強其資產負債表。但我們肯定希望密切關注其債務帶來太大風險的跡象。毫無疑問,我們從資產負債表中瞭解到的債務最多。但影響未來資產負債表表現的,將是湖南先鋒電力大智科技的盈利情況。因此,如果你熱衷於瞭解更多關於它的收益,可能值得查看一下它的長期收益趨勢圖。
在過去的12個月裏,湖南先鋒電力大智科技公佈了1.62億元人民幣的收入,增長了32%,儘管該公司沒有公佈任何息税前收益。如果運氣好的話,該公司將能夠以增長的方式實現盈利。
告誡買入者
儘管湖南領先的電力大智科技成功地相當巧妙地實現了營收增長,但冷酷的現實是,該公司的息税前利潤正在虧損。具體地説,息税前虧損為2.47億加元。考慮到除了上面提到的債務,我們對公司應該使用如此多的債務沒有太大的信心。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。然而,它在過去一年裏燒掉了1.85億元人民幣的現金,這也於事無補。因此,坦率地説,我們認為這是有風險的。毫無疑問,我們從資產負債表中瞭解到的債務最多。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,您應該瞭解3個警示標誌我們已經發現了湖南領先的電力大智科技(包括兩家不太受我們歡迎的公司)。
如果你對一家增長迅速、資產負債表堅如磐石的公司更感興趣,那麼請立即查看我們的淨現金成長型股票清單。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
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。