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.' 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. We note that Hainan Haiyao Co., Ltd. (SZSE:000566) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.
Check out our latest analysis for Hainan Haiyao
How Much Debt Does Hainan Haiyao Carry?
You can click the graphic below for the historical numbers, but it shows that as of June 2022 Hainan Haiyao had CN¥3.93b of debt, an increase on CN¥2.86b, over one year. However, it also had CN¥962.3m in cash, and so its net debt is CN¥2.97b.
SZSE:000566 Debt to Equity History October 20th 2022
How Healthy Is Hainan Haiyao's Balance Sheet?
The latest balance sheet data shows that Hainan Haiyao had liabilities of CN¥3.97b due within a year, and liabilities of CN¥1.46b falling due after that. Offsetting this, it had CN¥962.3m in cash and CN¥1.57b in receivables that were due within 12 months. So its liabilities total CN¥2.89b more than the combination of its cash and short-term receivables.
While this might seem like a lot, it is not so bad since Hainan Haiyao has a market capitalization of CN¥5.71b, 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 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.
In the last year Hainan Haiyao had a loss before interest and tax, and actually shrunk its revenue by 2.9%, to CN¥2.1b. We would much prefer see growth.
Caveat Emptor
Importantly, Hainan Haiyao had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost CN¥545m 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. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled CN¥178m 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. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Hainan Haiyao you should know about.
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.
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。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。我們注意到海南海藥股份有限公司(SZSE：000566)的資產負債表上確實有債務。但真正的問題是，這筆債務是否讓該公司面臨風險。
為什麼債務會帶來風險？
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。在最糟糕的情況下，如果一家公司無法償還債權人的債務，它可能會破產。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，在企業中，債務可以是一個重要的工具，特別是資本密集型企業。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
海南海藥揹負着多少債務？
你可以點擊下圖查看歷史數據，但它顯示，截至2022年6月，海南海藥的債務為39.3億元人民幣，比一年前增加了28.6億元人民幣。然而，它也有9.623億新元的現金，因此其淨債務為29.7億新元。
深圳證交所：000566債轉股歷史2022年10月20日
海南海藥的資產負債表有多健康？
最新的資產負債表數據顯示，海南海藥有39.7億元的負債在一年內到期，14.6億元的負債在一年內到期。作為抵消，它有9.623億加元的現金和15.7億加元的應收賬款在12個月內到期。因此，它的負債總額比現金和短期應收賬款的總和高出28.9億加元。
雖然這看起來可能很多，但並不是很糟糕，因為海南海藥的市值為人民幣57.1億元，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。
去年，海南海藥息税前虧損，實際營收縮水2.9%，至21億元人民幣。我們更希望看到增長。
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。事實上，在息税前利潤水平上，它虧損了5.45億加元。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1.78億元。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。然而，並非所有投資風險都存在於資產負債表中--遠非如此。這些風險可能很難發現。每家公司都有它們，我們已經發現海南海藥1個警示標誌你應該知道。
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。
