David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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 Shenzhou International Group Holdings Limited (HKG:2313) makes use of debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
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 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. The first step when considering a company's debt levels is to consider its cash and debt together.
View our latest analysis for Shenzhou International Group Holdings
What Is Shenzhou International Group Holdings's Net Debt?
You can click the graphic below for the historical numbers, but it shows that as of June 2022 Shenzhou International Group Holdings had CN¥9.96b of debt, an increase on CN¥7.85b, over one year. However, it does have CN¥14.8b in cash offsetting this, leading to net cash of CN¥4.84b.
SEHK:2313 Debt to Equity History December 11th 2022
A Look At Shenzhou International Group Holdings' Liabilities
According to the last reported balance sheet, Shenzhou International Group Holdings had liabilities of CN¥12.8b due within 12 months, and liabilities of CN¥830.1m due beyond 12 months. Offsetting these obligations, it had cash of CN¥14.8b as well as receivables valued at CN¥5.21b due within 12 months. So it can boast CN¥6.33b more liquid assets than total liabilities.
This surplus suggests that Shenzhou International Group Holdings has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Shenzhou International Group Holdings boasts net cash, so it's fair to say it does not have a heavy debt load!
It is just as well that Shenzhou International Group Holdings's load is not too heavy, because its EBIT was down 42% over the last year. Falling earnings (if the trend continues) could eventually make even modest debt quite risky. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Shenzhou International Group Holdings's ability to maintain a healthy balance sheet going forward. 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. While Shenzhou International Group Holdings has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Looking at the most recent three years, Shenzhou International Group Holdings recorded free cash flow of 49% of its EBIT, which is weaker than we'd expect. That's not great, when it comes to paying down debt.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Shenzhou International Group Holdings has net cash of CN¥4.84b, as well as more liquid assets than liabilities. So we don't have any problem with Shenzhou International Group Holdings's use of debt. 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. For instance, we've identified 1 warning sign for Shenzhou International Group Holdings that you should be aware of.
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.
David·伊本説得好,波動不是我們關心的風險,我們關心的是避免資本的永久性損失。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申洲國際控股有限公司(HKG:2313)利用債務。但這筆債務對股東來説是一個擔憂嗎?
債務在什麼時候是危險的?
債務是幫助企業發展的一種工具,但如果一家企業無法償還貸款人的債務,那麼它就只能聽從貸款人的擺佈。最終,如果公司不能履行其償還債務的法定義務,股東可能會一無所有地離開。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。在考慮一家公司的債務水平時,第一步是同時考慮其現金和債務。
查看我們對申洲國際控股的最新分析
申洲國際控股的淨負債是多少?
你可以點擊下圖查看歷史數據,但它顯示了截至2022年6月,申洲國際控股的債務為99.6億元人民幣,比一年前增加了78.5億元人民幣。然而,它確實有148億加元的現金來抵消這一點,導致淨現金為48.4億加元。
聯交所:2313債轉股歷史2022年12月11日
申洲國際控股的負債狀況一瞥
根據最近一次上報的資產負債表,申洲國際控股有128億加元的負債在12個月內到期,8.301億加元的負債在12個月後到期。作為對這些債務的抵銷,該公司有148億加元的現金以及價值52.1億元的應收賬款在12個月內到期。因此,它的流動資產比總計負債。
這一盈餘表明,申洲國際控股擁有保守的資產負債表,很可能不會有太大困難就能消除債務。簡而言之,申洲國際控股擁有淨現金,可以説它沒有沉重的債務負擔!
幸好申洲國際控股的負擔不是太重,因為它的息税前利潤比去年下降了42%。收益下降(如果這種趨勢持續下去)最終可能會使規模不大的債務面臨相當大的風險。在分析債務水平時,資產負債表顯然是一個起點。但決定申洲國際控股未來能否保持健康資產負債表的,最重要的是公司未來的盈利狀況。因此,如果你想看看專業人士的想法,你可能會發現這份關於分析師利潤預測的免費報告很有趣。
最後,企業需要自由現金流來償還債務;會計利潤只是不能削減這一點。雖然申洲國際控股的資產負債表上有淨現金,但它將息税前利潤轉換為自由現金流的能力仍然值得一看,以幫助我們瞭解它正在以多快的速度建立(或侵蝕)現金餘額。縱觀最近三年,申洲國際控股的自由現金流佔其息税前利潤的49%,這比我們預期的要弱。當涉及到償還債務時,這並不是很好。
總結
雖然我們同情那些對債務感到擔憂的投資者,但你應該記住,申洲國際控股擁有48.4億元人民幣的淨現金,流動資產多於負債。因此,我們對申洲國際控股的債務使用沒有任何問題。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。例如,我們已經確定申洲國際控股的1個警告標誌這一點你應該知道。
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。
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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。