Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. Importantly, Sa Sa International Holdings Limited (HKG:178) does carry debt. But the more important question is: how much risk is that debt creating?
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. If things get really bad, the lenders can take control of the business. 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, 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 Sa Sa International Holdings
How Much Debt Does Sa Sa International Holdings Carry?
You can click the graphic below for the historical numbers, but it shows that as of September 2022 Sa Sa International Holdings had HK$80.0m of debt, an increase on HK$18.9m, over one year. But it also has HK$221.4m in cash to offset that, meaning it has HK$141.4m net cash.
How Strong Is Sa Sa International Holdings' Balance Sheet?
Zooming in on the latest balance sheet data, we can see that Sa Sa International Holdings had liabilities of HK$849.1m due within 12 months and liabilities of HK$356.8m due beyond that. Offsetting these obligations, it had cash of HK$221.4m as well as receivables valued at HK$128.3m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by HK$856.2m.
Given Sa Sa International Holdings has a market capitalization of HK$5.65b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, Sa Sa International Holdings also has more cash than debt, so we're pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Sa Sa International Holdings can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
In the last year Sa Sa International Holdings's revenue was pretty flat, and it made a negative EBIT. While that hardly impresses, its not too bad either.
So How Risky Is Sa Sa International Holdings?
Although Sa Sa International Holdings had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of HK$233m. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. For riskier companies like Sa Sa International Holdings I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.
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.
次の図をクリックして歴史の数字を見ることができますが、2022年9月までのSA International Holdingsの債務は8000万香港ドルで、1年前より1890万香港ドル増えたことを示しています。しかし、それは2億214億香港ドルの現金を相殺することもあり、これは1.414億香港ドルの純現金を持っていることを意味する
SA International Holdingsの貸借対照表はどのくらい強いですか
最新の貸借対照表データを拡大すると、SA International Holdingsでは8.491億香港ドルの負債が12カ月以内に満期になり、その後3億568億香港ドルの負債が満期になっていることが分かる。これらの債務の相殺として、同社は2.214億香港ドルの現金と1億283億香港ドルの売掛金が12ヶ月以内に満期になった。そのため、同社の負債は現金と(最近)売掛金の和より8.562億香港ドル高い
SA International Holdingsの時価総額が56.5億香港ドルであることから、これらの債務があまりにも大きな脅威になるとは信じられない。しかし、十分な負債があり、私たちは株主に未来の貸借対照表を監視し続けることを提案するに違いない。SA International Holdingsは確かに注目すべき負債を持っているが、その現金も債務よりも多いので、私たちはそれが債務を安全に管理できることを非常に確信している。あなたが債務を分析する時、貸借対照表は明らかにあなたが注目している分野だ。しかし最終的には、この業務の将来の収益力はSA International Holdingsが時間の経過とともに貸借対照表を強化できるかどうかを決定する。未来に注目すればこれを見ることができます無料ですアナリストの利益予測の報告書を示す
昨年、SA International Holdingsの収入はかなり平板で、利税前の利益はマイナスだった。これは印象的ではありませんが、あまり悪くありません
ではSA International Holdingsのリスクはどのくらいでしょうか?
SA International Holdingsは過去12カ月間に利税前収益(EBIT)損失を出したにもかかわらず、2.33億香港ドルの正の自由キャッシュフローを生み出した。したがって,額面から見ると,純現金状況を考慮すると,この株は短期的には大きなリスクはないと考えられる。収入の増加が少ないため、人々のこの業務に対する情熱を引き出す前に、私たちは本当にいくつかの積極的な利税前の利益を見る必要があります。Sa International Holdingsのようなリスクの高い会社では、私はいつも長期的な利益と収入傾向に注目するのが好きです。幸いにも、利益、収入、運営キャッシュフローに関する私たちの相互作用グラフをクリックして見ることができます