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.' 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. We note that Dongfeng Motor Group Company Limited (HKG:489) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
What Risk Does Debt Bring?
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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.
Check out our latest analysis for Dongfeng Motor Group
What Is Dongfeng Motor Group's Net Debt?
As you can see below, Dongfeng Motor Group had CN¥53.1b of debt, at June 2022, which is about the same as the year before. You can click the chart for greater detail. However, it does have CN¥84.1b in cash offsetting this, leading to net cash of CN¥31.0b.
SEHK:489 Debt to Equity History December 1st 2022
A Look At Dongfeng Motor Group's Liabilities
According to the last reported balance sheet, Dongfeng Motor Group had liabilities of CN¥125.0b due within 12 months, and liabilities of CN¥30.2b due beyond 12 months. Offsetting these obligations, it had cash of CN¥84.1b as well as receivables valued at CN¥17.8b due within 12 months. So its liabilities total CN¥53.3b more than the combination of its cash and short-term receivables.
The deficiency here weighs heavily on the CN¥34.5b company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. After all, Dongfeng Motor Group would likely require a major re-capitalisation if it had to pay its creditors today. Dongfeng Motor Group boasts net cash, so it's fair to say it does not have a heavy debt load, even if it does have very significant liabilities, in total. 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 Dongfeng Motor Group can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
In the last year Dongfeng Motor Group had a loss before interest and tax, and actually shrunk its revenue by 32%, to CN¥87b. That makes us nervous, to say the least.
So How Risky Is Dongfeng Motor Group?
While Dongfeng Motor Group lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of CN¥8.3b. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. Given the lack of transparency around future revenue (and cashflow), we're nervous about this one, until it makes its first big sales. To us, it is a high risk play. 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. For example, we've discovered 1 warning sign for Dongfeng Motor Group that you should be aware of before investing here.
When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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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.
一些人说,作为投资者,考虑风险的最佳方式是波动性,而不是债务,但巴菲特曾说过一句名言:波动性远非风险的同义词。当你考察一家公司的风险有多大时,考虑它的资产负债表是很自然的,因为当一家企业倒闭时,债务往往会涉及到它。我们注意到东风集团股份股份有限公司(HKG:489)的资产负债表上确实有债务。但股东是否应该担心它的债务使用情况?
债务会带来什么风险?
债务是帮助企业发展的一种工具,但如果一家企业无法偿还贷款人的债务,那么它就只能听从贷款人的摆布。资本主义的一部分是“创造性破坏”的过程,破产的企业被银行家无情地清算。然而,一种更常见(但仍然昂贵)的情况是,一家公司必须以低廉的股价稀释股东的股份,才能控制债务。当然,在企业中,债务可以是一个重要的工具,特别是资本密集型企业。在考虑一家公司的债务水平时,第一步是同时考虑其现金和债务。
看看我们对东风集团股份的最新分析
东风集团股份的净负债是多少?
如下所示,截至2022年6月,东风集团股份的债务为531亿元人民币,与前一年持平。您可以单击图表查看更多详细信息。然而,它确实有841亿加元的现金抵消了这一点,导致净现金310亿加元。
联交所:489债转股历史2022年12月1日
看东风集团股份的负债
根据最近一次上报的资产负债表,东风集团股份有1250亿加元的负债在12个月内到期,30.2B加元的负债在12个月后到期。为了抵消这些债务,该公司有841亿加元的现金以及价值178亿加元的应收账款在12个月内到期。因此,其负债总额为人民币533亿元,超过了现金和短期应收账款的总和。
这一不足给这家345亿元的CN公司本身带来了沉重的负担,就像一个孩子在一个装满书籍、运动装备和小号的巨大背包的重压下挣扎一样。因此,我们肯定认为股东需要密切关注这一事件。毕竟,如果东风集团股份今天不得不偿还债权人的债务,它很可能需要进行一次大规模的资本重组。东风集团股份拥有净现金,因此可以公平地说,它没有沉重的债务负担,即使它总共有非常重大的负债。当你分析债务时,资产负债表显然是你关注的领域。但最终,该业务未来的盈利能力将决定东风集团股份能否随着时间的推移加强其资产负债表。因此,如果你想看看专业人士的想法,你可能会发现这份关于分析师利润预测的免费报告很有趣。
去年东风集团股份出现息税前亏损,实际营收缩水32%,至870亿加元。至少可以说,这让我们感到紧张。
那么,东风集团股份的风险有多大呢?
虽然东风集团股份在息税前收益(EBIT)水平上出现了亏损,但它实际上录得了83亿元的账面利润。因此,当你考虑到它有净现金和法定利润时,它的股票风险可能并不像看起来那样高,至少在短期内是这样。考虑到未来收入(和现金流)缺乏透明度,我们对这款产品感到紧张,直到它做出第一笔大销售。对我们来说,这是一场高风险的比赛。在分析债务水平时,资产负债表显然是一个起点。但归根结底,每家公司都可能包含存在于资产负债表之外的风险。例如,我们发现东风集团股份的1个警示标志在这里投资之前你应该意识到这一点。
总而言之,有时候专注于甚至不需要债务的公司会更容易。读者可以访问净债务为零的成长型股票列表100%免费,现在。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。