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Is China Conch Venture Holdings (HKG:586) A Risky Investment?

Is China Conch Venture Holdings (HKG:586) A Risky Investment?

中国海螺创业控股(HKG: 586)是风险投资吗?
Simply Wall St ·  04/17 18:58

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 can see that China Conch Venture Holdings Limited (HKG:586) does use debt in its business. But should shareholders be worried about its use of debt?

传奇基金经理李露(由查理·芒格支持)曾经说过:“最大的投资风险不是价格的波动,而是你是否会遭受永久的资本损失。”当我们思考一家公司的风险有多大时,我们总是喜欢考虑其债务的用途,因为债务过载可能导致破产。我们可以看到,中国海螺创业控股有限公司(HKG: 586)确实在其业务中使用了债务。但是,股东是否应该担心其债务的使用?

What Risk Does Debt Bring?

债务会带来什么风险?

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 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

一般而言,只有当公司无法通过筹集资金或用自己的现金流轻松还清债务时,债务才会成为真正的问题。如果情况变得非常糟糕,贷款人可以控制业务。但是,更频繁(但仍然昂贵)的情况是,公司必须以低廉的价格发行股票,永久稀释股东,以支撑其资产负债表。但是,通过取代稀释,对于需要资本以高回报率投资增长的企业来说,债务可以成为一个非常好的工具。在考虑企业使用多少债务时,要做的第一件事是同时考虑其现金和债务。

What Is China Conch Venture Holdings's Debt?

中国海螺创业控股的债务是多少?

You can click the graphic below for the historical numbers, but it shows that as of December 2023 China Conch Venture Holdings had CN¥27.0b of debt, an increase on CN¥22.1b, over one year. However, it does have CN¥3.71b in cash offsetting this, leading to net debt of about CN¥23.3b.

你可以点击下图查看历史数字,但它显示,截至2023年12月,中国海螺创业控股在一年内有270亿元人民币的债务,比221亿加元人民币有所增加。但是,它确实有371亿加元的现金抵消了这一点,净负债约为233亿加元。

debt-equity-history-analysis
SEHK:586 Debt to Equity History April 17th 2024
SEHK: 586 2024 年 4 月 17 日债务与股本的比率记录

How Healthy Is China Conch Venture Holdings' Balance Sheet?

中国海螺创业控股的资产负债表有多健康?

According to the last reported balance sheet, China Conch Venture Holdings had liabilities of CN¥6.45b due within 12 months, and liabilities of CN¥26.3b due beyond 12 months. Offsetting these obligations, it had cash of CN¥3.71b as well as receivables valued at CN¥3.97b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥25.0b.

根据上次报告的资产负债表,中国海螺创业控股的负债为64.5亿元人民币,12个月以后到期的负债为263亿元人民币。除这些债务外,它有371亿元人民币的现金以及价值39.7亿元人民币的应收账款将在12个月内到期。因此,其负债比其现金和(短期)应收账款总额高出250亿元人民币。

This deficit casts a shadow over the CN¥8.83b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, China Conch Venture Holdings would likely require a major re-capitalisation if it had to pay its creditors today.

这一赤字给这家88.3亿元人民币的公司蒙上了阴影,就像一个耸立在凡人之上的巨人。因此,毫无疑问,我们将密切关注其资产负债表。毕竟,如果中国海螺风险控股公司今天必须向债权人付款,则可能需要进行大规模的资本重组。

We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.

我们使用两个主要比率来告知我们相对于收益的债务水平。第一个是净负债除以利息、税项、折旧和摊销前的收益(EBITDA),第二个是其利息和税前收益(EBIT)覆盖其利息支出(或简称利息保障)的多少倍。这样,我们既考虑债务的绝对数量,也考虑为债务支付的利率。

China Conch Venture Holdings has a rather high debt to EBITDA ratio of 8.6 which suggests a meaningful debt load. However, its interest coverage of 2.9 is reasonably strong, which is a good sign. More concerning, China Conch Venture Holdings saw its EBIT drop by 5.4% in the last twelve months. If it keeps going like that paying off its debt will be like running on a treadmill -- a lot of effort for not much advancement. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if China Conch Venture 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.

中国海螺创业控股的债务与息税折旧摊销前利润的比率相当高,为8.6,这表明债务负担相当可观。但是,其2.9的利息覆盖率相当强,这是一个好兆头。更令人担忧的是,中国海螺创业控股公司的息税前利润在过去十二个月中下降了5.4%。如果它继续这样下去,还清债务就像在跑步机上跑步一样,付出很大的努力,但进展不大。毫无疑问,我们从资产负债表中学到的关于债务的知识最多。但最终,该业务的未来盈利能力将决定中国海螺创业控股能否随着时间的推移加强其资产负债表。因此,如果您专注于未来,可以查看这份显示分析师利润预测的免费报告。

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So we always check how much of that EBIT is translated into free cash flow. Over the last three years, China Conch Venture Holdings saw substantial negative free cash flow, in total. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.

但是我们最终的考虑因素也很重要,因为公司无法用纸面利润来偿还债务;它需要冷硬现金。因此,我们总是检查息税前利润中有多少转化为自由现金流。在过去的三年中,中国海螺创业控股总共出现了可观的负自由现金流。尽管投资者无疑预计这种情况将在适当的时候逆转,但这显然意味着其使用债务的风险更大。

Our View

我们的观点

To be frank both China Conch Venture Holdings's conversion of EBIT to free cash flow and its track record of staying on top of its total liabilities make us rather uncomfortable with its debt levels. And even its interest cover fails to inspire much confidence. Considering all the factors previously mentioned, we think that China Conch Venture Holdings really is carrying too much debt. To our minds, that means the stock is rather high risk, and probably one to avoid; but to each their own (investing) style. 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 3 warning signs for China Conch Venture Holdings (1 can't be ignored) you should be aware of.

坦率地说,中国海螺创业控股将息税前利润转换为自由现金流,以及其保持总负债水平的往绩都使我们对其债务水平感到相当不舒服。而且,即使是它的利息保障也未能激发太大的信心。考虑到前面提到的所有因素,我们认为中国海螺创业控股确实背负了过多的债务。在我们看来,这意味着股票风险相当高,可能需要避免;但每个人都有自己的(投资)风格。毫无疑问,我们从资产负债表中学到的关于债务的知识最多。但归根结底,每家公司都可以控制资产负债表之外存在的风险。例如,我们已经确定了中国海螺创业控股的3个警告信号(其中一个不容忽视),你应该注意。

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.

当然,如果你是那种喜欢在没有债务负担的情况下购买股票的投资者,那么请立即查看我们的独家净现金增长股票清单。

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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.

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Simply Wall St的这篇文章本质上是笼统的。我们仅使用公正的方法根据历史数据和分析师的预测提供评论,我们的文章无意作为财务建议。它不构成买入或卖出任何股票的建议,也没有考虑到您的目标或财务状况。我们的目标是为您提供由基本数据驱动的长期重点分析。请注意,我们的分析可能不考虑最新的价格敏感型公司公告或定性材料。简而言之,华尔街没有持有任何上述股票的头寸。

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