We Think China Design Group (SHSE:603018) Can Manage Its Debt With Ease
We Think China Design Group (SHSE:603018) Can Manage Its Debt With Ease
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. As with many other companies China Design Group Co., Ltd. (SHSE:603018) makes use of debt. But the real question is whether this debt is making the company risky.
传奇基金经理李录(由查理·芒格支持)曾说:“最大的投资风险不是价格的波动性,而是你是否会遭受永久性资本损失。”当我们考虑一家公司的风险时,我们总是喜欢看它的债务使用情况,因为债务过重可能导致破产。和许多其他公司一样,华设集团股份有限公司(SHSE:603018)也使用债务。但真正的问题是这些债务是否使公司变得风险很高。
When Is Debt Dangerous?
债务何时有危险?
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, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.
债务是帮助企业发展的工具,但如果一个企业无法偿还债权人的债务,那它就存在于债权人的掌控之下。最终,如果公司无法履行偿还债务的法律责任,股东可能会一无所获。然而,一个更常见(但仍然痛苦)的情况是,公司不得不以低价发行新的股本,从而永久稀释股东的权益。当然,很多公司使用债务来资助增长,没有任何负面后果。当我们考虑一家公司的债务使用情况时,我们首先看现金和债务的总体情况。
How Much Debt Does China Design Group Carry?
华设集团承担多少债务?
As you can see below, at the end of March 2024, China Design Group had CN¥484.6m of debt, up from CN¥259.3m a year ago. Click the image for more detail. But it also has CN¥1.89b in cash to offset that, meaning it has CN¥1.40b net cash.
正如下图所示,截至2024年3月底,华设集团的债务为48460万人民币,较一年前的25930万人民币有所增加。请点击图片了解更多细节。但它也有18.9亿人民币的现金来抵消,意味着它有14亿人民币的净现金。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240529/0-4f1b8182062dab37b5573360fd7fe297-0-a3a36206a3158c7ae6abb2f918f66d51.png/big)
How Healthy Is China Design Group's Balance Sheet?
中国设计集团的资产负债表有多健康?
According to the last reported balance sheet, China Design Group had liabilities of CN¥6.93b due within 12 months, and liabilities of CN¥453.3m due beyond 12 months. On the other hand, it had cash of CN¥1.89b and CN¥8.16b worth of receivables due within a year. So it can boast CN¥2.66b more liquid assets than total liabilities.
根据最近披露的资产负债表显示,中国设计集团有69.3亿人民币的应付款项需要在12个月内偿还,45330万人民币的应付款项需要在12个月以上偿还。另一方面,集团有18.9亿人民币的现金,以及81.6亿人民币的应收款项,这些都是一年内需要偿还的。所以,它比流动资产多出了26.6亿人民币。 总负债。
This surplus liquidity suggests that China Design Group's balance sheet could take a hit just as well as Homer Simpson's head can take a punch. Having regard to this fact, we think its balance sheet is as strong as an ox. Succinctly put, China Design Group boasts net cash, so it's fair to say it does not have a heavy debt load!
这个盈余流动资金表明,中国设计集团的资产负债表能够承受压力,就像霍默·辛普森的头一样能承受一拳。考虑到这一事实,我们认为它的资产负债表像公牛一样强壮。简而言之,中国设计集团拥有净现金,因此可以说它没有沉重的债务负担!
China Design Group's EBIT was pretty flat over the last year, but that shouldn't be an issue given the it doesn't have a lot of debt. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine China Design Group's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
中国设计集团的息税前利润在过去一年基本持平,但鉴于它没有太多债务,这并不是问题。当你分析债务时,资产负债表显然是需要关注的领域。但最终确定中国设计集团能否保持健康的资产负债表取决于未来收入。所以,如果你关注未来,可以查看分析师盈利预测的免费报告。
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. China Design Group may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last three years, China Design Group produced sturdy free cash flow equating to 59% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.
最后,业务需要自由现金流来偿还债务;会计利润不足以做到这一点。中国设计集团可能在资产负债表上有净现金,但看看业务如何将息税前利润转化为自由现金流仍然是有趣的,因为这将影响它对债务的需求和管理能力。在过去三年中,中国设计集团产生了可观的自由现金流,相当于其息税前利润的59%,这正是我们所期望的。这笔冷硬现金意味着它可以在需要时减少债务。
Summing Up
总之
While it is always sensible to investigate a company's debt, in this case China Design Group has CN¥1.40b in net cash and a decent-looking balance sheet. So is China Design Group's debt a risk? It doesn't seem so to us. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 1 warning sign for China Design Group that you should be aware of before investing here.
尽管调查公司的债务是明智的,但在这种情况下,华设集团拥有14亿人民币的净现金和一个看起来不错的资产负债表。所以,华设集团的债务是否存在风险?在我们看来似乎并没有。资产负债表显然是在分析债务时需要关注的领域。然而,并不是所有的投资风险都存在于资产负债表中-远非如此。例如,我们发现了一个对于华设集团的警示信号,您在此投资之前应该注意。
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.
说到底,有时候更容易集中精力关注根本不需要债务的公司。读者可以免费访问零净债务增长股票列表。
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