Is Brilliance Technology (SZSE:300542) Using Too Much Debt?
Is Brilliance Technology (SZSE:300542) Using Too Much Debt?
The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 Brilliance Technology Co., Ltd. (SZSE:300542) does have debt on its balance sheet. But is this debt a concern to shareholders?
Charile Munger支持的外部基金经理Li Lu说:“最大的投资风险不在价格波动,而在于你是否会遭受永久性资本损失。” 研究一家公司是否风险投资时,考虑其资产负债表是很自然的,因为企业崩溃时经常涉及债务。 我们注意到新晨科技股份有限公司(SZSE:300542)的资产负债表上确实有债务。 但这些债务对股东来说是否值得关注?
When Is Debt Dangerous?
债务何时有危险?
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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. 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. When we examine debt levels, we first consider both cash and debt levels, together.
一般来说,当公司无法轻松偿还债务时,无论是通过筹集资本还是通过自有现金流,债务才会成为真正的问题。最终,如果公司无法履行偿还债务的法律义务,股东可能一无所有。但更常见(但仍然昂贵)的情况是,公司必须以便宜的股票价格稀释股东,以控制债务。虽然债务可以替代稀释,但它对于需要以高回报率投资增长的企业来说是一种极好的工具。当我们检查债务水平时,我们首先考虑现金和债务水平的总体情况。
What Is Brilliance Technology's Debt?
新晨科技的债务情况?
You can click the graphic below for the historical numbers, but it shows that as of March 2024 Brilliance Technology had CN¥376.3m of debt, an increase on CN¥307.0m, over one year. However, because it has a cash reserve of CN¥229.6m, its net debt is less, at about CN¥146.7m.
您可以点击下面的图形查看历史数据,但可以看到截至2024年3月,新晨科技有3.763亿元人民币的债务,比一年前的3.07亿元人民币有所增加。然而,由于该公司有2.296亿元人民币的现金储备,其净债务较少,约为1.467亿元人民币。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240626/0-e71473721c116f8a7a0cca69ac5d23ce-0-f0191da3ffcb7ff4d23f39e5a3295a1c.png/big)
A Look At Brilliance Technology's Liabilities
了解新晨科技的负债
The latest balance sheet data shows that Brilliance Technology had liabilities of CN¥765.2m due within a year, and liabilities of CN¥1.23m falling due after that. Offsetting this, it had CN¥229.6m in cash and CN¥600.7m in receivables that were due within 12 months. So it actually has CN¥63.9m more liquid assets than total liabilities.
最新的资产负债表数据显示,新晨科技有7.652亿元人民币的年内到期负债,之后有1.23万元人民币的到期负债。 与此相抵消的是,公司有2.296亿元人民币的现金和6.007亿元人民币的应收账款,这些款项将在12个月内到期。 因此,公司实际拥有6.39亿元人民币。比总负债还多出了更多的流动资产。
Having regard to Brilliance Technology's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the CN¥3.72b company is short on cash, but still worth keeping an eye on the balance sheet.
考虑到新晨科技的规模,其流动资产与总负债很好地平衡。 因此,这家37.2亿元人民币的公司很不可能在现金方面短缺,但还是值得关注资产负债表。
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). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
我们使用两个主要的比率来告诉我们相对于收益的债务水平。第一个是净债务除以利息、税、折旧和摊销前利润(EBITDA),而第二个是其利润前利息和税(EBIT)覆盖其利息费用的次数(或其利息覆盖率,简称)。因此,我们考虑与折旧和摊销费用相关的盈利以及没有相关费用的盈利相对于债务水平。
Brilliance Technology's net debt is sitting at a very reasonable 2.3 times its EBITDA, while its EBIT covered its interest expense just 5.2 times last year. While that doesn't worry us too much, it does suggest the interest payments are somewhat of a burden. Unfortunately, Brilliance Technology saw its EBIT slide 8.7% in the last twelve months. If earnings continue on that decline then managing that debt will be difficult like delivering hot soup on a unicycle. 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 Brilliance Technology'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.
新晨科技的净债务相对于其EBITDA非常合理,为2.3倍,而去年EBIT的利息支出仅覆盖了5.2倍。 虽然这不太令我们担忧,但这确实表明利息支付有些负担。不幸的是,新晨科技去年的EBIT下降了8.7%。 如果收益继续下滑,则管理这些债务将会像在独轮车上传递热汤一样困难。在分析债务时资产负债表显然是需要关注的领域。但是,除了资产负债表之外,并不是所有投资风险都驻留在资产负债表中。因此,您应该了解我们发现的3个警告信号(包括1个与我们不太合适的信号)。
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. Over the last three years, Brilliance Technology 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.
最后,企业需要自由现金流来偿还债务;会计利润并不能解决问题。 因此,逻辑下一步是查看实际自由现金流与EBIT相匹配的比例。 在过去的三年中,新晨科技看到了大量负面的自由现金流。 虽然投资者无疑希望这种情况很快逆转,但这显然意味着它的债务使用更加危险。
Our View
我们的观点
Brilliance Technology's conversion of EBIT to free cash flow was a real negative on this analysis, although the other factors we considered cast it in a significantly better light. But on the bright side, its ability to to handle its total liabilities isn't too shabby at all. Taking the abovementioned factors together we do think Brilliance Technology's debt poses some risks to the business. So while that leverage does boost returns on equity, we wouldn't really want to see it increase from here. 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. To that end, you should learn about the 3 warning signs we've spotted with Brilliance Technology (including 1 which doesn't sit too well with us) .
在此分析中,新晨科技的EBIT转化为自由现金流实际上是个负面因素,虽然我们考虑到了其他因素,但这在很大程度上改善了局面。 但是值得庆幸的是,其应对总负债的能力确实不错。 结合以上因素,我们认为新晨科技的债务对业务造成了一定风险。 因此,虽然杠杆比率确实提高了股本回报率,但我们不希望看到它从这里增加。 肯定要关注资产负债表,但并不是所有的投资风险都存在于资产负债表中。因此,您应该了解我们发现的3个警告信号(包括1个与我们不太合适的信号)。
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.
如果您在所有这些工作之后,更感兴趣于拥有坚实资产负债表的快速发展公司,请立即查看我们的净现金成长股列表。
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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