China Water Affairs Group (HKG:855) Seems To Be Using A Lot Of Debt
China Water Affairs Group (HKG:855) Seems To Be Using A Lot Of Debt
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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies China Water Affairs Group Limited (HKG:855) makes use of debt. But the real question is whether this debt is making the company risky.
有人说,波动性,而不是债务,是投资者思考风险的最佳方式,但沃伦·巴菲特曾说过一句名言:“波动性远非风险的代名词。”因此,很明显,当你考虑任何给定股票的风险时,你需要考虑债务,因为过多的债务会使公司陷入困境。与许多其他公司一样,中国水务集团有限公司(HKG: 855)也使用债务。但真正的问题是这笔债务是否使公司面临风险。
Why Does Debt Bring Risk?
为什么债务会带来风险?
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. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest 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.
债务是帮助企业增长的工具,但是如果企业无法偿还贷款,那么债务就任其摆布。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。当然,债务的好处在于它通常代表廉价资本,尤其是当它以高回报率进行再投资的能力取代公司的稀释时。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 Water Affairs Group's Debt?
中国水务集团的债务是多少?
As you can see below, China Water Affairs Group had HK$25.8b of debt, at March 2024, which is about the same as the year before. You can click the chart for greater detail. However, it also had HK$5.30b in cash, and so its net debt is HK$20.5b.
如下所示,截至2024年3月,中国水务集团有258亿港元的债务,与前一年大致相同。您可以单击图表以获取更多详细信息。但是,它也有53.0亿港元的现金,因此其净负债为205亿港元。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240629/0-4d97e195a87cd871e1fdaab1222254fb-0-c572f726ef623a4ae9e195d6468329ce.png/big)
How Strong Is China Water Affairs Group's Balance Sheet?
中国水务集团的资产负债表有多强?
The latest balance sheet data shows that China Water Affairs Group had liabilities of HK$20.7b due within a year, and liabilities of HK$21.0b falling due after that. Offsetting this, it had HK$5.30b in cash and HK$5.09b in receivables that were due within 12 months. So its liabilities total HK$31.4b more than the combination of its cash and short-term receivables.
最新的资产负债表数据显示,中国水务集团的负债为207亿港元,此后到期的负债为210亿港元。与此相抵消的是,它有53.0亿港元的现金和50.9亿港元的应收账款将在12个月内到期。因此,其负债总额比其现金和短期应收账款的总额高出314亿港元。
This deficit casts a shadow over the HK$8.19b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. At the end of the day, China Water Affairs Group would probably need a major re-capitalization if its creditors were to demand repayment.
这笔赤字给这家81.9亿港元的公司蒙上了阴影,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。归根结底,如果债权人要求还款,中国水务集团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 Water Affairs Group has net debt to EBITDA of 4.3 suggesting it uses a fair bit of leverage to boost returns. On the plus side, its EBIT was 7.3 times its interest expense, and its net debt to EBITDA, was quite high, at 4.3. Unfortunately, China Water Affairs Group's EBIT flopped 10% over the last four quarters. If earnings continue to decline at that rate then handling the debt will be more difficult than taking three children under 5 to a fancy pants restaurant. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if China Water Affairs 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.
中国水务集团的净负债占息税折旧摊销前利润为4.3,这表明它使用了相当多的杠杆作用来提高回报。从好的方面来看,其息税前利润是利息支出的7.3倍,其净负债占息税折旧摊销前利润的比例相当高,为4.3倍。不幸的是,中国水务集团的息税前利润在过去四个季度中下降了10%。如果收入继续以这种速度下降,那么处理债务将比带三个5岁以下的孩子去一家高档裤子餐厅要困难得多。在分析债务水平时,资产负债表是显而易见的起点。但最终,该业务的未来盈利能力将决定中国水务集团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。
Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. So we always check how much of that EBIT is translated into free cash flow. Over the last three years, China Water Affairs Group saw substantial negative free cash flow, in total. While that may be a result of expenditure for growth, it does make the debt far more risky.
最后,尽管税务人员可能喜欢会计利润,但贷款人只接受冷硬现金。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,中国水务集团的自由现金流总额为负数。尽管这可能是增长支出的结果,但它确实使债务风险大大增加。
Our View
我们的观点
To be frank both China Water Affairs Group'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. But at least it's pretty decent at covering its interest expense with its EBIT; that's encouraging. We should also note that Water Utilities industry companies like China Water Affairs Group commonly do use debt without problems. After considering the datapoints discussed, we think China Water Affairs Group has too much debt. While some investors love that sort of risky play, it's certainly not our cup of tea. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 2 warning signs for China Water Affairs Group you should be aware of, and 1 of them shouldn't be ignored.
坦率地说,中国水务集团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。但至少它在用息税前利润支付利息支出方面相当不错;这令人鼓舞。我们还应该注意,像中国水务集团这样的水务行业公司通常会毫无问题地使用债务。在考虑了所讨论的数据点之后,我们认为中国水务集团的债务过多。尽管有些投资者喜欢这种冒险的游戏,但这肯定不是我们的好选择。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。但是,并非所有的投资风险都存在于资产负债表中,远非如此。一个很好的例子:我们发现了中国水务集团的两个警告信号,你应该注意其中 1 个不容忽视。
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
如果你有兴趣投资能够在没有债务负担的情况下增加利润的企业,请查看这份资产负债表上有净现金的成长型企业的免费清单。
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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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