These 4 Measures Indicate That Shandong Xinchao Energy (SHSE:600777) Is Using Debt Reasonably Well
These 4 Measures Indicate That Shandong Xinchao Energy (SHSE:600777) Is Using Debt Reasonably Well
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.' 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 note that Shandong Xinchao Energy Corporation Limited (SHSE:600777) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.
由伯克希尔哈撒韦的查理·芒格支持的外部基金经理李录在说到'最大的投资风险不在于价格的波动,而在于您是否会遭受永久性资本损失'时毫不遮掩。 当我们考虑一家公司有多大风险时,我们总是喜欢看看其债务使用情况,因为债务过高可能会导致毁灭。 我们注意到山东新潮能源股份有限公司(SHSE:600777)的资产负债表上确实有债务。 但真正的问题是,这笔债务是否会让公司变得更加危险。
When Is Debt Dangerous?
债务何时有危险?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
债务资助了业务,直到该业务遇到困难无法用新资本或自由现金流偿还债务为止。资本主义的必要过程是“创造性破坏”的过程,在这个过程中,银行家们会无情地清算失败的企业。然而,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权益,以控制债务。当然,许多公司使用债务来资助增长,没有任何负面后果。当我们审查债务水平时,我们首先考虑现金和债务水平。
What Is Shandong Xinchao Energy's Debt?
山东新潮能源的债务是什么?
As you can see below, Shandong Xinchao Energy had CN¥7.26b of debt at June 2024, down from CN¥8.09b a year prior. However, it also had CN¥4.05b in cash, and so its net debt is CN¥3.21b.
正如您以下所述,山东新潮能源在2024年6月的债务为72.6亿人民币,低于前一年的80.9亿人民币。 然而,它也有40.5亿人民币的现金,因此其净债务为32.1亿人民币。
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How Strong Is Shandong Xinchao Energy's Balance Sheet?
山东新潮能源的资产负债表有多强大?
The latest balance sheet data shows that Shandong Xinchao Energy had liabilities of CN¥2.83b due within a year, and liabilities of CN¥11.5b falling due after that. Offsetting these obligations, it had cash of CN¥4.05b as well as receivables valued at CN¥1.35b due within 12 months. So it has liabilities totalling CN¥8.88b more than its cash and near-term receivables, combined.
最新的资产负债表数据显示,山东新潮能源一年内有283亿人民币的到期负债,之后有1150亿人民币的到期负债。抵消这些负债的是40.5亿人民币的现金和13.5亿人民币的应收账款(在12个月内到期)。因此,它的负债总额比其现金和短期应收账款总和多出88.8亿人民币。
This is a mountain of leverage relative to its market capitalization of CN¥12.4b. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry.
相对于其124亿人民币的市值,这是一座债务重压的大山。这意味着如果公司需要迅速强化其资产负债表,股东将面临严重稀释。
We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.
我们通过将公司的净债务与其息税折旧摊销前利润(EBITDA)相除,并计算其息税前利润(EBIT)如何覆盖其利息费用(利息覆盖率)来衡量公司的债务负担相对于其盈利能力。因此,我们同时考虑债务的绝对数量以及所支付的利率。
Shandong Xinchao Energy's net debt is only 0.46 times its EBITDA. And its EBIT covers its interest expense a whopping 10.4 times over. So you could argue it is no more threatened by its debt than an elephant is by a mouse. On the other hand, Shandong Xinchao Energy's EBIT dived 18%, over the last year. If that rate of decline in earnings continues, the company could find itself in a tight spot. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Shandong Xinchao Energy will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
山东新潮能源的净债务只有EBITDA的0.46倍。其EBIT覆盖利息支出的倍数高达10.4倍。因此,你可以说它对债务的威胁不比大象对老鼠的威胁更大。
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. During the last three years, Shandong Xinchao Energy produced sturdy free cash flow equating to 79% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.
最后,企业需要自由现金流来偿还债务;会计利润无法满足需求。因此,我们需要看看EBIT是否带来了相应的自由现金流。在过去三年中,山东新潮能源产生了稳定的自由现金流,相当于其EBIT的79%,基本符合预期。这笔干净的现金意味着它可以在需要时减少债务。
Our View
我们的观点
Shandong Xinchao Energy's conversion of EBIT to free cash flow was a real positive on this analysis, as was its interest cover. But truth be told its EBIT growth rate had us nibbling our nails. Looking at all this data makes us feel a little cautious about Shandong Xinchao Energy's debt levels. While debt does have its upside in higher potential returns, we think shareholders should definitely consider how debt levels might make the stock more risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Shandong Xinchao Energy's earnings per share history for free.
山东新潮能源将EBIT转化为自由现金流,在此分析中实现了真正的积极作用,其利息覆盖也是如此。但实话实说,其EBIT增长率让我们有些担忧。看到所有这些数据,我们对山东新潮能源的债务水平感到有些谨慎。尽管债务在带来更高的潜在回报方面确实有其好处,但我们认为股东们应该考虑债务水平可能会使股票更加风险。在许多其他指标中,我们认为追踪每股盈利的增长速度非常重要,如果有的话。如果您也已经意识到这一点,那么您很幸运,因为今天您可以免费查看山东新潮能源每股盈利历史的互动图表。
At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.
归根结底,专注于没有净债务的公司往往更好。您可以访问我们的特别列表,其中包括所有表现出盈利增长轨迹的公司。这是免费的。
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