Is Longjian Road&BridgeLtd (SHSE:600853) Using Too Much Debt?
Is Longjian Road&BridgeLtd (SHSE:600853) Using Too Much Debt?
Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 Longjian Road&Bridge Co.,Ltd (SHSE:600853) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
霍華德·馬克斯說得很好,不必關心股價波動,「我擔心的是永久性損失的可能性……我認識的每個實際投資者都會擔心。」當你考慮風險時,考慮公司的資產負債表是很自然的,因爲債務在企業崩潰時往往會涉及。我們注意到,龍建路橋股份有限公司(SHSE: 600853)的資產負債表上確實有債務。但股東是否應該擔心它的債務使用呢?
When Is Debt A Problem?
什麼時候負債才是一個問題?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.
當公司不能輕鬆地通過自由現金流或發行有吸引力的股本籌集資金來履行這些義務時,債務和其他負債會對公司構成風險。在最糟糕的情況下,公司如果無法償付其債權人的款項,則可能會破產。然而,會發生的更常見(但仍然昂貴)的情況是,公司必須以廉價的股票價格稀釋股東的持股比例,以便控制債務。話雖如此,在考慮公司的債務水平時,第一步是考慮其現金和債務的總體情況。
What Is Longjian Road&BridgeLtd's Net Debt?
龍建路橋股份有限公司的淨債務是什麼?
You can click the graphic below for the historical numbers, but it shows that as of March 2024 Longjian Road&BridgeLtd had CN¥15.0b of debt, an increase on CN¥13.7b, over one year. On the flip side, it has CN¥3.57b in cash leading to net debt of about CN¥11.5b.
您可以單擊下面的圖形查看歷史數字,但它顯示,截至2024年3月,龍建路橋股份有限公司的債務爲150億元人民幣,較去年同期增長了13.7億元人民幣。另一方面,它有35.7億元人民幣的現金,導致淨債務約爲115億元人民幣。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240524/0-f93678f042c38da47fd85eab3ac72fe9-0-9b59be490d68f85774098d637f561483.png/big)
How Strong Is Longjian Road&BridgeLtd's Balance Sheet?
龍建路橋股份有限公司的資產負債表有多強?
The latest balance sheet data shows that Longjian Road&BridgeLtd had liabilities of CN¥20.6b due within a year, and liabilities of CN¥8.56b falling due after that. Offsetting these obligations, it had cash of CN¥3.57b as well as receivables valued at CN¥12.3b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥13.3b.
最新的資產負債表數據顯示,龍建路橋股份有限公司有206億元人民幣的短期應付款和85.6億元人民幣的長期應付款,相對地,它有35.7億元人民幣的現金以及123億元人民幣的應收款在12個月內到期。所以它的負債超過了其現金和(短期)應收款的總和達133億元人民幣。
The deficiency here weighs heavily on the CN¥3.64b company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. At the end of the day, Longjian Road&BridgeLtd would probably need a major re-capitalization if its creditors were to demand repayment.
這裏的缺陷嚴重影響這家364億元人民幣的公司,就像一個孩子在揹着裝滿書籍、運動裝備和小號的巨大揹包時感到吃力一樣。所以我們認爲股東需要密切關注這一點。歸根結底,如果債權人要求償還,龍建路橋股份有限公司可能需要進行重大的再資本化。
In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.
爲了比較一個公司的債務與其收益的關係,我們計算其淨債務除以利息、稅、折舊和攤銷前的收益和利息前的收益(其利息覆蓋率)。因此,我們考慮了債務的絕對數量以及支付的利率。
With a net debt to EBITDA ratio of 11.9, it's fair to say Longjian Road&BridgeLtd does have a significant amount of debt. But the good news is that it boasts fairly comforting interest cover of 2.8 times, suggesting it can responsibly service its obligations. More concerning, Longjian Road&BridgeLtd saw its EBIT drop by 2.4% 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 it is Longjian Road&BridgeLtd's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
淨債務與息稅折舊及攤銷前利潤(EBITDA)比率爲11.9,龍建路橋股份有限公司確實擁有大量債務。但好消息是,其利息覆蓋率相對較高,達到2.8倍,表明其可以負責任地服務其債務。更令人擔憂的是,龍建路橋股份有限公司在過去12個月中的EBIt下降了2.4%。如果它繼續這樣,償還債務就像在跑步機上奔跑-付出了很多努力但取得的進展不大。毫無疑問,資產負債表是我們了解債務的最佳途徑。但龍建路橋股份有限公司的收益將會影響資產負債表在未來的表現。因此,在考慮債務時,肯定值得查看收益趨勢。點擊此處獲取交互式快照。
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. Over the last three years, Longjian Road&BridgeLtd 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.
但我們的最終考慮也很重要,因爲公司無法用紙幣收益償還債務,它需要冷硬的現金。因此,我們顯然需要看看EBIt是否帶來相應的自由現金流。在過去的三年中,龍建路橋股份有限公司的自由現金流總額顯著爲負。雖然這可能是爲了擴大規模而產生的支出,但這使得債務更加危險。
Our View
我們的觀點
To be frank both Longjian Road&BridgeLtd'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. Having said that, its ability to grow its EBIT isn't such a worry. Taking into account all the aforementioned factors, it looks like Longjian Road&BridgeLtd 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 Longjian Road&BridgeLtd you should be aware of, and 1 of them is a bit unpleasant.
坦率地說,龍建路橋股份有限公司的EBIt轉化爲自由現金流的能力以及其控制總負債的記錄讓我們對其債務水平感到有些不安。但是,它增長EBIt的能力並不令人擔憂。在考慮所有以上因素時,看起來龍建路橋股份有限公司的債務過多。雖然有些投資者喜歡這種危險的投資,但這絕不是我們的菜。毫無疑問,我們從資產負債表中了解債務。然而,投資風險並非全部來自資產負債表 - 遠非如此。例如:我們已經發現了兩個龍建路橋股份有限公司需要注意的預警信號,其中1個有點令人不悅。
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.
如果您有興趣投資能夠在不負債的情況下增長利潤的企業,請查看這份免費列表,其中列出了在資產負債表上擁有淨現金的成長型企業。
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