Here's Why Zhejiang Zhongke Magnetic Industry (SZSE:301141) Can Manage Its Debt Responsibly
Here's Why Zhejiang Zhongke Magnetic Industry (SZSE:301141) Can Manage Its Debt Responsibly
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. We note that Zhejiang Zhongke Magnetic Industry Co., Ltd. (SZSE:301141) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
李錄(查理·芒格支持的傳奇基金經理)曾說過:“最大的投資風險不在價格的波動,而在於你是否會遭受永久性的資本損失。” 當我們考慮一家公司的風險時,我們總是喜歡看它使用債務的情況,因爲債務過載可能會導致毀滅。 我們注意到浙江中科磁性材料股份有限公司(SZSE:301141)確實在其資產負債表上有債務。 但是股東們應該擔心它的債務使用嗎?
Why Does Debt Bring Risk?
爲什麼債務會帶來風險?
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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.
當業務無法便捷地通過自由現金流或以有吸引力的價格籌集資金來履行債務和其他負債時,負債和其他負債成爲商業風險。資本主義的一部分是“創造性毀滅”的過程,失敗的企業會被銀行無情地清算。雖然這不是太常見的情況,但我們經常看到負債累累的公司因爲貸款人強迫他們以低於正常價格的形式募集資本而永久稀釋股東權益。當然,債務可以成爲資本密集型企業的重要工具。在考慮公司債務水平時,第一步是考慮其現金和債務的總和。
What Is Zhejiang Zhongke Magnetic Industry's Debt?
浙江中科磁性材料股份有限公司的債務情況如何?
As you can see below, Zhejiang Zhongke Magnetic Industry had CN¥14.0m of debt at March 2024, down from CN¥37.1m a year prior. However, its balance sheet shows it holds CN¥788.1m in cash, so it actually has CN¥774.0m net cash.
如下圖所示,在2024年3月,浙江中科磁性材料股份有限公司的債務爲人民幣14億,比去年同期的人民幣37.1億有所減少。 然而,其資產負債表顯示,它持有人民幣7.881億的現金,因此實際上有人民幣7.74億的淨現金。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240606/0-a6fcda5289e6ff030de464e85e149c60-0-f27ef782cb1ed8d1b6ee105653a4abed.png/big)
A Look At Zhejiang Zhongke Magnetic Industry's Liabilities
根據最新公佈的資產負債表顯示,浙江中科磁性材料股份有限公司的負債中有人民幣1.431億在12個月內到期,有人民幣1.54億的負債逾期12個月。與此同時,它持有人民幣7.881億的現金,以及價值人民幣2.308億元的應收賬款在12個月內到期。所以實際上它實際持有的現金超過了負債860.3億。
According to the last reported balance sheet, Zhejiang Zhongke Magnetic Industry had liabilities of CN¥143.1m due within 12 months, and liabilities of CN¥15.4m due beyond 12 months. Offsetting these obligations, it had cash of CN¥788.1m as well as receivables valued at CN¥230.8m due within 12 months. So it actually has CN¥860.3m more liquid assets than total liabilities.
這一差額表明,浙江中科磁性材料股份有限公司的債務使用看起來既安全又保守。考慮到它具有充足的短期流動性,我們認爲它不會有任何與債權人的問題。簡單地說,浙江中科磁性材料股份有限公司擁有的現金比債務還多,這可能是它可以安全地管理其債務的一個很好的指標。比總負債還多出了更多的流動資產。
This surplus suggests that Zhejiang Zhongke Magnetic Industry is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Simply put, the fact that Zhejiang Zhongke Magnetic Industry has more cash than debt is arguably a good indication that it can manage its debt safely.
浙江中科磁性材料股份有限公司的負債負擔並不太重,因爲其EBIT在去年下降了96%。當一家公司看到其收益下滑時,有時會發現它與債權人的關係也變得緊張。分析債務水平時,資產負債表是一個顯而易見的起點。但是,你不能孤立地看待債務;因爲浙江中科磁性材料股份有限公司將需要收益來爲那些債務提供服務。因此,在考慮債務時,值得看一下收益趨勢。單擊此處獲取交互式快照。
It is just as well that Zhejiang Zhongke Magnetic Industry's load is not too heavy, because its EBIT was down 96% over the last year. When a company sees its earnings tank, it can sometimes find its relationships with its lenders turn sour. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Zhejiang Zhongke Magnetic Industry 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.
但我們最後的考慮也很重要,因爲公司無法用虛假利潤支付債務,它需要冰冷的現金。雖然浙江中科磁性材料股份有限公司在其資產負債表上有淨現金,但仍值得看一下它將利潤前利息和稅前利潤(EBIT)轉化爲自由現金流的能力,幫助我們了解它正在多快地積累(或流失)現金餘額。在過去的三年中,浙江中科磁性材料股份有限公司創造出的自由現金流約佔其EBIT的13%,表現平平。這個弱勢的現金流水平削弱了它管理和償還債務的能力。
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Zhejiang Zhongke Magnetic Industry has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. In the last three years, Zhejiang Zhongke Magnetic Industry created free cash flow amounting to 13% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.
雖然我們同情那些關注債務的投資者,但你應該記住,浙江中科磁性材料股份有限公司有人民幣7.74億的淨現金,以及比負債更具流動性的資產。因此,我們對浙江中科磁性材料股份有限公司的債務使用並不擔憂。在分析債務水平時,資產負債表是一個很好的起點。但是,最終,每家公司都可能存在超出資產負債表以外的風險。爲此,你應該了解我們發現的4個浙江中科磁性材料股份有限公司的預警信號(其中1個有點不愉快)。
Summing Up
總之
While we empathize with investors who find debt concerning, you should keep in mind that Zhejiang Zhongke Magnetic Industry has net cash of CN¥774.0m, as well as more liquid assets than liabilities. So we are not troubled with Zhejiang Zhongke Magnetic Industry's debt use. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should learn about the 4 warning signs we've spotted with Zhejiang Zhongke Magnetic Industry (including 1 which is a bit unpleasant) .
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.
如果在所有這些之後,您更感興趣的是具有堅實資產負債表的快速增長公司,那麼不要拖延,查看我們的淨現金增長股票列表。
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