Here's Why Jiangsu Huachang Chemical (SZSE:002274) Can Manage Its Debt Responsibly
Here's Why Jiangsu Huachang Chemical (SZSE:002274) Can Manage Its Debt Responsibly
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. Importantly, Jiangsu Huachang Chemical Co., Ltd (SZSE:002274) does carry debt. But the more important question is: how much risk is that debt creating?
当谈到风险投资时,巴菲特旗下的外部基金经理、李录(Li Lu)就毫不掩饰地说:“最大的投资风险不是价格的波动,而是你是否会承受资本永久损失。” 考虑到许多企业破产时都涉及债务,因此在评估风险时自然需要考虑公司的资产负债表。事关重大的是:这些债务会带来多大的风险?
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. If things get really bad, the lenders can take control of the business. 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. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
债务对企业有助于融资,直到企业难以还清债务或用新资本或自由现金流来支付。如果事情变得真的很糟糕,贷款人可以接管企业。虽然这种情况并不太常见,但我们经常看到负债累累的企业因为贷款人强迫其以破产价格卖出股份而永久性地稀释股东利益。然而,债务也可以通过替代稀释,成为需要高投资回报率进行增长的企业融资的一种极为有效的工具。在考虑企业使用多少债务时,首先要看现金负债表。
What Is Jiangsu Huachang Chemical's Net Debt?
江苏华昌化工的净债务是多少?
The image below, which you can click on for greater detail, shows that Jiangsu Huachang Chemical had debt of CN¥268.6m at the end of March 2024, a reduction from CN¥660.9m over a year. But it also has CN¥783.8m in cash to offset that, meaning it has CN¥515.1m net cash.
下面这张图片,你可以点击以获取更详细的信息,显示江苏华昌化工在2024年3月末的债务为2.686亿元人民币,是去年同期6.609亿元人民币的降低。但是,它还有7.838亿元人民币的现金来抵消这些债务,因此其净现金为5.151亿元人民币。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240528/0-f640b3baac9ebf0f0670e20ec91df80c-0-41f4ffab9ba031e6fb236baaf44c31b3.png/big)
How Healthy Is Jiangsu Huachang Chemical's Balance Sheet?
江苏华昌化工财务状况如何?
Zooming in on the latest balance sheet data, we can see that Jiangsu Huachang Chemical had liabilities of CN¥2.53b due within 12 months and liabilities of CN¥7.40m due beyond that. Offsetting this, it had CN¥783.8m in cash and CN¥1.35b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥401.9m.
详细查看最新财务状况数据后,我们发现江苏华昌化工有2.53亿元人民币的负债到期在12个月内,740万元人民币的负债到期在一年以后。抵消这些负债的话,它有7.838亿元人民币的现金和12个月内到期的应收账款1.35亿元人民币。因此,其负债大于其现金和(短期)应收账款之和401.9万元人民币。
Given Jiangsu Huachang Chemical has a market capitalization of CN¥7.79b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, Jiangsu Huachang Chemical also has more cash than debt, so we're pretty confident it can manage its debt safely.
考虑到江苏华昌化工的市值为7.79亿元人民币,很难想象这些负债会带来多大的威胁。话虽如此,我们仍需要继续监测它的资产负债表,以防情况恶化。尽管它有值得注意的负债,但江苏华昌化工也有比债务更多的现金,因此我们相当有信心它能够安全地管理债务。
On the other hand, Jiangsu Huachang Chemical's EBIT dived 10%, over the last year. We think hat kind of performance, if repeated frequently, could well lead to difficulties for the stock. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Jiangsu Huachang Chemical'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.
另一方面,江苏华昌化工的息税前收益下降了10%。我们认为,如果这种表现经常重复,很可能会导致该股票的困难。显然,在分析债务时,需要关注资产负债表。但企业的盈利情况也将影响资产负债表未来的表现。因此,在考虑债务时,值得看一下盈利趋势。单击此处获取交互快照。
Finally, a company can only pay off debt with cold hard cash, not accounting profits. Jiangsu Huachang Chemical may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the most recent three years, Jiangsu Huachang Chemical recorded free cash flow worth 72% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.
最后,企业只有通过冰冷的现金而不是会计利润来偿还债务。尽管江苏华昌化工财务状况表现出有净现金,但了解企业如何将其息税前收益(EBIT)转化为自由现金流,因为这将影响其管理债务的需求和能力,仍然是有趣的。在过去三年中,江苏华昌化工录得的自由现金流价值相当于其EBIT的72%,这是比较正常的,因为自由现金流不包括利息和税收。这种自由现金流的表现使公司有能力在适当时偿还债务。
Summing Up
总之
We could understand if investors are concerned about Jiangsu Huachang Chemical's liabilities, but we can be reassured by the fact it has has net cash of CN¥515.1m. The cherry on top was that in converted 72% of that EBIT to free cash flow, bringing in CN¥556m. So we are not troubled with Jiangsu Huachang Chemical's debt use. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. Be aware that Jiangsu Huachang Chemical is showing 1 warning sign in our investment analysis , you should know about...
我们可以理解投资者对江苏华昌化工的负债感到担忧,但我们可以放心的是,其净现金为5.151亿元人民币。而它的EBIT转化为自由现金流的比例高达72%,带来了5.56亿元人民币的现金流。所以,我们不担心江苏华昌化工的债务使用。概括来说,股票的风险并不总在于资产负债表,需要注意的投资风险还有其他。然而值得注意的是,我们的投资分析中,江苏华昌化工还出现了1个警告信号,您应该知晓……
When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
说到底,有时更容易关注那些甚至不需要债务的公司。读者可以免费查看零净债务增长股票列表,立即获得。
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