Changzhou Shichuang EnergyLtd (SHSE:688429) Takes On Some Risk With Its Use Of Debt
Changzhou Shichuang EnergyLtd (SHSE:688429) Takes On Some Risk With Its Use Of Debt
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 can see that Changzhou Shichuang Energy Co.,Ltd. (SHSE:688429) does use debt in its business. But is this debt a concern to shareholders?
伯克希尔哈撒韦的详利·卢支持的外部基金经理人李璐毫不掩饰地表示:“最大的投资风险并非价格波动,而是永久性资本损失。”当我们考虑公司的风险时,我们总是喜欢看一下它的负债使用情况,由于负债超载可能会导致毁灭性的后果。我们可以看到,常州市创能源股份有限公司(SHSE:688429)确实运用了债务进行业务。但是这种债务是否会担忧股东呢?
What Risk Does Debt Bring?
债务带来了什么风险?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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.
债务是帮助企业成长的一种工具,但如果企业无法偿还债权人,那么它就存在于债权人的掌控之下。在最糟糕的情况下,公司可能会破产,如果无法偿还其债权人。然而,更常见 (但仍然痛苦的) 情况是,它必须以低价募集新的股权资本,从而永久性地稀释股东。话虽如此,最常见的情况是,一个公司合理地管理其债务,并以自己的优势来处理。在考虑一家公司的债务水平时,第一步是考虑其现金和债务的总和。
What Is Changzhou Shichuang EnergyLtd's Net Debt?
常州市创能源有限公司的净债务是多少?
The image below, which you can click on for greater detail, shows that at March 2024 Changzhou Shichuang EnergyLtd had debt of CN¥371.8m, up from CN¥6.49m in one year. But it also has CN¥1.39b in cash to offset that, meaning it has CN¥1.01b net cash.
下图所示为常州市创能源有限公司于2024年3月的负债状况,债务为3,718万元人民币,比一年前的649万元人民币有所增长。但它也有13.9亿人民币的现金来抵消这些负债,这意味着它还有10.1亿人民币的净现金。
![big](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240809/0-1dd68b69a8f86894c2af0190367343fe-0-55cbc97eb3acdc294f9ac5a05582f5c3.png/big)
How Strong Is Changzhou Shichuang EnergyLtd's Balance Sheet?
常州市创能源有限公司的资产负债表有多强大?
We can see from the most recent balance sheet that Changzhou Shichuang EnergyLtd had liabilities of CN¥1.59b falling due within a year, and liabilities of CN¥169.2m due beyond that. Offsetting this, it had CN¥1.39b in cash and CN¥430.8m in receivables that were due within 12 months. So it can boast CN¥57.8m more liquid assets than total liabilities.
我们可以从最近的资产负债表看出,常州市创能源有限公司有159亿元人民币的短期到期债务,以及1692万元人民币的长期到期债务。相抵消的是,它有13.9亿元人民币的现金和4308万元人民币的应收账款,这些应收款项在12个月内到期。因此,它可以宣称比总负债多5780万元人民币的流动资产。
This state of affairs indicates that Changzhou Shichuang EnergyLtd's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the CN¥6.29b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that Changzhou Shichuang EnergyLtd has more cash than debt is arguably a good indication that it can manage its debt safely.
这种情况表明,常州市创能源有限公司的资产负债表看起来非常坚实,因为其总负债几乎等于其流动资产。因此,这家总资产超过62.9亿元人民币的公司极不可能缺乏现金,但仍值得关注资产负责表。简单地说,常州市创能源有限公司拥有比债务更多的现金,可以合理管理债务安全。
It is just as well that Changzhou Shichuang EnergyLtd's load is not too heavy, because its EBIT was down 88% over the last year. Falling earnings (if the trend continues) could eventually make even modest debt quite risky. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Changzhou Shichuang EnergyLtd 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.
常州市创能源有限公司的负担不太重要,因为它的利润(息税前利润)在过去一年中下降了88%。收益下降(如果趋势继续)最终可能会使即使是适度的债务也相当冒险。在分析债务水平时,资产负债表是自然而然的起点。但是您不能孤立地看待负债,因为常州市创能源有限公司需要收益来还清这笔债务。因此,在考虑债务时,肯定值得看一下收益趋势。单击此处获取互动快照。
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Changzhou Shichuang EnergyLtd 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. Over the last three years, Changzhou Shichuang EnergyLtd saw substantial negative free cash flow, in total. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.
但是,我们最终的考虑也很重要,因为公司无法用纸质利润支付债务,它需要有现金。尽管常州市创能源有限公司在其资产负债表中有净现金,但仍值得查看其将息税前利润(EBIT)转换为自由现金流的能力,以帮助我们了解它积累现金的速度是快还是慢。过去三年,常州市创能源有限公司的自由现金流总额相当大。虽然投资者无疑希望这种情况能够逆转,但这显然意味着它对债务的使用更加冒险。
Summing Up
总之
While it is always sensible to investigate a company's debt, in this case Changzhou Shichuang EnergyLtd has CN¥1.01b in net cash and a decent-looking balance sheet. So although we see some areas for improvement, we're not too worried about Changzhou Shichuang EnergyLtd's balance sheet. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 3 warning signs with Changzhou Shichuang EnergyLtd (at least 2 which are concerning) , and understanding them should be part of your investment process.
尽管调查公司的债务常常是明智之举,但在这种情况下,常州市创能源有限公司拥有1.01亿元人民币的净现金和一个相当不错的资产负债表。因此,尽管我们看到了改进的一些方面,但我们对常州市创能源有限公司的资产负债表并不担心。毫无疑问,我们从资产负债表中了解到的有关债务的信息最为重要,但是,最终,每个公司都可能存在在资产负债表之外的风险。我们已确定常州市创能源有限公司存在3个警告信号(至少有2个令人关注),了解它们应该成为您投资过程的一部分。
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.
如果在所有这些之后,您更感兴趣的是具有坚实资产负债表的快速增长公司,那么不要拖延,查看我们的净现金增长股票列表。
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