Here's Why Yinchuan Xinhua Commercial (Group) (SHSE:600785) Has A Meaningful Debt Burden
Here's Why Yinchuan Xinhua Commercial (Group) (SHSE:600785) Has A Meaningful Debt Burden
David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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. As with many other companies Yinchuan Xinhua Commercial (Group) Co., Ltd. (SHSE:600785) makes use of debt. But should shareholders be worried about its use of debt?
大卫·伊本说得很好，他说：“波动性不是我们关心的风险。我们关心的是避免永久的资本损失。”当我们想到一家公司的风险有多大时，我们总是喜欢看看它对债务的使用，因为债务超负荷会导致破产。和许多其他公司一样 银川新华商业（集团）有限公司 （SHSE: 600785）利用了债务。但是，股东们应该担心它会使用债务吗？
Why Does Debt Bring Risk?
为什么债务会带来风险？
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. 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. When we examine debt levels, we first consider both cash and debt levels, together.
债务为企业提供帮助，直到企业难以用新的资本或自由现金流还清债务。最终，如果公司无法履行偿还债务的法律义务，股东可能一无所有地离开。但是，更常见（但仍然令人痛苦）的情况是，它必须以低廉的价格筹集新的股权资本，从而永久稀释股东。但是，通过取代稀释，债务可以成为需要资本以高回报率投资增长的企业的一个非常好的工具。当我们研究债务水平时，我们首先要同时考虑现金和债务水平。
See our latest analysis for Yinchuan Xinhua Commercial (Group)
查看我们对银川新华商业（集团）的最新分析
What Is Yinchuan Xinhua Commercial (Group)'s Debt?
银川新华商业（集团）的债务是多少？
As you can see below, at the end of March 2023, Yinchuan Xinhua Commercial (Group) had CN¥1.25b of debt, up from CN¥934.7m a year ago. Click the image for more detail. However, it does have CN¥735.4m in cash offsetting this, leading to net debt of about CN¥513.0m.
如下所示，截至2023年3月底，银川新华商业（集团）的债务为12.5亿元人民币，高于去年同期的9.347亿元人民币。点击图片了解更多详情。但是，它确实有7.354亿元人民币的现金抵消了这一点，导致净负债约为5.13亿元人民币。
How Healthy Is Yinchuan Xinhua Commercial (Group)'s Balance Sheet?
银川新华商业（集团）的资产负债表有多健康？
Zooming in on the latest balance sheet data, we can see that Yinchuan Xinhua Commercial (Group) had liabilities of CN¥3.55b due within 12 months and liabilities of CN¥2.72b due beyond that. Offsetting these obligations, it had cash of CN¥735.4m as well as receivables valued at CN¥350.1m due within 12 months. So it has liabilities totalling CN¥5.18b more than its cash and near-term receivables, combined.
放大最新的资产负债表数据，我们可以看出，银川新华商业（集团）在12个月内到期的负债为35.5亿元人民币，此后到期的负债为272亿元人民币。为了抵消这些债务，它有7.354亿元人民币的现金以及价值3.501亿元人民币的应收账款，这些应收账款将在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的总和多出51.8亿人民币。
Given this deficit is actually higher than the company's market capitalization of CN¥3.59b, we think shareholders really should watch Yinchuan Xinhua Commercial (Group)'s debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution.
鉴于这一赤字实际上高于公司的市值35.9亿人民币，我们认为股东们确实应该关注银川新华商业（集团）的债务水平，就像家长第一次看孩子骑自行车一样。在公司不得不迅速清理资产负债表的情况下，股东似乎很可能会遭受大规模的稀释。
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). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).
我们通过以下方法来衡量公司的债务负担与其盈利能力：将其净负债除以利息、税项、折旧和摊销前的收益（EBITDA），并计算其利息和税前收益（EBIT）支付利息支出（利息保障）的难易程度。这种方法的优势在于，我们既考虑了债务的绝对数量（包括净负债与息税折旧摊销前利润），也考虑了与该债务相关的实际利息支出（及其利息覆盖率）。
Looking at its net debt to EBITDA of 1.4 and interest cover of 2.9 times, it seems to us that Yinchuan Xinhua Commercial (Group) is probably using debt in a pretty reasonable way. But the interest payments are certainly sufficient to have us thinking about how affordable its debt is. One way Yinchuan Xinhua Commercial (Group) could vanquish its debt would be if it stops borrowing more but continues to grow EBIT at around 13%, as it did over the last year. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Yinchuan Xinhua Commercial (Group)'s ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
银川新华商业（集团）的净负债占息税折旧摊销前利润的1.4倍，利息覆盖率为2.9倍，在我们看来，银川新华商业（集团）可能正在以相当合理的方式使用债务。但是利息支付肯定足以让我们考虑其债务的负担能力。银川新华商业（集团）克服债务的一种方法是停止增加借款，但继续像去年一样将息税前利润增长至13％左右。资产负债表显然是分析债务时需要关注的领域。但是，决定银川新华商业（集团）未来保持健康资产负债表的能力最重要的是未来的收益。因此，如果你专注于未来，可以看看这个 免费的 显示分析师盈利预测的报告。
Finally, a company can only pay off debt with cold hard cash, not accounting profits. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. Happily for any shareholders, Yinchuan Xinhua Commercial (Group) actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.
最后，公司只能用冷硬现金偿还债务，不能用会计利润来偿还债务。因此，我们显然需要看看息税前利润是否带来了相应的自由现金流。令所有股东高兴的是，银川新华商业（集团）在过去三年中产生的自由现金流实际上超过了息税前利润。这种强劲的现金创造就像穿着大黄蜂套装的小狗一样温暖了我们的心。
Our View
我们的观点
Neither Yinchuan Xinhua Commercial (Group)'s ability to handle its total liabilities nor its interest cover gave us confidence in its ability to take on more debt. But the good news is it seems to be able to convert EBIT to free cash flow with ease. Looking at all the angles mentioned above, it does seem to us that Yinchuan Xinhua Commercial (Group) is a somewhat risky investment as a result of its debt. That's not necessarily a bad thing, since leverage can boost returns on equity, but it is something to be aware of. 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. To that end, you should be aware of the 1 warning sign we've spotted with Yinchuan Xinhua Commercial (Group) .
银川新华商业（集团）处理其总负债的能力和利息保障都没有使我们对其承担更多债务的能力充满信心。但好消息是，它似乎能够轻松地将息税前利润转换为自由现金流。从上述所有角度来看，在我们看来，银川新华商业（集团）由于其债务，确实是一项风险较大的投资。这不一定是一件坏事，因为杠杆可以提高股本回报率，但这是需要注意的事情。在分析债务水平时，资产负债表是显而易见的起点。但是，并非所有的投资风险都存在于资产负债表中，远非如此。为此，你应该意识到 1 个警告标志 我们在银川新华商业（集团）见过面。
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.
毕竟，如果你对一家资产负债表坚如磐石的快速成长型公司更感兴趣，那么请立即查看我们的净现金增长股票清单。
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