China Titans Energy Technology Group (HKG:2188) Is Carrying A Fair Bit 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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that China Titans Energy Technology Group Co., Limited (HKG:2188) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

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. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is China Titans Energy Technology Group's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 China Titans Energy Technology Group had debt of CN¥270.1m, up from CN¥213.2m in one year. However, it does have CN¥154.6m in cash offsetting this, leading to net debt of about CN¥115.5m.

How Strong Is China Titans Energy Technology Group's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that China Titans Energy Technology Group had liabilities of CN¥379.4m due within 12 months and liabilities of CN¥71.9m due beyond that. Offsetting this, it had CN¥154.6m in cash and CN¥359.4m in receivables that were due within 12 months. So it can boast CN¥62.7m more liquid assets than total liabilities.

This surplus suggests that China Titans Energy Technology Group is using debt in a way that is appears to be both safe and conservative. Due to its strong net asset position, it is not likely to face issues with its lenders. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since China Titans Energy Technology Group will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Check out our latest analysis for China Titans Energy Technology Group

Over 12 months, China Titans Energy Technology Group saw its revenue hold pretty steady, and it did not report positive earnings before interest and tax. While that hardly impresses, its not too bad either.

Caveat Emptor

Importantly, China Titans Energy Technology Group had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable CN¥70m at the EBIT level. Looking on the brighter side, the business has adequate liquid assets, which give it time to grow and develop before its debt becomes a near-term issue. But a profit would do more to inspire us to research the business more closely. So it seems too risky for our taste. 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. For example, we've discovered 2 warning signs for China Titans Energy Technology Group (1 doesn't sit too well with us!) that you should be aware of before investing here.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.