Is CSSC Offshore & Marine Engineering (Group) (HKG:317) Weighed On By Its Debt Load?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, CSSC Offshore & Marine Engineering (Group) Company Limited (HKG:317) does carry debt. But should shareholders be worried about its use of debt?

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Why Does Debt Bring Risk?

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. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is CSSC Offshore & Marine Engineering (Group)'s Debt?

The image below, which you can click on for greater detail, shows that at March 2025 CSSC Offshore & Marine Engineering (Group) had debt of CN¥6.06b, up from CN¥5.03b in one year. But on the other hand it also has CN¥15.4b in cash, leading to a CN¥9.31b net cash position.

How Strong Is CSSC Offshore & Marine Engineering (Group)'s Balance Sheet?

Zooming in on the latest balance sheet data, we can see that CSSC Offshore & Marine Engineering (Group) had liabilities of CN¥28.8b due within 12 months and liabilities of CN¥5.59b due beyond that. Offsetting this, it had CN¥15.4b in cash and CN¥5.09b in receivables that were due within 12 months. So its liabilities total CN¥13.9b more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since CSSC Offshore & Marine Engineering (Group) has a market capitalization of CN¥29.9b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Despite its noteworthy liabilities, CSSC Offshore & Marine Engineering (Group) boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is CSSC Offshore & Marine Engineering (Group)'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.

See our latest analysis for CSSC Offshore & Marine Engineering (Group)

Over 12 months, CSSC Offshore & Marine Engineering (Group) reported revenue of CN¥20b, which is a gain of 19%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is CSSC Offshore & Marine Engineering (Group)?

Although CSSC Offshore & Marine Engineering (Group) had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of CN¥546m. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. 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. We've identified 1 warning sign with CSSC Offshore & Marine Engineering (Group) , and understanding them should be part of your investment process.

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.

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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.