Does Antengene (HKG:6996) Have A Healthy Balance Sheet?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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. We note that Antengene Corporation Limited (HKG:6996) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is Antengene's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 Antengene had debt of CN¥230.0m, up from CN¥180.0m in one year. However, it does have CN¥799.2m in cash offsetting this, leading to net cash of CN¥569.2m.

How Strong Is Antengene's Balance Sheet?

According to the last reported balance sheet, Antengene had liabilities of CN¥190.1m due within 12 months, and liabilities of CN¥309.2m due beyond 12 months. Offsetting this, it had CN¥799.2m in cash and CN¥31.3m in receivables that were due within 12 months. So it can boast CN¥331.2m more liquid assets than total liabilities.

This surplus suggests that Antengene has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Antengene 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 ultimately the future profitability of the business will decide if Antengene can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Antengene

In the last year Antengene wasn't profitable at an EBIT level, but managed to grow its revenue by 50%, to CN¥84m. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is Antengene?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Antengene had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of CN¥294m and booked a CN¥229m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of CN¥569.2m. That means it could keep spending at its current rate for more than two years. With very solid revenue growth in the last year, Antengene may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. To that end, you should be aware of the 2 warning signs we've spotted with Antengene .

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.