We Think Hantech (KOSDAQ:098070) Can Manage Its Debt With Ease

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, Hantech Co., Ltd. (KOSDAQ:098070) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Hantech's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Hantech had ₩16.6b of debt in June 2025, down from ₩56.8b, one year before. But it also has ₩25.4b in cash to offset that, meaning it has ₩8.79b net cash.

A Look At Hantech's Liabilities

According to the last reported balance sheet, Hantech had liabilities of ₩60.0b due within 12 months, and liabilities of ₩1.17b due beyond 12 months. Offsetting these obligations, it had cash of ₩25.4b as well as receivables valued at ₩41.7b due within 12 months. So it actually has ₩5.87b more liquid assets than total liabilities.

This state of affairs indicates that Hantech's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₩498.2b company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that Hantech has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Hantech

Better yet, Hantech grew its EBIT by 122% last year, which is an impressive improvement. That boost will make it even easier to pay down debt going forward. 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 Hantech's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Hantech 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 most recent three years, Hantech recorded free cash flow worth 76% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While it is always sensible to investigate a company's debt, in this case Hantech has ₩8.79b in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 122% over the last year. So we don't think Hantech's use of debt is risky. 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 - Hantech has 1 warning sign we think you should be aware of.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.