We Think Hyper (KOSDAQ:065650) Has A Fair Chunk Of Debt

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. Importantly, Hyper Corporation Inc. (KOSDAQ:065650) does carry debt. But the real question is whether this debt is making the company risky.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Why Does Debt Bring Risk?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Hyper Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Hyper had ₩14.6b of debt, an increase on ₩4.20b, over one year. On the flip side, it has ₩2.25b in cash leading to net debt of about ₩12.4b.

How Strong Is Hyper's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Hyper had liabilities of ₩31.1b due within 12 months and liabilities of ₩5.55b due beyond that. On the other hand, it had cash of ₩2.25b and ₩13.2b worth of receivables due within a year. So its liabilities total ₩21.1b more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Hyper has a market capitalization of ₩36.9b, 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. When analysing debt levels, the balance sheet is the obvious place to start. But it is Hyper'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.

Check out our latest analysis for Hyper

In the last year Hyper wasn't profitable at an EBIT level, but managed to grow its revenue by 32%, to ₩63b. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Hyper still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable ₩16b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled ₩12b in negative free cash flow over the last twelve months. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 5 warning signs for Hyper (of which 3 are significant!) you should know about.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.