Taghill Holdings Berhad (KLSE:TAGHILL) Is Making Moderate Use Of Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, Taghill Holdings Berhad (KLSE:TAGHILL) does carry debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Taghill Holdings Berhad's Debt?

You can click the graphic below for the historical numbers, but it shows that as of May 2025 Taghill Holdings Berhad had RM212.3m of debt, an increase on RM174.0m, over one year. On the flip side, it has RM71.5m in cash leading to net debt of about RM140.8m.

How Healthy Is Taghill Holdings Berhad's Balance Sheet?

We can see from the most recent balance sheet that Taghill Holdings Berhad had liabilities of RM568.7m falling due within a year, and liabilities of RM20.4m due beyond that. Offsetting this, it had RM71.5m in cash and RM485.9m in receivables that were due within 12 months. So it has liabilities totalling RM31.8m more than its cash and near-term receivables, combined.

Taghill Holdings Berhad has a market capitalization of RM108.9m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Taghill Holdings Berhad 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 Taghill Holdings Berhad

In the last year Taghill Holdings Berhad wasn't profitable at an EBIT level, but managed to grow its revenue by 225%, to RM562m. That's virtually the hole-in-one of revenue growth!

Caveat Emptor

While we can certainly appreciate Taghill Holdings Berhad's revenue growth, its earnings before interest and tax (EBIT) loss is not ideal. Indeed, it lost a very considerable RM29m 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. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of RM39m into a profit. So to be blunt we do think it 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. Be aware that Taghill Holdings Berhad is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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.