We Think Zantat Holdings Berhad (KLSE:ZANTAT) Has A Fair Chunk Of Debt

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 can see that Zantat Holdings Berhad (KLSE:ZANTAT) does use debt in its business. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Zantat Holdings Berhad Carry?

As you can see below, at the end of June 2025, Zantat Holdings Berhad had RM12.7m of debt, up from RM10.3m a year ago. Click the image for more detail. On the flip side, it has RM10.8m in cash leading to net debt of about RM1.94m.

How Healthy Is Zantat Holdings Berhad's Balance Sheet?

We can see from the most recent balance sheet that Zantat Holdings Berhad had liabilities of RM18.4m falling due within a year, and liabilities of RM8.82m due beyond that. On the other hand, it had cash of RM10.8m and RM19.8m worth of receivables due within a year. So it can boast RM3.33m more liquid assets than total liabilities.

This short term liquidity is a sign that Zantat Holdings Berhad could probably pay off its debt with ease, as its balance sheet is far from stretched. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Zantat Holdings Berhad'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.

View our latest analysis for Zantat Holdings Berhad

In the last year Zantat Holdings Berhad had a loss before interest and tax, and actually shrunk its revenue by 15%, to RM95m. That's not what we would hope to see.

Caveat Emptor

While Zantat Holdings Berhad's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost RM2.4m at the EBIT level. Looking on the brighter side, the business has adequate liquid assets, which give it time to grow and develop before its debt becomes a near-term issue. But we'd want to see some positive free cashflow before spending much time on trying to understand the stock. This one is a bit too risky for our liking. 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. For instance, we've identified 3 warning signs for Zantat Holdings Berhad (2 can't be ignored) you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.