Joe Holding Berhad (KLSE:JOE) Has Debt But No Earnings; Should You Worry?

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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Joe Holding Berhad (KLSE:JOE) makes use of debt. But the real question is whether this debt is making the company risky.

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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 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 Joe Holding Berhad's Debt?

As you can see below, Joe Holding Berhad had RM60.8m of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. However, its balance sheet shows it holds RM90.6m in cash, so it actually has RM29.8m net cash.

How Strong Is Joe Holding Berhad's Balance Sheet?

We can see from the most recent balance sheet that Joe Holding Berhad had liabilities of RM66.8m falling due within a year, and liabilities of RM10.5m due beyond that. On the other hand, it had cash of RM90.6m and RM14.5m worth of receivables due within a year. So it can boast RM27.7m more liquid assets than total liabilities.

This surplus liquidity suggests that Joe Holding Berhad's balance sheet could take a hit just as well as Homer Simpson's head can take a punch. On this view, lenders should feel as safe as the beloved of a black-belt karate master. Simply put, the fact that Joe Holding Berhad has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Joe Holding 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.

See our latest analysis for Joe Holding Berhad

Over 12 months, Joe Holding Berhad made a loss at the EBIT level, and saw its revenue drop to RM13m, which is a fall of 37%. To be frank that doesn't bode well.

So How Risky Is Joe Holding Berhad?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months Joe Holding Berhad lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of RM3.1m and booked a RM18m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of RM29.8m. That kitty means the company can keep spending for growth for at least two years, at current rates. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. 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 4 warning signs for Joe Holding Berhad (of which 3 are concerning!) 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.

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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.