Would CJ Century Logistics Holdings Berhad (KLSE:CJCEN) Be Better Off With Less 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. We can see that CJ Century Logistics Holdings Berhad (KLSE:CJCEN) does use debt in its business. But is this debt a concern to shareholders?

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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. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does CJ Century Logistics Holdings Berhad Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 CJ Century Logistics Holdings Berhad had RM118.2m of debt, an increase on RM109.8m, over one year. On the flip side, it has RM74.6m in cash leading to net debt of about RM43.6m.

A Look At CJ Century Logistics Holdings Berhad's Liabilities

The latest balance sheet data shows that CJ Century Logistics Holdings Berhad had liabilities of RM213.0m due within a year, and liabilities of RM82.7m falling due after that. On the other hand, it had cash of RM74.6m and RM209.2m worth of receivables due within a year. So its liabilities total RM12.0m more than the combination of its cash and short-term receivables.

Given CJ Century Logistics Holdings Berhad has a market capitalization of RM75.6m, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. When analysing debt levels, the balance sheet is the obvious place to start. But it is CJ Century Logistics Holdings Berhad's earnings that will influence how the balance sheet holds up in the future. 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 CJ Century Logistics Holdings Berhad

Over 12 months, CJ Century Logistics Holdings Berhad made a loss at the EBIT level, and saw its revenue drop to RM679m, which is a fall of 7.3%. We would much prefer see growth.

Caveat Emptor

Importantly, CJ Century Logistics Holdings Berhad had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at RM7.4m. 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 RM8.4m into a profit. In the meantime, we consider the stock very risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 3 warning signs we've spotted with CJ Century Logistics Holdings Berhad (including 1 which is significant) .

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.