Is Manufacturing Integration Technology (SGX:M11) Using Debt In A Risky Way?

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.' 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. We can see that Manufacturing Integration Technology Ltd (SGX:M11) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. 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.

What Is Manufacturing Integration Technology's Debt?

As you can see below, at the end of June 2025, Manufacturing Integration Technology had S$4.83m of debt, up from S$1.77m a year ago. Click the image for more detail. On the flip side, it has S$860.0k in cash leading to net debt of about S$3.97m.

How Strong Is Manufacturing Integration Technology's Balance Sheet?

We can see from the most recent balance sheet that Manufacturing Integration Technology had liabilities of S$8.68m falling due within a year, and liabilities of S$181.0k due beyond that. On the other hand, it had cash of S$860.0k and S$2.91m worth of receivables due within a year. So it has liabilities totalling S$5.09m more than its cash and near-term receivables, combined.

This is a mountain of leverage relative to its market capitalization of S$5.30m. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Manufacturing Integration Technology will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Manufacturing Integration Technology

Over 12 months, Manufacturing Integration Technology reported revenue of S$8.5m, which is a gain of 46%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Manufacturing Integration Technology still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable S$3.6m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through S$2.6m of cash over the last year. So suffice it to say 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. For example, we've discovered 3 warning signs for Manufacturing Integration Technology that you should be aware of before investing here.

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.