We Think China International Holdings (SGX:BEH) Has A Fair Chunk Of 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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies China International Holdings Limited (SGX:BEH) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is China International Holdings's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 China International Holdings had CN¥106.2m of debt, an increase on CN¥78.7m, over one year. However, because it has a cash reserve of CN¥39.5m, its net debt is less, at about CN¥66.7m.

How Strong Is China International Holdings' Balance Sheet?

We can see from the most recent balance sheet that China International Holdings had liabilities of CN¥179.5m falling due within a year, and liabilities of CN¥90.3m due beyond that. On the other hand, it had cash of CN¥39.5m and CN¥252.8m worth of receivables due within a year. So it can boast CN¥22.5m more liquid assets than total liabilities.

This surplus strongly suggests that China International Holdings has a rock-solid balance sheet (and the debt is of no concern whatsoever). Having regard to this fact, we think its balance sheet is as strong as an ox. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since China International Holdings 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.

View our latest analysis for China International Holdings

Over 12 months, China International Holdings made a loss at the EBIT level, and saw its revenue drop to CN¥90m, which is a fall of 6.7%. We would much prefer see growth.

Caveat Emptor

Over the last twelve months China International Holdings produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping CN¥2.9m. That said, we're impressed with the strong balance sheet liquidity. That will give the company some time and space to grow and develop its business as need be. While the stock is probably a bit risky, there may be an opportunity if the business itself improves, allowing the company to stage a recovery. 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. Case in point: We've spotted 3 warning signs for China International Holdings you should be aware of.

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.