Analyzing Debt Levels of Jiangsu Recbio Technology Co., Ltd.
Jiangsu Recbio Technology Co., Ltd. (HKG:2179) has recently come under scrutiny for its debt levels, with concerns raised about the potential risks it poses to investors. The company, backed by Berkshire Hathaway’s Charlie Munger, is facing mounting debt of CN¥681.3m, up from CN¥509.2m in just one year. With only CN¥531.3m in cash on hand, the net debt stands at approximately CN¥150.0m.
Debt can be a useful tool for businesses looking to expand, but when it becomes unmanageable, it can spell disaster. Jiangsu Recbio Technology’s liabilities of CN¥681.6m due within 12 months and CN¥541.3m due beyond that are cause for concern. With only CN¥531.3m in cash and CN¥38.6m in receivables due within 12 months, the company’s total liabilities exceed its liquid assets by CN¥653.1m.
Despite the company’s total market value of CN¥3.70b, the high level of liabilities raises red flags for investors. With an earnings before interest and tax (EBIT) loss of CN¥535m in the last twelve months, Jiangsu Recbio Technology’s balance sheet appears far from healthy. The company also burned through CN¥862m in cash over the same period, further adding to its financial woes.
Investors are advised to exercise caution when considering Jiangsu Recbio Technology as an investment option. The company’s high debt levels and poor financial performance make it a risky stock, with potential for further trouble ahead. Keeping a close eye on the company’s balance sheet strength and profitability will be crucial in determining its future prospects.
