Is Bioneer (KOSDAQ:064550) Weighed On By Its Debt Load?

Simply Wall St · 3d ago

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 note that Bioneer Corporation (KOSDAQ:064550) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Bioneer's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of December 2024 Bioneer had ₩71.6b of debt, an increase on ₩41.8b, over one year. But it also has ₩94.3b in cash to offset that, meaning it has ₩22.7b net cash.

debt-equity-history-analysis
KOSDAQ:A064550 Debt to Equity History April 15th 2025

How Strong Is Bioneer's Balance Sheet?

According to the last reported balance sheet, Bioneer had liabilities of ₩65.6b due within 12 months, and liabilities of ₩39.7b due beyond 12 months. Offsetting this, it had ₩94.3b in cash and ₩15.1b in receivables that were due within 12 months. So it actually has ₩4.04b more liquid assets than total liabilities.

This state of affairs indicates that Bioneer's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the ₩428.2b company is short on cash, but still worth keeping an eye on the balance sheet. Succinctly put, Bioneer boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is Bioneer'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.

View our latest analysis for Bioneer

In the last year Bioneer wasn't profitable at an EBIT level, but managed to grow its revenue by 12%, to ₩294b. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Bioneer?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Bioneer lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through ₩27b of cash and made a loss of ₩21b. But the saving grace is the ₩22.7b on the balance sheet. That means it could keep spending at its current rate for more than two years. 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. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 1 warning sign with Bioneer , and understanding them should be part of your investment process.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.