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Is JBB Builders International (HKG:1903) Using Debt In A Risky Way?

Simply Wall St · 1d ago

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. As with many other companies JBB Builders International Limited (HKG:1903) makes use of debt. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is JBB Builders International's Net Debt?

As you can see below, JBB Builders International had RM6.38m of debt at June 2025, down from RM10.5m a year prior. However, its balance sheet shows it holds RM81.1m in cash, so it actually has RM74.7m net cash.

debt-equity-history-analysis
SEHK:1903 Debt to Equity History December 15th 2025

How Strong Is JBB Builders International's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that JBB Builders International had liabilities of RM162.7m due within 12 months and liabilities of RM2.47m due beyond that. Offsetting this, it had RM81.1m in cash and RM174.6m in receivables that were due within 12 months. So it can boast RM90.5m more liquid assets than total liabilities.

It's good to see that JBB Builders International has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Succinctly put, JBB Builders International 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 JBB Builders International's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for JBB Builders International

Over 12 months, JBB Builders International reported revenue of RM427m, which is a gain of 30%, 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.

So How Risky Is JBB Builders International?

While JBB Builders International lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of RM1.3m. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. Keeping in mind its 30% revenue growth over the last year, we think there's a decent chance the company is on track. There's no doubt fast top line growth can cure all manner of ills, for a stock. 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. Be aware that JBB Builders International is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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.