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Haina Intelligent Equipment International Holdings (HKG:1645) Is Carrying A Fair Bit Of Debt

Simply Wall St · 1d ago

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 Haina Intelligent Equipment International Holdings Limited (HKG:1645) 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 Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Haina Intelligent Equipment International Holdings Carry?

The image below, which you can click on for greater detail, shows that at June 2025 Haina Intelligent Equipment International Holdings had debt of CN¥308.7m, up from CN¥212.7m in one year. However, it does have CN¥35.2m in cash offsetting this, leading to net debt of about CN¥273.6m.

debt-equity-history-analysis
SEHK:1645 Debt to Equity History December 16th 2025

How Healthy Is Haina Intelligent Equipment International Holdings' Balance Sheet?

According to the last reported balance sheet, Haina Intelligent Equipment International Holdings had liabilities of CN¥648.1m due within 12 months, and liabilities of CN¥6.71m due beyond 12 months. On the other hand, it had cash of CN¥35.2m and CN¥147.1m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥472.6m.

Haina Intelligent Equipment International Holdings has a market capitalization of CN¥1.73b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Haina Intelligent Equipment 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 Haina Intelligent Equipment International Holdings

In the last year Haina Intelligent Equipment International Holdings had a loss before interest and tax, and actually shrunk its revenue by 2.6%, to CN¥411m. We would much prefer see growth.

Caveat Emptor

Importantly, Haina Intelligent Equipment International Holdings had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost CN¥22m 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 CN¥122m of cash over the last year. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 3 warning signs for Haina Intelligent Equipment International Holdings that you should be aware of before investing here.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.