Is Kin Pang Holdings (HKG:1722) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, Kin Pang Holdings Limited (HKG:1722) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Kin Pang Holdings Carry?

The image below, which you can click on for greater detail, shows that at June 2025 Kin Pang Holdings had debt of MO$98.2m, up from MO$89.9m in one year. However, it also had MO$28.5m in cash, and so its net debt is MO$69.7m.

How Healthy Is Kin Pang Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Kin Pang Holdings had liabilities of MO$264.0m due within 12 months and liabilities of MO$1.16m due beyond that. Offsetting this, it had MO$28.5m in cash and MO$226.6m in receivables that were due within 12 months. So its liabilities total MO$10.1m more than the combination of its cash and short-term receivables.

Given Kin Pang Holdings has a market capitalization of MO$75.9m, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Kin Pang Holdings will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Kin Pang Holdings

In the last year Kin Pang Holdings had a loss before interest and tax, and actually shrunk its revenue by 3.2%, to MO$686m. That's not what we would hope to see.

Caveat Emptor

Importantly, Kin Pang Holdings had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost MO$6.3m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of MO$6.0m. So we do think this stock is quite risky. 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. To that end, you should be aware of the 3 warning signs we've spotted with Kin Pang Holdings .

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.