Is Daesung Hi-Tech (KOSDAQ:129920) Using Debt In A Risky Way?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Daesung Hi-Tech Co., Ltd. (KOSDAQ:129920) makes use of debt. But should shareholders be worried about its use of debt?

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. 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 Daesung Hi-Tech Carry?

As you can see below, Daesung Hi-Tech had ₩93.2b of debt at September 2025, down from ₩102.9b a year prior. However, because it has a cash reserve of ₩9.08b, its net debt is less, at about ₩84.2b.

How Healthy Is Daesung Hi-Tech's Balance Sheet?

The latest balance sheet data shows that Daesung Hi-Tech had liabilities of ₩100.3b due within a year, and liabilities of ₩30.2b falling due after that. Offsetting these obligations, it had cash of ₩9.08b as well as receivables valued at ₩22.4b due within 12 months. So its liabilities total ₩99.0b more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the ₩59.8b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Daesung Hi-Tech would likely require a major re-capitalisation if it had to pay its creditors today. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Daesung Hi-Tech can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for Daesung Hi-Tech

In the last year Daesung Hi-Tech wasn't profitable at an EBIT level, but managed to grow its revenue by 6.9%, to ₩100b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Over the last twelve months Daesung Hi-Tech produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable ₩14b at the EBIT level. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. For example, we would not want to see a repeat of last year's loss of ₩12b. And until that time we think this is a risky 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. For instance, we've identified 1 warning sign for Daesung Hi-Tech that you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.