Would Integrated Waste Solutions Group Holdings (HKG:923) Be Better Off With Less Debt?

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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Integrated Waste Solutions Group Holdings Limited (HKG:923) 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 A Problem?

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. 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, 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 Integrated Waste Solutions Group Holdings's Debt?

The chart below, which you can click on for greater detail, shows that Integrated Waste Solutions Group Holdings had HK$50.0m in debt in September 2025; about the same as the year before. On the flip side, it has HK$32.5m in cash leading to net debt of about HK$17.5m.

How Healthy Is Integrated Waste Solutions Group Holdings' Balance Sheet?

We can see from the most recent balance sheet that Integrated Waste Solutions Group Holdings had liabilities of HK$6.47m falling due within a year, and liabilities of HK$52.6m due beyond that. On the other hand, it had cash of HK$32.5m and HK$12.3m worth of receivables due within a year. So its liabilities total HK$14.3m more than the combination of its cash and short-term receivables.

Of course, Integrated Waste Solutions Group Holdings has a market capitalization of HK$91.6m, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. When analysing debt levels, the balance sheet is the obvious place to start. But it is Integrated Waste Solutions Group Holdings'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.

Check out our latest analysis for Integrated Waste Solutions Group Holdings

In the last year Integrated Waste Solutions Group Holdings had a loss before interest and tax, and actually shrunk its revenue by 2.1%, to HK$43m. We would much prefer see growth.

Caveat Emptor

Over the last twelve months Integrated Waste Solutions Group Holdings produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable HK$45m 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 HK$28m of cash over the last year. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 4 warning signs with Integrated Waste Solutions Group Holdings (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

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.