Is Meta Media Holdings (HKG:72) Using Debt Sensibly?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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. Importantly, Meta Media Holdings Limited (HKG:72) does carry 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. If things get really bad, the lenders can take control of the business. 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, 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Meta Media Holdings's Debt?

As you can see below, Meta Media Holdings had CN¥155.5m of debt at June 2025, down from CN¥172.1m a year prior. However, it also had CN¥34.9m in cash, and so its net debt is CN¥120.6m.

How Healthy Is Meta Media Holdings' Balance Sheet?

According to the last reported balance sheet, Meta Media Holdings had liabilities of CN¥271.8m due within 12 months, and liabilities of CN¥31.7m due beyond 12 months. On the other hand, it had cash of CN¥34.9m and CN¥121.8m worth of receivables due within a year. So its liabilities total CN¥146.8m more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the CN¥79.0m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Meta Media Holdings 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 you can't view debt in total isolation; since Meta Media 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.

Check out our latest analysis for Meta Media Holdings

In the last year Meta Media Holdings had a loss before interest and tax, and actually shrunk its revenue by 3.8%, to CN¥369m. We would much prefer see growth.

Caveat Emptor

Importantly, Meta Media Holdings had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping CN¥10m. Considering that alongside the liabilities mentioned above make us nervous about the company. It would need to improve its operations quickly for us to be interested in it. It's fair to say the loss of CN¥18m didn't encourage us either; we'd like to see a profit. In the meantime, we consider the stock to be risky. 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 example - Meta Media Holdings has 1 warning sign we think you should be aware of.

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.