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華爾街日報Health Check: How Prudently Does Warisan TC Holdings Berhad (KLSE:WARISAN) Use Debt?
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.' 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, Warisan TC Holdings Berhad (KLSE:WARISAN) does carry debt. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.
What Is Warisan TC Holdings Berhad's Debt?
As you can see below, Warisan TC Holdings Berhad had RM288.5m of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. However, it does have RM57.9m in cash offsetting this, leading to net debt of about RM230.6m.
A Look At Warisan TC Holdings Berhad's Liabilities
We can see from the most recent balance sheet that Warisan TC Holdings Berhad had liabilities of RM566.7m falling due within a year, and liabilities of RM77.3m due beyond that. Offsetting this, it had RM57.9m in cash and RM230.3m in receivables that were due within 12 months. So it has liabilities totalling RM355.8m more than its cash and near-term receivables, combined.
The deficiency here weighs heavily on the RM48.8m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we'd watch its balance sheet closely, without a doubt. At the end of the day, Warisan TC Holdings Berhad would probably need a major re-capitalization if its creditors were to demand repayment. When analysing debt levels, the balance sheet is the obvious place to start. But it is Warisan TC Holdings Berhad's earnings that will influence how the balance sheet holds up in the future. 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 Warisan TC Holdings Berhad
In the last year Warisan TC Holdings Berhad wasn't profitable at an EBIT level, but managed to grow its revenue by 9.6%, to RM560m. 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 Warisan TC Holdings Berhad produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping RM21m. When you combine this with the very significant balance sheet liabilities mentioned above, we are so wary of it that we are basically at a loss for the right words. Like every long-shot we're sure it has a glossy presentation outlining its blue-sky potential. But the reality is that it is low on liquid assets relative to liabilities, and it lost RM40m in the last year. So we think buying this stock is 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 learn about the 2 warning signs we've spotted with Warisan TC Holdings Berhad (including 1 which is a bit unpleasant) .
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.