Health Check: How Prudently Does OKG Technology Holdings (HKG:1499) Use Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. We note that OKG Technology Holdings Limited (HKG:1499) does have debt on its balance sheet. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is OKG Technology Holdings's Debt?

As you can see below, OKG Technology Holdings had HK$108.0m of debt at September 2025, down from HK$389.3m a year prior. However, it does have HK$109.0m in cash offsetting this, leading to net cash of HK$1.00m.

How Healthy Is OKG Technology Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that OKG Technology Holdings had liabilities of HK$179.4m due within 12 months and no liabilities due beyond that. Offsetting this, it had HK$109.0m in cash and HK$62.9m in receivables that were due within 12 months. So its liabilities total HK$7.47m more than the combination of its cash and short-term receivables.

Having regard to OKG Technology Holdings' size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the HK$1.14b company is short on cash, but still worth keeping an eye on the balance sheet. While it does have liabilities worth noting, OKG Technology Holdings also has more cash than debt, so we're pretty confident it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is OKG Technology Holdings'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.

View our latest analysis for OKG Technology Holdings

In the last year OKG Technology Holdings had a loss before interest and tax, and actually shrunk its revenue by 17%, to HK$341m. That's not what we would hope to see.

So How Risky Is OKG Technology Holdings?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that OKG Technology Holdings had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of HK$11m and booked a HK$12m accounting loss. But the saving grace is the HK$1.00m on the balance sheet. That means it could keep spending at its current rate for more than two years. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. For instance, we've identified 1 warning sign for OKG Technology Holdings that you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.