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华尔街日报Propel Global Berhad (KLSE:PGB) Is Making Moderate Use Of Debt
Warren Buffett famously said, '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. We note that Propel Global Berhad (KLSE:PGB) does have debt on its balance sheet. But is this debt a concern to shareholders?
What Risk Does Debt Bring?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.
What Is Propel Global Berhad's Net Debt?
The image below, which you can click on for greater detail, shows that at September 2025 Propel Global Berhad had debt of RM29.3m, up from RM23.5m in one year. However, it does have RM10.7m in cash offsetting this, leading to net debt of about RM18.5m.
How Strong Is Propel Global Berhad's Balance Sheet?
We can see from the most recent balance sheet that Propel Global Berhad had liabilities of RM62.0m falling due within a year, and liabilities of RM25.9m due beyond that. Offsetting this, it had RM10.7m in cash and RM78.9m in receivables that were due within 12 months. So it can boast RM1.79m more liquid assets than total liabilities.
This surplus suggests that Propel Global Berhad has a conservative balance sheet, and could probably eliminate its debt without much difficulty. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Propel Global 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.
See our latest analysis for Propel Global Berhad
In the last year Propel Global Berhad had a loss before interest and tax, and actually shrunk its revenue by 48%, to RM95m. To be frank that doesn't bode well.
Caveat Emptor
While Propel Global Berhad's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Its EBIT loss was a whopping RM22m. On a more positive note, the company does have liquid assets, so it has a bit of time to improve its operations before the debt becomes an acute problem. But we'd want to see some positive free cashflow before spending much time on trying to understand the stock. So it seems too risky for our taste. 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. Case in point: We've spotted 4 warning signs for Propel Global Berhad you should be aware of, and 3 of them are significant.
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.