Is Asia-express Logistics Holdings (HKG:8620) Using Too Much 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.' 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 can see that Asia-express Logistics Holdings Limited (HKG:8620) does use debt in its business. But is this debt a concern to shareholders?

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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. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Asia-express Logistics Holdings Carry?

The image below, which you can click on for greater detail, shows that at September 2025 Asia-express Logistics Holdings had debt of HK$21.2m, up from HK$13.0m in one year. However, it also had HK$12.4m in cash, and so its net debt is HK$8.82m.

A Look At Asia-express Logistics Holdings' Liabilities

We can see from the most recent balance sheet that Asia-express Logistics Holdings had liabilities of HK$65.3m falling due within a year, and liabilities of HK$12.6m due beyond that. Offsetting this, it had HK$12.4m in cash and HK$44.7m in receivables that were due within 12 months. So its liabilities total HK$20.8m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Asia-express Logistics Holdings has a market capitalization of HK$50.2m, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. There's no doubt that we learn most about debt from the balance sheet. But it is Asia-express Logistics 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 Asia-express Logistics Holdings

In the last year Asia-express Logistics Holdings had a loss before interest and tax, and actually shrunk its revenue by 3.0%, to HK$338m. We would much prefer see growth.

Caveat Emptor

Importantly, Asia-express Logistics Holdings had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at HK$4.2m. 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. For example, we would not want to see a repeat of last year's loss of HK$4.0m. In the meantime, we consider the stock very risky. 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. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Asia-express Logistics Holdings (of which 1 shouldn't be ignored!) you should know about.

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.