We Think Metaspacex (HKG:1796) Has A Fair Chunk Of Debt

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. As with many other companies Metaspacex Limited (HKG:1796) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Metaspacex's Debt?

The chart below, which you can click on for greater detail, shows that Metaspacex had HK$54.0m in debt in September 2025; about the same as the year before. On the flip side, it has HK$44.5m in cash leading to net debt of about HK$9.49m.

A Look At Metaspacex's Liabilities

The latest balance sheet data shows that Metaspacex had liabilities of HK$26.7m due within a year, and liabilities of HK$67.9m falling due after that. On the other hand, it had cash of HK$44.5m and HK$120.5m worth of receivables due within a year. So it actually has HK$70.3m more liquid assets than total liabilities.

This short term liquidity is a sign that Metaspacex could probably pay off its debt with ease, as its balance sheet is far from stretched. But either way, Metaspacex has virtually no net debt, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is Metaspacex'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 Metaspacex

In the last year Metaspacex had a loss before interest and tax, and actually shrunk its revenue by 38%, to HK$236m. That makes us nervous, to say the least.

Caveat Emptor

Not only did Metaspacex's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at HK$10m. Looking on the brighter side, the business has adequate liquid assets, which give it time to grow and develop before its debt becomes a near-term issue. But we'd be more likely to spend time trying to understand the stock if the company made a profit. This one is a bit too risky for our liking. When we look at a riskier company, we like to check how their profits (or losses) are trending over time. Today, we're providing readers this interactive graph showing how Metaspacex's profit, revenue, and operating cashflow have changed over the last few years.

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.