Health Check: How Prudently Does Glory Health Industry (HKG:2329) 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.' 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, Glory Health Industry Limited (HKG:2329) does carry debt. But should shareholders be worried about its use of debt?

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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. 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, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Glory Health Industry Carry?

The chart below, which you can click on for greater detail, shows that Glory Health Industry had CN¥22.6b in debt in June 2025; about the same as the year before. And it doesn't have much cash, so its net debt is about the same.

How Strong Is Glory Health Industry's Balance Sheet?

We can see from the most recent balance sheet that Glory Health Industry had liabilities of CN¥31.2b falling due within a year, and liabilities of CN¥13.4b due beyond that. Offsetting these obligations, it had cash of CN¥105.5m as well as receivables valued at CN¥9.85b due within 12 months. So its liabilities total CN¥34.7b more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the CN¥485.5m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Glory Health Industry would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Glory Health Industry'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.

See our latest analysis for Glory Health Industry

Over 12 months, Glory Health Industry saw its revenue hold pretty steady, and it did not report positive earnings before interest and tax. While that hardly impresses, its not too bad either.

Caveat Emptor

Over the last twelve months Glory Health Industry produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping CN¥108m. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. 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 CN¥1.4b in the last year. So we're not very excited about owning this stock. Its too risky for us. 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 3 warning signs we've spotted with Glory Health Industry (including 2 which are a bit concerning) .

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.