China Regenerative Medicine International (HKG:8158) Is Carrying A Fair Bit 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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that China Regenerative Medicine International Limited (HKG:8158) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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 China Regenerative Medicine International Carry?

As you can see below, at the end of June 2025, China Regenerative Medicine International had HK$51.1m of debt, up from HK$41.2m a year ago. Click the image for more detail. However, because it has a cash reserve of HK$7.28m, its net debt is less, at about HK$43.8m.

A Look At China Regenerative Medicine International's Liabilities

Zooming in on the latest balance sheet data, we can see that China Regenerative Medicine International had liabilities of HK$59.8m due within 12 months and liabilities of HK$69.1m due beyond that. On the other hand, it had cash of HK$7.28m and HK$39.5m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by HK$82.1m.

This deficit is considerable relative to its market capitalization of HK$132.3m, so it does suggest shareholders should keep an eye on China Regenerative Medicine International's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But it is China Regenerative Medicine International'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.

View our latest analysis for China Regenerative Medicine International

Over 12 months, China Regenerative Medicine International reported revenue of HK$58m, which is a gain of 5.8%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Over the last twelve months China Regenerative Medicine International produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable HK$29m at the EBIT level. 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. So we think its balance sheet is a little strained, though not beyond repair. On the bright side, we note that trailing twelve month EBIT is worse than the free cash flow of HK$2.4m and the profit of HK$1.3m. So one might argue that there's still a chance it can get things on the right track. 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. Be aware that China Regenerative Medicine International is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

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.