Would Skymission Group Holdings (HKG:1429) Be Better Off With Less Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Skymission Group Holdings Limited (HKG:1429) makes use of debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Skymission Group Holdings's Net Debt?

As you can see below, at the end of September 2025, Skymission Group Holdings had HK$63.2m of debt, up from HK$55.3m a year ago. Click the image for more detail. And it doesn't have much cash, so its net debt is about the same.

A Look At Skymission Group Holdings' Liabilities

Zooming in on the latest balance sheet data, we can see that Skymission Group Holdings had liabilities of HK$98.7m due within 12 months and liabilities of HK$5.13m due beyond that. Offsetting these obligations, it had cash of HK$738.0k as well as receivables valued at HK$355.2m due within 12 months. So it actually has HK$252.1m more liquid assets than total liabilities.

This surplus strongly suggests that Skymission Group Holdings has a rock-solid balance sheet (and the debt is of no concern whatsoever). On this view, lenders should feel as safe as the beloved of a black-belt karate master. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Skymission Group Holdings will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Skymission Group Holdings

Over 12 months, Skymission Group Holdings made a loss at the EBIT level, and saw its revenue drop to HK$485m, which is a fall of 8.3%. We would much prefer see growth.

Caveat Emptor

Importantly, Skymission Group Holdings had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable HK$41m at the EBIT level. That said, we're impressed with the strong balance sheet liquidity. That will give the company some time and space to grow and develop its business as need be. While the stock is probably a bit risky, there may be an opportunity if the business itself improves, allowing the company to stage a recovery. 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. Case in point: We've spotted 3 warning signs for Skymission Group Holdings you should be aware of, and 2 of them are a bit unpleasant.

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.