Yahoo Finance What You Must Know About Pan Hong Holdings Group Limited’s (SGX:P36) Financial Strength
Investors are always looking for growth in small-cap stocks like Pan Hong Holdings Group Limited (SGX:P36), with a market cap of S$53.79m. However, an important fact which most ignore is: how financially healthy is the business? So, understanding the company’s financial health becomes vital, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. I believe these basic checks tell most of the story you need to know. Nevertheless, I know these factors are very high-level, so I’d encourage you to dig deeper yourself into P36 here.
How does P36’s operating cash flow stack up against its debt?
P36’s debt levels have fallen from S$936.82m to S$100.41m over the last 12 months – this includes both the current and long-term debt. With this reduction in debt, P36’s cash and short-term investments stands at S$350.58m for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of P36’s operating efficiency ratios such as ROA here.
Does P36’s liquid assets cover its short-term commitments?
At the current liabilities level of S$975.19m liabilities, the company has been able to meet these commitments with a current assets level of S$1.55b, leading to a 1.59x current account ratio. For Real Estate companies, this ratio is within a sensible range as there’s enough of a cash buffer without holding too capital in low return investments.
Can P36 service its debt comfortably?
P36’s level of debt is appropriate relative to its total equity, at 15.41%. P36 is not taking on too much debt commitment, which can be restrictive and risky for equity-holders.
Next Steps:
P36’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. However, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven’t considered other factors such as how P36 has been performing in the past. I recommend you continue to research Pan Hong Holdings Group to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for P36’s future growth? Take a look at our free research report of analyst consensus for P36’s outlook.
Valuation: What is P36 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether P36 is currently mispriced by the market.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
