Is Investing in iRay Technology (SHSE:688301) a Risky Decision?

Legendary fund manager Li Lu once said that the biggest investment risk is a permanent loss of capital, highlighting the importance of assessing a company’s use of debt. iRay Technology Company Limited (SHSE:688301) carries debt, which can become a problem if the company cannot easily pay it off, potentially leading to shareholder losses. At the end of September 2024, iRay Technology had CN¥2.88 billion in debt, with CN¥1.69 billion in cash, resulting in net debt of about CN¥1.19 billion. The company’s balance sheet shows liabilities of CN¥636.3 million due within a year and CN¥2.97 billion due beyond that, with cash and short-term receivables totaling CN¥1.69 billion. The company’s net debt to EBITDA ratio is 2.3, indicating moderate use of debt, but its ability to grow EBIT and convert it to free cash flow is concerning. While iRay Technology operates in the Medical Equipment industry, known for being defensive, the company is taking risks with its use of debt that may impact future profitability. Ultimately, investors should carefully monitor the company’s balance sheet and overall financial health. This article provides a comprehensive analysis of iRay Technology’s debt levels and potential risks for investors to consider.

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