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What does China Creative Global Holdings Limited’s (HKG:1678) Balance Sheet Tell Us About Its Future?

China Creative Global Holdings Limited (SEHK:1678) is a small-cap stock with a market capitalization of HK$423.15M. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Consumer Durables businesses operating in the environment facing headwinds from current disruption, especially ones that are currently loss-making, are inclined towards being higher risk. So, understanding the company’s financial health becomes essential. Here are few basic financial health checks you should consider before taking the plunge. However, since I only look at basic financial figures, I’d encourage you to dig deeper yourself into 1678 here.

Does 1678 generate enough cash through operations?

1678 has shrunken its total debt levels in the last twelve months, from CN¥176.07M to CN¥147.76M , which comprises of short- and long-term debt. With this debt repayment, 1678’s cash and short-term investments stands at CN¥778.29M for investing into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can examine some of 1678’s operating efficiency ratios such as ROA here.

Does 1678’s liquid assets cover its short-term commitments?

At the current liabilities level of CN¥63.86M liabilities, it appears that the company has been able to meet these commitments with a current assets level of CN¥1.14B, leading to a 17.91x current account ratio. Though, a ratio greater than 3x may be considered as too high, as 1678 could be holding too much capital in a low-return investment environment.

SEHK:1678 Historical Debt May 8th 18
SEHK:1678 Historical Debt May 8th 18

Does 1678 face the risk of succumbing to its debt-load?

With debt at 7.08% of equity, 1678 may be thought of as having low leverage. This range is considered safe as 1678 is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Risk around debt is extremely low for 1678, and the company also has the ability and headroom to increase debt if needed going forward.

Next Steps:

1678’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for 1678’s financial health. Other important fundamentals need to be considered alongside. You should continue to research China Creative Global Holdings to get a better picture of the stock by looking at:

  1. Historical Performance: What has 1678’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. 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.

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