We Think Pamtek (KOSDAQ:271830) Has A Fair Chunk Of Debt
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, Pamtek Co., Ltd. (KOSDAQ:271830) does carry debt. But the more important question is: how much risk is that debt creating?
What Risk Does Debt Bring?
Debt assists a business until the business has trouble paying it off, either with new capital or with free 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.
What Is Pamtek's Debt?
The chart below, which you can click on for greater detail, shows that Pamtek had ₩10.5b in debt in September 2025; about the same as the year before. However, because it has a cash reserve of ₩4.95b, its net debt is less, at about ₩5.52b.
A Look At Pamtek's Liabilities
According to the last reported balance sheet, Pamtek had liabilities of ₩23.0b due within 12 months, and liabilities of ₩14.3b due beyond 12 months. Offsetting these obligations, it had cash of ₩4.95b as well as receivables valued at ₩12.2b due within 12 months. So it has liabilities totalling ₩20.1b more than its cash and near-term receivables, combined.
While this might seem like a lot, it is not so bad since Pamtek has a market capitalization of ₩60.1b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Pamtek 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.
View our latest analysis for Pamtek
Over 12 months, Pamtek made a loss at the EBIT level, and saw its revenue drop to ₩34b, which is a fall of 60%. To be frank that doesn't bode well.
Caveat Emptor
While Pamtek's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. To be specific the EBIT loss came in at ₩5.4b. 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. Another cause for caution is that is bled ₩5.4b in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very risky. 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. To that end, you should learn about the 4 warning signs we've spotted with Pamtek (including 2 which shouldn't be ignored) .
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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.