HK PROPERTY DIRECT LTD

Executive Summary

HK Property Direct Ltd shows significant financial stress characterized by persistent negative equity and a severe liquidity gap, despite owning an investment property asset. While regulatory compliance is maintained, the company’s ability to meet short-term obligations is questionable without additional capital or asset realization. Further due diligence on asset valuation, debt obligations, and cash flow plans is essential to assess the viability of ongoing operations.

HK PROPERTY DIRECT LTD - Analysis Report

Company Number: SC690621

Analysis Date: 2025-07-29 20:54 UTC

1. Risk Rating: HIGH
   Despite holding a significant investment property asset valued at £52,943, HK Property Direct Ltd exhibits considerable financial distress. The company has persistently negative net assets (£-6,651 in 2024) and net current liabilities (£-26,680 in 2024), indicating an inability to cover short-term obligations from current assets. The disparity between current assets (£1,455) and current liabilities (£28,135) highlights severe liquidity constraints.

2. Key Concerns:

• Liquidity Shortfall: Cash and current assets (£1,455) are vastly insufficient to meet current liabilities (£28,135), posing immediate solvency risks and potential cash flow crises.
• Negative Equity: The company’s shareholders’ funds are negative and worsening over time (from £-836 in 2021 to £-6,661 in 2024), indicating accumulated losses and erosion of capital.
• Long-Term Debt Burden: Amounts due after more than five years remain substantial (£25,414 in 2024), which may strain future financial flexibility given the ongoing negative net asset position.

3. Positive Indicators:

• Investment Property Asset: The company holds an investment property valued at £52,943, which provides a tangible asset base that could be leveraged or sold to address liabilities.
• Timely Filing Compliance: The company’s accounts and confirmation statements are filed on time with no overdue filings, reflecting adherence to regulatory requirements.
• Stable Ownership and Management: The controlling shareholder, Mr. Hassan Khan, has maintained directorship since incorporation, suggesting stable governance at the ownership level.

4. Due Diligence Notes:

• Valuation and Marketability of Investment Property: Verify the basis and current validity of the £52,943 valuation and assess market conditions affecting liquidity realization.
• Debt Terms and Covenants: Review detailed loan agreements, repayment schedules, interest rates, and any covenant obligations linked to the £32,914 total creditors (including long-term loans).
• Cash Flow Projections: Obtain management forecasts to understand how the company plans to manage ongoing liquidity challenges and whether additional capital injections or asset disposals are anticipated.
• Profit and Loss Details: Since only abridged accounts are filed, request full financial statements or management accounts to evaluate operational performance and recurring profitability.
• Director and Related Party Transactions: Investigate any related party loans or guarantees given the concentration of ownership and potential conflicts of interest.