1332 · Nissui

Will it survive?

• Can it pay its interest? 12.1×
  Comfortable
  Operating income ¥40.4B ÷ interest expense ¥3.3B
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? ¥260.3B · 6.4× operating profit
  Heavy net debt
  Cash ¥24.3B − debt ¥284.5B
  What this means

  Netting ¥24.3B of cash and short-term investments against ¥284.5B of debt leaves ¥260.3B owed, about 6.4× a year's operating profit (7.0× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 61d
  Long (60+ days)
  DSO 45 + DIO 53 − DPO 37 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 5%
  Below average through the cycle
  10-yr median, range 4%–6%; 6% latest = NOPAT ¥31.9B ÷ invested capital ¥496.3B
  Industry peers: median 9%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 6% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 3%
  Thin, recently turned positive
  latest ¥26.7B = operating cash ¥53.2B − maintenance capex ¥26.5B; positive each of the last 3 years, after an earlier loss stretch (10-yr median 2%)
  Industry peers: median 6%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 3% of revenue this year, a 2% median across 10 years. It chose to put ¥16.5B more into growth, so free cash flow this year was ¥10.2B — the gap is investment, not weakness.

• Are earnings backed by cash? 1.93×
  Cash-backed
  Cash from ops ¥53.2B ÷ net income ¥27.5B
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 57%
  Returns about half
  Dividends + buybacks ¥15.3B ÷ Owner Earnings ¥26.7B
  What this means

  Of ¥26.7B Owner Earnings, ¥15.3B (57%) went back to shareholders, ¥9.2B dividends, ¥6.1B buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.62×
  Expanding
  Capex ¥43.1B ÷ depreciation ¥26.5B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 10 of 10
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• Return on capital ≥ 15% 0 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 3% → 4% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 3% early, 4% lately, median 3%.

• Reinvestment, incremental ROIC 8%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth +5%/yr
  What this means

  Owner earnings grew about 5% a year over the record.

• Worst year 2021 · 2.8% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Share count +0.0%/yr
  What this means

  Roughly flat share count, little dilution, little buyback.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.