2501 · Sapporo Holdings

Will it survive?

• Can it pay its interest? 5.9×
  Comfortable
  Operating income ¥24.4B ÷ interest expense ¥4.1B
  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? ¥176.2B · 7.2× operating profit
  Heavy net debt
  Cash ¥22.4B − debt ¥198.5B
  What this means

  Netting ¥22.4B of cash and short-term investments against ¥198.5B of debt leaves ¥176.2B owed, about 7.2× a year's operating profit (8.1× 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? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 2%
  Below average through the cycle
  10-yr median, range -3%–5%; 5% latest = NOPAT ¥19.3B ÷ invested capital ¥395.0B
  Industry peers: median 16%
  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 5% 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 6%
  Solid, recently turned positive
  latest ¥32.7B = operating cash ¥44.6B − maintenance capex ¥11.9B; positive each of the last 3 years, after an earlier loss stretch (10-yr median 4%)
  Industry peers: median 2%
  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 6% of revenue this year, a 4% median across 10 years.

• Are earnings backed by cash? 2.29×
  Cash-backed
  Cash from ops ¥44.6B ÷ net income ¥19.5B
  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? 13%
  Reinvests most of it
  Dividends + buybacks ¥4.1B ÷ Owner Earnings ¥32.7B
  What this means

  Of ¥32.7B Owner Earnings, ¥4.1B (13%) went back to shareholders, ¥4.1B dividends, ¥60M 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? 0.52×
  Harvesting
  Capex ¥11.9B ÷ depreciation ¥22.8B
  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, 2016–2025

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

• Profitable years 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• 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 2% → 3% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 2% early, 3% lately, median 2%.

• Reinvestment, incremental ROIC returns capital
  What this means

  The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.

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

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

• Worst year 2020 · −3.7% op. margin
  What this means

  Operations went underwater in 2020, understand why before trusting the good years.

• 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.