2768 · Sojitz

Will it survive?

• Can it pay its interest? —
  Not the right lens here
  What this means

  This business earns through equity-method affiliates, so interest coverage on its operating line isn't meaningful. Read its solvency on net debt against equity instead.

• How heavy is the debt, net of cash? ¥1.16T
  Net debt
  Cash ¥245.1B − debt ¥1.40T
  What this means

  Netting ¥245.1B of cash and short-term investments against ¥1.40T of debt leaves ¥1.16T owed. 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 —
  Operating income not meaningful here
  Industry peers: median 16%
  What this means

  This business earns mostly through equity-method affiliates, so its operating line understates its earning power and a ROIC built on it would mislead. Read it on return on equity and the record instead.

• Owner-earnings margin 4%
  Thin through the cycle
  9-yr median margin, range -2%–6%; latest (¥23.3B) = operating cash ¥16.8B − maintenance capex ¥40.1B
  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 -1% of revenue this year, a 4% median across 9 years.

• Are earnings backed by cash? 0.16×
  Thinly cash-backed
  Cash from ops ¥16.8B ÷ net income ¥103.6B
  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? —
  No surplus to allocate
  What this means

  The business didn't generate positive Owner Earnings this year, so any distributions came from the balance sheet or borrowing, not from operations.

• Investing or harvesting? 0.80×
  Maintaining
  Capex ¥40.1B ÷ depreciation ¥49.9B
  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 −0% → −0% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about −0% early, −0% lately, median −1%.

• Reinvestment, incremental ROIC −0%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

• Worst year 2021 · −0.8% op. margin
  What this means

  Operations went underwater in 2021, understand why before trusting the good years.

• Dividend record rising
  What this means

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