3861 · Oji Holdings

Will it survive?

• Can it pay its interest? 3.0×
  Adequate
  Operating income ¥34.6B ÷ interest expense ¥11.6B
  What this means

  Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.

• How heavy is the debt, net of cash? ¥872.6B · 25.2× operating profit
  Heavy net debt
  Cash ¥74.2B + ST investments ¥9.1B − debt ¥955.9B
  What this means

  Netting ¥83.3B of cash and short-term investments against ¥955.9B of debt leaves ¥872.6B owed, about 25.2× a year's operating profit (27.6× 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? 34d
  Tight
  DSO 60 + DIO 32 − DPO 58 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 4%
  Below average through the cycle
  10-yr median, range 2%–7%; 2% latest = NOPAT ¥27.3B ÷ invested capital ¥1.68T
  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 2% 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 1%
  Thin, recently turned positive
  latest ¥20.9B = operating cash ¥113.4B − maintenance capex ¥92.4B; 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 1% of revenue this year, a 4% median across 10 years.

• Are earnings backed by cash? 2.04×
  Cash-backed
  Cash from ops ¥113.4B ÷ net income ¥55.6B
  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? 360%
  Returned more than it generated
  Dividends + buybacks ¥75.4B ÷ Owner Earnings ¥20.9B
  What this means

  The company returned more than it generated: against ¥20.9B of Owner Earnings, ¥75.4B (360%) went back to shareholders, ¥27.7B dividends, ¥47.7B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.

• Investing or harvesting? 1.00×
  Maintaining
  Capex ¥92.4B ÷ depreciation ¥92.8B
  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, 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 6% → 3% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 6% early to 3% lately, median 5% — competition or costs are biting in.

• 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 −18%/yr
  What this means

  Owner earnings shrank about 18% a year over the record.

• Worst year 2026 · 1.9% 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.