4188 · Mitsubishi Chemical Group

Will it survive?

• Can it pay its interest? 0.8×
  Does not cover its interest
  Operating income ¥30.1B ÷ interest expense ¥38.6B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? ¥1.36T · 45.3× operating profit
  Heavy net debt
  Cash ¥527.1B − debt ¥1.89T
  What this means

  Netting ¥527.1B of cash and short-term investments against ¥1.89T of debt leaves ¥1.36T owed, about 45.3× a year's operating profit (62.9× 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 4%
  Below average through the cycle
  10-yr median, range 1%–11%; 1% latest = NOPAT ¥23.8B ÷ invested capital ¥3.13T
  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 1% 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 5%
  Thin through the cycle
  9-yr median margin, range 2%–7%; latest ¥152.2B = operating cash ¥436.3B − maintenance capex ¥284.1B
  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 4% of revenue this year, a 5% median across 9 years.

• Are earnings backed by cash? 36.88×
  Cash-backed
  Cash from ops ¥436.3B ÷ net income ¥11.8B
  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? 62%
  Returns about half
  Dividends + buybacks ¥94.5B ÷ Owner Earnings ¥152.2B
  What this means

  Of ¥152.2B Owner Earnings, ¥94.5B (62%) went back to shareholders, ¥44.5B dividends, ¥50.0B 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? 1.05×
  Maintaining
  Capex ¥284.1B ÷ depreciation ¥271.2B
  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 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 6% → 3% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 6% early to 3% lately, median 4% — 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 +0%/yr
  What this means

  Owner earnings grew about 0% a year over the record.

• Worst year 2026 · 0.8% op. margin
  What this means

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

• Share count −0.5%/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.