7532 · Pan Pacific International Holdings

Will it survive?

• Can it pay its interest? —
  Interest expense not tagged in the data
  What this means

  No usable interest-expense line was tagged in the filing data, but the balance sheet carries real net debt — so the interest burden here is unknown, not absent. Read the debt on the net-debt check below.

• How heavy is the debt, net of cash? ¥266.8B · 1.6× operating profit
  Modest net debt
  Cash ¥175.8B − debt ¥442.6B
  What this means

  Netting ¥175.8B of cash and short-term investments against ¥442.6B of debt leaves ¥266.8B owed, about 1.6× a year's operating profit (2.7× 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? 10d
  Tight
  DSO 3 + DIO 54 − DPO 46 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 8%
  Solid through the cycle
  10-yr median, range 7%–15%; 15% latest = NOPAT ¥128.2B ÷ invested capital ¥857.0B
  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 15% 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 4%
  Thin, recently turned positive
  latest ¥93.3B = operating cash ¥132.0B − maintenance capex ¥38.7B; 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 4% of revenue this year, a 2% median across 10 years.

• Are earnings backed by cash? 1.46×
  Cash-backed
  Cash from ops ¥132.0B ÷ net income ¥90.5B
  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? 22%
  Reinvests most of it
  Dividends + buybacks ¥20.3B ÷ Owner Earnings ¥93.3B
  What this means

  Of ¥93.3B Owner Earnings, ¥20.3B (22%) went back to shareholders, ¥20.3B dividends, ¥1M 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? —
  Not enough data
  What this means

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

Durability & moat, 2016–2025

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% → 6% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 6% early, 6% lately, median 5%.

• Reinvestment, incremental ROIC 17%
  What this means

  Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.

• Owner earnings growth +59%/yr
  What this means

  Owner earnings grew about 59% a year over the record.

• Worst year 2020 · 4.5% op. margin
  What this means

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

• Dividend record rising
  What this means

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