8802 · Mitsubishi Estate

Will it survive?

• Can it pay its interest? 6.0×
  Comfortable
  Operating income ¥329.7B ÷ interest expense ¥55.1B
  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? ¥3.29T · 10.0× operating profit
  Heavy net debt
  Cash ¥280.1B + ST investments ¥7.0B − debt ¥3.58T
  What this means

  Netting ¥287.1B of cash and short-term investments against ¥3.58T of debt leaves ¥3.29T owed, about 10.0× a year's operating profit (10.9× 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 5%
  Below average through the cycle
  10-yr median, range 4%–6%; 5% latest = NOPAT ¥260.5B ÷ invested capital ¥4.92T
  Industry peers: median 7%
  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 14%
  Solid through the cycle
  10-yr median margin, range 8%–23%; latest ¥400.9B = operating cash ¥508.9B − maintenance capex ¥108.0B
  Industry peers: median 7%
  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 23% of revenue this year, a 14% median across 10 years. It chose to put ¥416.7B more into growth, so free cash flow this year was (¥15.8B) — the gap is investment, not weakness.

• Are earnings backed by cash? 2.29×
  Cash-backed
  Cash from ops ¥508.9B ÷ net income ¥222.5B
  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? 46%
  Returns about half
  Dividends + buybacks ¥185.5B ÷ Owner Earnings ¥400.9B
  What this means

  Of ¥400.9B Owner Earnings, ¥185.5B (46%) went back to shareholders, ¥55.5B dividends, ¥130.0B 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? 4.86×
  Expanding
  Capex ¥524.7B ÷ depreciation ¥108.0B
  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 18% → 19% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 18% early, 19% lately, median 19%.

• 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 +8%/yr
  What this means

  Owner earnings grew about 8% a year over the record.

• Worst year 2017 · 17.1% op. margin
  What this means

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

• Share count −1.5%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record rising
  What this means

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