9147 · Nippon Express Holdings

Will it survive?

• Can it pay its interest? 3.1×
  Adequate
  Operating income ¥51.5B ÷ interest expense ¥16.5B
  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? ¥595.4B · 11.6× operating profit
  Heavy net debt
  Cash ¥283.4B − debt ¥878.8B
  What this means

  Netting ¥283.4B of cash and short-term investments against ¥878.8B of debt leaves ¥595.4B owed, about 11.6× a year's operating profit (17.1× 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 3%
  Below average through the cycle
  4-yr median, range 3%–11%; 3% latest = NOPAT ¥40.7B ÷ invested capital ¥1.42T
  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 4 years (it ran 3% 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 6%
  Solid through the cycle
  4-yr median margin, range 5%–10%; latest ¥140.4B = operating cash ¥208.7B − maintenance capex ¥68.2B
  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 5% of revenue this year, a 6% median across 4 years.

• Are earnings backed by cash? 77.48×
  Cash-backed
  Cash from ops ¥208.7B ÷ net income ¥2.7B
  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? 54%
  Returns about half
  Dividends + buybacks ¥76.5B ÷ Owner Earnings ¥140.4B
  What this means

  Of ¥140.4B Owner Earnings, ¥76.5B (54%) went back to shareholders, ¥26.5B 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? 0.36×
  Harvesting
  Capex ¥68.2B ÷ depreciation ¥191.8B
  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, 2022–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 4 of 4
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• Return on capital ≥ 15% 0 of 4 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 4% → 2% (2-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 4% early to 2% lately, median 2% — 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 −7%/yr
  What this means

  Owner earnings shrank about 7% a year over the record.

• Worst year 2024 · 1.9% op. margin
  What this means

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

• Dividend record paid
  What this means

  Paid a dividend in 4 of the years on record.