9503 · Kansai Electric Power

Will it survive?

• Can it pay its interest? 10.3×
  Comfortable
  Operating income ¥437.6B ÷ interest expense ¥42.7B
  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? ¥2.94T · 6.7× operating profit
  Heavy net debt
  Cash ¥741.3B − debt ¥3.68T
  What this means

  Netting ¥741.3B of cash and short-term investments against ¥3.68T of debt leaves ¥2.94T owed, about 6.7× a year's operating profit (8.4× 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
  10-yr median, range -1%–10%; 6% latest = NOPAT ¥345.7B ÷ invested capital ¥6.01T
  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 6% 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 —
  Not enough data
  Industry peers: median 2%
  What this means

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

• Are earnings backed by cash? 1.72×
  Cash-backed
  Cash from ops ¥652.4B ÷ net income ¥380.1B
  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? —
  Not enough data
  What this means

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

• Investing or harvesting? —
  Not enough data
  What this means

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

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 7% → 13% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 7% early to 13% lately, median 6% — pricing power intact or improving.

• Reinvestment, incremental ROIC 19%
  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.

• Worst year 2023 · −1.3% op. margin
  What this means

  Operations went underwater in 2023, understand why before trusting the good years.

• Share count +1.9%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• Dividend record rising
  What this means

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