PSIG, PS International Group Ltd.

Will it survive?

• Can it pay its interest? -43.6×
  Does not cover its interest
  Operating income ($2M) ÷ interest expense $35K
  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? +$11M
  Net cash
  Cash $9M + ST investments $5M − debt $3M
  What this means

  Cash and short-term investments exceed every dollar of debt by $11M, on net the company owes nothing, and can act from strength when others can't. 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? -7d
  Negative, funded by others
  DSO 65 + DIO 0 − DPO 72 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

• Return on invested capital —
  Not meaningful here
  Invested capital ($10M) = debt $3M + equity ($4M) − cash
  Industry peers: median 9%
  What this means

  Invested capital is near zero or negative, usually years of buybacks pulling equity down. ROIC explodes or flips sign and stops meaning anything. Judge this one on Owner Earnings instead.

• Owner-earnings margin 1%
  Thin through the cycle
  3-yr median margin, range -10%–5%; latest ($6M) = operating cash ($1M) − maintenance capex $4M
  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 -10% of revenue this year, a 1% median across 3 years.

• Are earnings backed by cash? ($1M)
  Loss, and burning cash
  Net income ($15M) · cash from operations ($1M)
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did not.

How is the cash used?

• Where do the earnings go? —
  No surplus to allocate
  What this means

  The business didn't generate positive Owner Earnings this year, so any distributions came from the balance sheet or borrowing, not from operations.

• Investing or harvesting? 81.52×
  Expanding
  Capex $4M ÷ depreciation $52K
  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.

Graham’s defensive tests · 0 of 3 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $53M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Miss
  Current ratio ≥ 2× · 0.79×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Miss
  Debt ≤ working capital · $3M vs ($8M) WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.33/share (latest year $-0.99), the averaged base the calculator's gate runs on, and book value is $-0.24/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2022–2025

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

• Profitable years 2 of 4
  What this means

  Lost money in 2 year(s), look at what happened there before trusting the average.

• Operating margin 4% → −4% (2-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 4% early to −4% lately, median −3% — 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 −40%/yr
  What this means

  Owner earnings shrank about 40% a year over the record.

• Worst year 2024 · −6.0% op. margin
  What this means

  Operations went underwater in 2024, understand why before trusting the good years.

• Dividend record rising
  What this means

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