2502 · Asahi Group Holdings

Will it survive?

• Can it pay its interest? 8.6×
  Comfortable
  Operating income ¥185.9B ÷ interest expense ¥21.6B
  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? ¥1.49T · 8.0× operating profit
  Heavy net debt
  Cash ¥156.4B − debt ¥1.64T
  What this means

  Netting ¥156.4B of cash and short-term investments against ¥1.64T of debt leaves ¥1.49T owed, about 8.0× a year's operating profit (8.8× 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 2%–8%; 3% latest = NOPAT ¥146.8B ÷ invested capital ¥4.49T
  Industry peers: median 15%
  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 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 9%
  Solid through the cycle
  8-yr median margin, range -1%–11%; latest (¥18.7B) = operating cash ¥104.8B − maintenance capex ¥123.5B
  Industry peers: median 11%
  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 -1% of revenue this year, a 9% median across 8 years.

• Are earnings backed by cash? 0.86×
  Mostly cash-backed
  Cash from ops ¥104.8B ÷ net income ¥121.6B
  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? —
  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? 0.76×
  Harvesting
  Capex ¥123.5B ÷ depreciation ¥163.1B
  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, 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% → 8% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 6% early to 8% lately, median 9% — pricing power intact or improving.

• Reinvestment, incremental ROIC 4%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth −3%/yr
  What this means

  Owner earnings shrank about 3% a year over the record.

• Worst year 2016 · 1.6% 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.