4661 · Oriental Land

Will it survive?

• Can it pay its interest? 68.6×
  Comfortable
  Operating income ¥168.4B ÷ interest expense ¥2.5B
  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? +¥38.3B
  Net cash
  Cash ¥236.1B + ST investments ¥128.9B − debt ¥326.7B
  What this means

  Cash and short-term investments exceed every dollar of debt by ¥38.3B, 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? 5d
  Tight
  DSO 18 + DIO 11 − DPO 24 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 13%
  Solid through the cycle
  10-yr median, range -5%–15%; 12% latest = NOPAT ¥133.0B ÷ invested capital ¥1.15T
  Industry peers: median 6%
  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 12% 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 17%
  High through the cycle
  10-yr median margin, range -41%–25%; latest ¥104.3B = operating cash ¥181.3B − maintenance capex ¥77.0B
  Industry peers: median 8%
  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 15% of revenue this year, a 17% median across 10 years.

• Are earnings backed by cash? 1.49×
  Cash-backed
  Cash from ops ¥181.3B ÷ net income ¥121.9B
  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? 22%
  Reinvests most of it
  Dividends + buybacks ¥22.9B ÷ Owner Earnings ¥104.3B — this fiscal year
  What this means

  Of ¥104.3B Owner Earnings, ¥22.9B (22%) went back to shareholders, ¥22.9B dividends, ¥0 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. This year's proportion is 22%; across the record (2017–2026) it is 37%, the capital-allocation section below.

• Investing or harvesting? 1.16×
  Maintaining
  Capex ¥77.0B ÷ depreciation ¥66.5B
  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 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 1 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 24% → 25% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 24% early, 25% lately, median 23%.

• Reinvestment, incremental ROIC 10%
  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 +4%/yr
  What this means

  Owner earnings grew about 4% a year over the record.

• Worst year 2021 · −27.0% op. margin
  What this means

  Operations went underwater in 2021, 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.