Operating Margin - Sugi Holdings Co Ltd (TSE:7649)

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Price: 3 712 JPY 1.5%

Market Cap: 705.2B JPY

4.8%

Current

Average

3.1%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

4.8%

Operating Profit

46B

Revenue

964.4B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
JP	S	Sugi Holdings Co Ltd TSE:7649	671.8B JPY	5%
ZA	C	Clicks Group Ltd JSE:CLS	82.2B Zac	9%
ZA	D	Dis-Chem Pharmacies Ltd JSE:DCP	30.3B Zac	6%
US		Walgreens Boots Alliance Inc NASDAQ:WBA	10.4B USD	2%
BR		Raia Drogasil SA BOVESPA:RADL3	40.7B BRL	6%
JP		MatsukiyoCocokara & Co TSE:3088	1.1T JPY	8%
JP		Tsuruha Holdings Inc TSE:3391	703.4B JPY	5%
SA		Al Nahdi Medical Company SCJSC SAU:4164	16.8B SAR	9%
JP		Welcia Holdings Co Ltd TSE:3141	657.7B JPY	3%
JP		Cosmos Pharmaceutical Corp TSE:3349	616.6B JPY	4%
CN		Yifeng Pharmacy Chain Co Ltd SSE:603939	27.5B CNY	10%

Sugi Holdings Co Ltd
Glance View

Market Cap

671.8B JPY

Industry

Retail

In the bustling realm of Japan's retail sector, Sugi Holdings Co., Ltd. has carved out a formidable presence, quietly steering the ship of healthcare-focused retailing. Established in 1976 and headquartered in Aichi Prefecture, the company operates an extensive network of pharmacies and drugstores under the Sugi Pharmacy, Japan Co., Ltd., and Japan Wellness segments. With its core focus on pharmaceuticals, cosmetics, and daily essentials, Sugi Holdings has adeptly woven itself into the fabric of everyday life for many Japanese consumers. The company strategically places its outlets in residential areas, enabling easy access and convenience, which has proven instrumental in capturing a loyal customer base. Its business model hinges on the dual approach of brick-and-mortar stores complemented by an online presence, where e-commerce facilitates a broader reach while maintaining a personal touch through storefront interactions. The engine that propels Sugi Holdings' revenue generation is its diversified product range, which spans prescription drugs, healthcare products, and an assortment of consumer goods. This diversity orchestrates a steady, reliable cash flow, largely buffered by the recurring nature of pharmaceutical sales. In addition to retail, they offer in-home medical care services, catering to an aging population—a demographic with growing healthcare needs. The company's business acumen is reflected in its adept supply chain management and strategic pricing, which enhance both operational efficiency and competitive positioning. By embracing digital tools and data analytics to better understand consumer behavior, Sugi Holdings continues to refine its offerings, ensuring sustainable growth in a dynamic retail landscape.

View Sugi Holdings Co Ltd Analysis

Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Sugi Holdings Co Ltd
TSE:7649