ORIX(US:IX)2021-11-07 18:38Financial Data and Key Metrics Changes - In the first half of FY 2022, net profit increased by 56.3% year-over-year to ¥146.7 billion, achieving 58.7% of the full-year profit forecast of ¥250 billion [6][23] - Return on equity (ROE) on an annualized basis was 9.5%, approaching the target of 11% [6][24] - The second quarter net income was ¥81.5 billion, the highest since the COVID-19 outbreak, recovering to pre-COVID levels [7][21] Business Line Data and Key Metrics Changes - Segment income totaled ¥240.1 billion, a 53.1% increase compared to the same period last year, with base profit increasing by 45.6% year-over-year to ¥173.5 billion [8][14] - The corporate financial services and maintenance leasing segments recorded significant increases, while the overseas segments, excluding transportation equipment, continued to perform well [9][10] - Investment gains rose by 77.1% year-over-year to ¥66.6 billion, driven by sales in the real estate segment and gains from the IPO of a business partner [11][26] Market Data and Key Metrics Changes - In the Asia and Australia segment, leasing increased in South Korea and China, while auto leasing in Australia performed well, resulting in significant profit increases [19][20] - The balance of sustainable equity funds in ORIX Europe reached a record high of €328 billion, contributing to increased fee income [18] Company Strategy and Development Direction - The company plans to accelerate investment activities as economic activity normalizes, despite uncertainties in the market [23][24] - ORIX aims to increase its global renewable energy generating capacity to approximately 8 gigawatts by 2026, focusing on acquisitions in the renewable energy sector [28][30] - The company is shifting towards a business model of asset recycling for logistics centers, with a pipeline of over ¥100 billion in the Tokyo metropolitan area [27] Management's Comments on Operating Environment and Future Outlook - Management noted that while the situation remains unpredictable, the impact from COVID-19 is waning, and they see potential for recovery in the second half of the fiscal year [23][24] - Concerns about rising resource prices and real estate prices in China were acknowledged, but management remains optimistic about new investment opportunities [24] - The company expects a steady recovery in its three COVID-affected businesses: aircraft leasing, hotels and inns operations, and airport concessions [24] Other Important Information - ORIX's credit rating was upgraded by S&P from A- negative to A- stable [25] - The company completed ¥38.4 billion of its ¥50 billion share buyback program announced in May [25] Q&A Session Summary Question: Why was there no upward revision of the second half forecast despite a bright outlook? - Management indicated that while there is a high probability of an upward revision, the magnitude is still uncertain and may be clearer by the third quarter results [51][52] Question: Will the shareholder return policy change if profits exceed expectations? - Management confirmed that if profitability improves, both dividends and share buybacks could increase, with a focus on returning to a normal payout ratio [58][59] Question: What is the outlook for capital gains and potential slowdown in profit growth? - Management expressed confidence in maintaining a steady growth trajectory, although capital gains may fluctuate [62][63] Question: How does ORIX view its long-term performance and renewable energy projects? - Management remains optimistic about returning to pre-COVID profit levels and sees potential in renewable energy projects, with various strategies for profit realization [75][77] Question: What are the initiatives regarding ESG and their impact on share price? - Management emphasized that ESG initiatives are not expected to negatively impact investors, and they are committed to reducing emissions while maintaining profitability [80][81]