- $ORIX - Earnings Analysis: Diversified business segments provide stability.

Business Model

ORIX Corporation generates revenue through a diversified portfolio of businesses, including finance, operations, and investments across various segments such as corporate financial services, real estate, PE investment, environment & energy, insurance, banking & credit, aircraft & ships, and operations in the USA, Europe, Asia, and Australia.

Revenue Sources

• Finance revenues: Includes finance and fee business, leasing, and rental of automobiles, electronic measuring instruments and ICT-related equipment.
• Operating leases: Revenue from leasing of various assets like real estate, aircraft and ships.
• Life insurance premiums and related investment income: Revenue from life insurance policies and investment of premiums.
• Sales of goods and real estate: Revenue from sales of real estate properties and other goods.
• Services income: Includes revenues from asset management, facility operations, and other services.

Income Statement Analysis

• Total revenues increased by 5.4% year-on-year, driven by increases in operating leases revenues and services income, partially offset by decreases in finance revenues.
• Total expenses increased by 4.8% year-on-year, primarily due to increases in costs of operating leases, services expense, other expense, and selling, general, and administrative expenses, partially offset by decreases in interest expense.
• Net Income Attributable to ORIX Corporation Shareholders increased 24.0% year-on-year

Balance Sheet Analysis

• Total assets increased 3.6% compared to the end of the previous fiscal year, primarily due to increases in cash and cash equivalents, installment loans, investment in operating leases, and investment in securities.
• Total liabilities increased 3.6% compared to the end of the previous fiscal year, primarily due to increases in short-term debt, deposits and long-term debt, partially offset by a decrease in trade notes, accounts and other payable.
• Shareholders’ equity increased 3.7% compared to the end of the previous fiscal year.

Capital Allocation

The shareholder return policy includes paying out 39% of net income to dividends, setting a share buyback program of 50.0 Bln JPY, and allocating the remainder to internal reserves and new investments. The company completed a share buyback program of 50.0 Bln JPY and cancelled all treasury stock exceeding 2% of total shares outstanding.

Management Commentary

Q1-Q3 net income reached 271.8 Bln JPY (up 24% YoY), ROE of 9.0% (annualized).

Finance: Investment income higher in Insurance, leasing revenues rose in Australia and South Korea

Investments category profits rose sharply thanks to multiple exits

Downbeat Chinese economy, other APAC countries strong

Overall Sentiment: Positive overall, with some caution regarding the economic outlook in certain regions.

Recommendation

Rating: Hold

Reason for Rating: The company has shown solid performance with a diversified business model, but there are some uncertainties and risks that need to be monitored.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/11/2025, 4:55:42 AM