Tags: ORIX | IX | Japan | financial

ORIX: Japanese Financial Firm, but Global

By    |   Friday, 30 Sep 2011 03:15 PM

Japanese financial company ORIX Corp. (IX) has by U.S. standards a strangely diversified business model. The result is an odd but attractive mix of business. As of mid-2011, too, each business segment was generating profits.

ORIX segments its financial business into corporate financial services, maintenance leasing, real estate, investment banking, and retail, which includes banking and life insurance. Overseas — outside of Japan — is broken out separately from these divisions. The company's overseas business generated almost 40 percent of net income for the latest fiscal year, ending in March 2011.

For the fiscal quarter ending in June ORIX reported strong growth in sales and net income. Net income of $294 million was up 44 percent year-over-year in yen terms and over 50 percent in dollar terms. Earnings per share for the quarter were $1.14. For the full 2011 fiscal year ORIX earned $4.33, based on the dollar-yen exchange rate at the end of March 2011. Net income for the quarter was almost one-third of the company's profit goal for the full fiscal year.

Investment exposure

ORIX provides investment exposure to the financial markets of Japan, plus the overseas division generates 40 percent of the segment's revenue in the United States. China and the rest of Asia plus Australia are a growth market for the company and currently account for another 40 percent of overseas sales.

Reading through company materials, it appears the focus is moderate growth by generating profitable sales in all segments of the company business.

For the investor buying ORIX ADR shares, a strong dollar is a negative for the share price. The company's significant U.S. business exposure somewhat negates this fact and, so far this year, the yen price and ADR price have moved in parallel. ORIX is hardly if at all followed by Wall Street analysts. An investor looking at IX should perform deeper research before buying shares.

The company reports next on Oct. 25.

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Japanese financial company ORIX Corp. (IX) has by U.S. standards a strangely diversified business model. The result is an odd but attractive mix of business. As of mid-2011, too, each business segment was generating profits. ORIX segments its financial business into...
ORIX,IX,Japan,financial
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2011-15-30
Friday, 30 Sep 2011 03:15 PM
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