IX - ORIX: Consider Capital Recycling Plans And Peer Valuation Discount

2024-04-26 12:33:19 ET

Summary

• ORIX Corporation is rated as a Buy, as its P/B is lower than its peers and the company has the potential to increase its ROE through capital recycling initiatives.
• ORIX Corporation recently announced the sale of a 66% equity interest in ORIX Credit for a gain of JPY57 billion, which is part of the company's capital recycling plans.
• IX's current undervaluation is justified by its inferior ROE as compared to peers, but the valuation gap is likely to narrow over time as the company meets its ROE targets.

Elevator Pitch

ORIX Corporation ( IX ) [8591:JP] is rated as a Buy.

Earlier, I analyzed ORIX Corporation's most recent third quarter financial results, and drew attention to its ROE target in my February 8, 2024 write-up . This update focuses on IX's recent capital recycling move and a comparison of the stock's valuation with peers....

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