ORIX Corporation American Depositary Shares

Thank you for joining this telephone conference of our Oryx Corporation for annual results for the consolidated Cisco year ended March 31st, 2021. The attendees at today's conference are member of the Board of Directors, Representative Executive Officer, President and CEO, Mr. Inoue, member of the Board of Directors, Senior Managing Executive Director, Mr. Taniguchi, and Executive Officer, Head of Treasury and Accounting Headquarters, Mr. Yano. As we begin the conference, we have some ask. In order to avoid feedback, if you have communication devices such as mobile phone nearby, please turn them off or move them away from the telephone. And if we experience severe feedback during the meeting, with the consent of the organizer, we may discontinue the meeting for a while and speak to the participant who is causing the feedback. We hope that you understand and we will hear from Mr. Yano during the first half and from Mr. Inoue during the second half, followed by Q&A. We expect the whole meeting to take about one hour. We would like to begin the meeting without further ado. Mr. Yano, the floor is yours.

Thank you. Good afternoon. I am Yano, Head of Treasury and Accounting Headquarters. Thank you for joining us today for the FI 2021 March and Business Performance Announcement of OREC. So let me explain. Please refer to page two of the handout. First, the net income and ROE. The net income of FY 2021 was at 192.4 billion Japanese yen with ROE of 6.4%. The result was lower than the prior year, but we managed to achieve net income in excess of 190 billion Japanese yen, which is provided as the guidance at the time of interim. Despite of the further spread of the COVID-19 virus and the state of emergency enforced by the government twice over, the profit bottomed in the second quarter and started to improve from the third quarter. Please refer to the chart on the right. At Oryx, there are business results of some subsidiaries and affiliated companies that are recognized with a three-month lag, which means that we have hit the bottom in first quarter in actual fact and continue to recover steadily since then. Please refer to the next slide. Breakdown of FI21. Segment profit. Total amount of segment profit was 318.9 billion Japanese yen. Please refer to the chart on the left. That shows the trend of segment profit over the past five years. Pale blue is investment gains, while dark blue is the base profit. The base profit was 229.6 billion Japanese yen. This is a decline of 70.7 billion Japanese yen on year over year. However, if we exclude the three areas of business, That was severely affected by the pandemic, which I am going to be explaining in a little more detail later. The profit was up by 7.6 billion Japanese yen year over year. This was thanks to the robustness enjoyed by environmental energy, life insurance, and bank and credit. We believe that the result proved the strength of our diverse business portfolio. On the other hand, the investment gain was 89.3 billion Japanese yen. timely exit to ensure high return on investment allowed us to maintain a certain level of profit generation. In Japan, investment gains were recognized through the disposition of logistic facilities, environment and energy businesses, while some gains were realized in the United States and in Asia. Please turn to the next page. I would now like to explain the impact of COVID-19 pandemic to our business. On this page, we share the impact to our business segments in each quarter, In some businesses, the impact is still persisting. However, the impacted amount is following a declining trend from the second quarter. Here again, we can confirm the recovery trend of our profit. Now, a little more into the details of the impact. First, the three areas of businesses that were affected severely by the pandemic. Real estate operation business has followed an uneasy trend affected by the fluctuation of the occupancy rate of hotels and inns. While the occupancy rate fell to as low a single-digit percentage in the first quarter, it made a significant recovery in November of the last year thanks to the GoToTravel campaign. Due to a rise in the number of COVID-positive cases over the festive season, the occupancy rate fell again in January of this year but started to recover slowly in February and March. Aircraft leasing business is still going through tough times. However, the demand for domestic flights is picking up in some countries where vaccination has progressed faster, which gives us confidence in the need to long-term, or even within this fiscal period, we can expect the recovery trend to get started. Airport concession business books the result with three-month lag, so the earnings of Kansai Airport in October to December was booked in the fourth quarter result. So, number of Japanese domestic flights improved in December and mitigated the negative impact in the fourth quarter. On the other hand, there are some businesses that were negatively affected by the pandemic in the first half but started to recover in the second half, like Corporate Financial Services and Maintenance Leasing, as well as Oryx USA, that had steadily recovered in the third quarter with no further negative impact experienced in the fourth quarter. Please refer to both page 5 and 6. The slides show the segment performance The breakdowns are shown in both profits and assets. In the fourth quarter, six segments posted growth from the third quarter. Another evidence of a broad recovery. As to the details of the segment performance, please refer to page 16 and onwards. I would like to make one brief remark about the result at this point in time. First, the corporate financial services and maintenance leasing segment. Segment profit was down by 3.8 billion Japanese yen at 59.1 billion Japanese yen. The segment was affected by COVID-19 in the first quarter, however, started to follow a recovery trend toward the fourth quarter with auto trending well, boosted by a recovery in rental car demand with profit up year over year. Segment asset decreased by 131.1 billion Japanese yen year over year due to decline in finance leasing and installment loans. But with excessive liquidity at the backdrop, we avoided extending new loans at lower spread and did not increase the asset balance just for the sake of it. Now the real estate segment. Segment profit was down by 55.5 billion Japanese yen at 24.7 billion Japanese yen. In the investment and operation unit, the base profit of hotels and inns decreased. The total amount of investment gains were down due to a large disposition gains being posted in the prior year.

With the Daikyo condominium business, the condominium management business translated into an increased profit of 1.4 billion yen compared to the previous year. New investments into those facilities are ongoing and segment assets increased by 50.9 billion yen year-on-year. And the asset management business, AUM, has been increasing steadily. At the end of March 2021, our AUM stood at 1.3 trillion yen. Moving on to PE investment and concession. Segment profit was 3.4 billion, down by 40.7 billion year-on-year. Domestic private equity investment We have invested into new projects, one in the first quarter and three in the third quarter, and the number of investees increased to 17. Businesses in general are solid, and we are booking more profits. I have already covered the concession business before. Moving on to energy and environment. Profit for this segment was $28.6 billion, up by $16.9 billion a year, a major improvement in the profit. Megasolar business increased in profit in Japan, and also we had gain on sales for the wind power in India, which contributed. And we announced two major investment projects for renewable energies overseas, one of which was Greenco Energy in India, and we have acquired 20% equity March this year. And the other project is Aron Energy in Spain. We now have a basic agreement to acquire 80% of the equity and we expect to close in the first quarter for this fiscal year. Moving on to the insurance segment. Segment profit was 55.1 billion yen, up by 10.3 billion compared to the previous year. New policies through online and face-to-face recruitment increased, contributing to stable profit. Profit in the fourth quarter is down compared to the third quarter, but this is due to active investment into advertising for new policy and also expanded sales of foreign currency-denominated investment candles. This means that we have US dollar-denominated liabilities and hold US dollar-denominated assets. And finally, the currencies are matched. However, accounting-wise, the impact of Forex is different from assets to liability, and we had a negative impact in the fourth quarter but we have already implemented countermeasures to minimize this impact. Segment assets was increased by 24% due to higher-level VUM, thanks to the increase of new policies. Moving on to banking and credit segment. Segment profit was 48 billion yen, up by 8.9 billion year-on-year. Similar to Oryx Life, non-face-to-face online activities were leveraged in order to capture the demand for real estate investment loans and that we have seen stable growth in both profit and assets. Moving on to aircraft and ship segment. Segment profit was down by 40.5 billion, but we secured 30.8 billion yen profit and profit increased compared to the third quarter. As I explained in the impact of COVID-19 as for aircraft leasing business, we are cautious. However, Well, depending on when the international flights recover, we can have some expectations for recovery for the future. Moving on to OECD USA. Segment profit was 43.6 billion yen, down by 13.1 billion yen a year. And in the beginning of the term, we had some reserve and impact for energy-related assets, translating into negative profit. But we have seen some recovery from the second quarter, and the profit level remains high. In the third quarter, we acquired a major arranger targeting low-income housing called Boston Capital. And the OCU in this field has become top player with this acquisition. And at the end of March 2021, AUM stood at $78.1 billion. Moving on to OX Europe. Segment profit was 37.9 billion yen, which was done by 5.9 billion yen year-on-year. But last year, we booked profit from the sales of part of the business of Robeco Sam. So if we exclude this impact, actually the profit has increased. Globally, this segment has done well, and the market is seeing a rapid recovery. And the AUM at the end of March 2021 was 307.4 billion euros. which was a major increase compared to the previous fiscal year's end. And we have seen a very steady increase of AUM balance as well in this fiscal year. In the fourth quarter, we have acquired 70% equity of asset management company in the infrastructure alternative investment called Gravis Capital Management. We will continue to invest into investees where we can leverage our strengths in the area of asset management as well. Moving on to Asia. and Oceania at the end. Segment profit was 14.7 billion yen. And although some impairment was booked with some PE investees, we have seen solid profit coming from local operations in China, Taiwan, and Australia. We have also booked gain on sales and evaluation with some investees. And that's all from me about the performance at the end of March 2021. Now we would like to ask our CEO, Mr. Inoue, to explain the business.

Oh, Inoue there. So this is Inoue from Oryx. So the state of emergency has been repeated. And just like the prior occasions, unfortunately, this presentation session would have to be carried out in this format. I'm sorry for the inconvenience. Let us start my explanation from page 7. So 2021 margin net income was down by 36.4% year-over-year at 192.4 billion yen. So a large decline from the prior year is something that we have not experienced since the global financial crisis, and we are terribly sorry for this result. So the major attributing factor to this result was aircraft-related businesses, Kansai Airport Concession, as well as real estate operation businesses. So the P&L of these areas, unfortunately, have declined by 99 billion yen year over year. But these businesses, we hope, will start to recover rapidly once we start to see the end of COVID-19 pandemic. Of course, it is dependent on how fast the vaccination is going to proceed. However, we think that we'll be able to start making positive contribution from these businesses as well. 2021 March end. a shareholder's return. At the time of interim, we have said that we'll be paying out 76 yen per share or a payout ratio of 50% whichever higher. So this time, we have decided to apply a payout ratio of 50%. So 78 yen per share for the whole year. In other words, in the second half, per share dividend is going to be 42 yen. As for the financial soundness, S&P Moody Fitch, in fact, has given us the credit rating of single A minus with outlook of negative. R&I, double A minus with outlook of stable. But depending on the progress that are to be made in our pipeline, there may be some stress that will be put on the credit rating, which may result in the downgrading, which I would like you to bear in mind. Now, in 2022, March and net income, we target at achieving 250 billion yen. As for the full-year dividend, we target to pay out 78 yen, with the interim dividend to be 39 yen. Of course, there are so many complex external factors that affect us, so this year is going to be pretty tough for us to focus ahead. But at the time of the interim for this fiscal period, We hope that we have some more clarity, so we hope to be able to revise our net income target at that time. Now, as to FY22 March end, we have set aside a share repurchase program of 50 billion yen, so the total payout should be on and around 57% for this year. So please refer to page 8. Here in Japan, it is very much dependent on how COVID-19 is going to trend going forward, which would give us some further clarity. But for the time being, I think we have to continue to watch over the development. But in the Western countries, inclusive of Europe and the United States, The vaccination, in fact, is progressing quite rapidly, we believe. So, therefore, we hope to be able to recover our businesses in those geographical locations. However, in the developing nations, inclusive of India, they are still struggling with COVID-19 pandemic. So, therefore, we have to continue to closely watch over the development in those countries as well. FI23 March 10th. we aim to recover back the net income of 300 billion yen. However, please give us a little more time before we can say this out loud with confidence. And unfortunately, at the 2021 March end, the ROE unfortunately was as low as 6.4%. To recover this ROE back to the level of 11%, is something that we take as we purchase, as well as rebalancing it by generating investment gains of the segment that are severely affected by the COVID-19, and also the improved... So if we were to combine all those efforts, we hope to recover the ROE in light of the business conditions by ways of allocating to dividend as well as new investment in general reserves as well as shares we purchase. It goes without saying that this policy... of course, would have to strike a right balance between the share price level of the time. And again, it goes without saying that as the management of Oryx, we are not satisfied with the current share price level. This is something that I felt the need to reiterate at this point in time. Now, at the end of this month, we will be concluding the acquisition of Elaban Energy SL. And through this company, we are going to carry out the renewable energy in European countries in earnest. In the last year, we have acquired Greenco, and in addition to that, the infrastructure fund asset management company, Gravis Asset Management, would allow us to perhaps explore a possibility of launching a renewable energy fund as well. Greenco, as well as Elalan, have various different projects in their development pipeline, and if you were to combine all that, the generating capacity would reach to somewhere around 17 gigawatts, with the project total amount being 1.6 trillion yen, of which 1.2 trillion yen will be procured by the project through the means of project financing, as well as cash on hand, and the financing by each firm. Now, in addition to that, several years ago, we had invested in geothermal business projects company, the largest of its kind in the world, Ohma Technology, 170 megawatt, with total project 100 billion yen, is underway. Now, in the next several years, the renewable energy area requires additional investment, and there could perhaps be a possibility of further M&A as well. In any case, it will remain to be one of our focal areas for RX. Here in Japan, The up and running environmental resources management Yori plant in the vicinity, the capacity of 1.6 megawatt dry biogas power generation plant is under construction and will be testing the operation this end of this month. The total amount of investment is 6.1 billion yen and the 500 metric tons of industrial and other waste per day is accepted at both Yori and its vicinity. And moreover, as the geothermal plant operation in Hachijojima, as well as at the Minami Kayabe in Hokkaido, the geological survey has been concluded, so we will be working at the development over time. The project, the total amount is 18 billion yen, with a capacity of 13.1 megawatt. Other than these projects here in Japan, The pipeline for renewable energy is now being secured to the extent of 80 billion yen or so. So please refer to page 10. Oryx Group, as a solar power operator, we are operating the facility of 870 megawatt of capacity. In 2018 June, we had established Oryx Renewable Energy Management, ORAM, which is an O&M company. And through this company, we were able to contain some of the degradation of the power, avoiding or minimizing the opportunity loss by making use of power generation monitoring system that is embedded with artificial intelligence. We have been proceeding with the digitization of the power plant. By avoiding the opportunity losses, we will be able to add up the profits by several tens of billions of yen. Based on this knowledge and health, as well as leveraging on the data that we have been able to collect, we are considering to take part in the AM activities for the third-party operators.

Please turn to page 11. Last year, we experienced a failure with a P investment for Kobayashi Kako. Currently, the company is under business suspension, and we are pursuing the possibility of turnaround. By the end of this fiscal term, we should be able to decide on the direction. As for PE investment, in the last several years, we have enjoyed a total of 200 billion yen worth of capital gain. Learning from the experience of Koyashikako, we will continue to be active in Japan, U.S., China, and Europe in major M&A projects including carve-out projects as well as business successions. In 2013, when we acquired Robico, the focus was mostly on traditional equity and fixed income management. But after that, a real estate organizer, servicer, and also low-income housing syndicator asset manager, Boston Capital, was acquired in the U.S., We have also acquired Gravis Capital in the UK. At the end of March 2021, our AUM stands at approximately 50 trillion yen. We will continue to conduct acquisition at the right times. We continue to invest into new logistics facilities domestically as well. Against the backdrop of a strong demand for e-commerce, there is a stronger need from overseas investors, and we are continuing the development, mostly in the metropolitan area. We already have a pipeline worth 150 billion yen, and we will continue to run the business model of turnover consisting of development, operation, and sales. As digitalization accelerates, there is heightened need for data centers. We will consider new form of data center with lower power consumption for both the new development as well as the replacement of existing facilities. I would like to report on the current status of MICE-IR. Osaka area is still in the state of emergency and The situation requires caution continuously, but our policy is to continue to assess the investment efficiency and respond accordingly. It is important for us to follow the government policy for decarbonization and minimize the risk which is specific to reclaimed land and improve the collaboration with MGM as well as group of local companies And also, we need to carefully consider whether the business case stands without the inbound traffic. In other words, we need to face this uncertain situation, and we may have to apply some conditions. But still, in that way, we are preparing the proposal for RSP. As for Kansai Airport, although there is no inbound traffic, In preparation for the Osaka Expo in 2025, we are receiving support from the central government, and we will be conducting a large-scale renewal of Terminal 1. And the cost of this renewal would be approximately 70 billion yen. Please turn to page 12. Next, I would like to touch upon ESG-related matters. In October 2021, we plan to renew our sustainability report. Based on the specific objective by the government for decarbonization, we will indicate our policy at Oryx, including CO2 reduction target. Oryx already has top-level renewable energy business in Japan, and through our network, we can continuously contribute for the decarbonized society, which is developing in various countries around the world. CO2 emission by our group in Japan was approximately 1.3 million tons at the end of March 2020. On the other hand, we're also contributing in terms of a CO2 reduction worth 3 million tons at the end of March 2020 through our renewable energy business. We are already... reducing three times as much as we're emitting domestically. So after the termination of FIT period, we can use the reduction of CO2 as carbon credit, and this has the potential of generating sufficient asset value. We are now calculating and aggregating the emissions of our group companies overseas. Considering how much emission is done by the group Maybe the overseas good companies are not emitting material amount, but by including the overseas data, we should be able to announce our CO2 emission in a more accurate manner. Challenges going forward include biomass mixed fuel, biomass called mixed fuel power in Soma Hibikina, and the operation of hotels, and the CO2 reduction at the waste processing plants. It is very important for us to address these issues one by one, specifically. Please turn to page 13. Oryx Group runs various businesses globally. We need specialists in each of these areas to be actively engaged. We provide a support system and programs to help them develop their own careers independently. Diversity and inclusion promotions are the sources of the growth for the whole Oryx group. In terms of female workplace participation, 40% of our professional staff are female and 26.2% of the managers are women. We are focused on supporting women's careers so that they can continue to work. in a better environment. In order to introduce fresh vitality and different perspectives into the group, we are actively hiring mid-careers. 60% of the staff that joined us last year are mid-career hires. We are also focused on disabled persons hiring. In order to promote this, we have established a special subsidiary for OREC's business support and they are contributing to the promotion of operational efficiency. And from 2016, we have started a project to transform the workplace, including work-style reform and providing better motivation for work, providing a better environment for people to be actively engaged. taking their own initiative, participating in the work. In 2018, we started providing support for business succession for medium- and small-sized businesses, including maintenance of employment, improved management system, as well as succession. We are supporting the employment creation and the local economy. Page 14 shows governors and... Half of the 12 directors at Oryx are independent directors. At one time, I sat on the nomination committee due to the request by the outside directors. However, since June, General Shareholders' Meeting this year, we went back to the structure where all of the members are outside directors. From FY21, we have increased the performance-based compensation and the share component of directors' compensations. And the ratio currently is 1 to 1 to 1 between fixed, bonus, and the share component. And we have also started discussing whether or not to reflect the ESG into the directors' and executives' compensation. High-level transparency and governance, we need to maintain and structure this. This is the basic stance. and we will continue to respond to the society's demand this way. And we will also respond to the requests and demands of the stakeholders, including shareholders, with regard to ESG. That concludes my presentation, and thank you very much for your kind attention.

Thank you very much. We are now ready for the Q&A session. If you wish to ask a question, please press 01 on your telephone keypad. After your name is announced, please ask your question. If you wish to cancel the question, please press 02. Now, if you wish to ask a question, you may ask up to one question each. Thank you. So, to begin with, From SMBC Nikko Securities, Muraki-san, please ask your question. I am Muraki from SMBC Nikko Securities. With regard to shareholders' return policy, now from Mr. Inoue, dependent on the progress of the business performance, you may decide to, or there could be a possibility of outward vision at the time of the interim for the net income. If that happens, the shareholders' return policy will be conducted in the ways of increase of the dividend or maybe a top-up of the shares we purchased. Could that be a possibility? And in conjunction to that, of course, there are various different investments, the unrealized gains, especially at the companies like Yaoi and also MICE IR, the major investment. At the time of fall of this year, Do you think that will be taken into account and would that affect your shareholders policy, return policy? So first of all, at the time of the interim, the revision for our earnings reconsideration, there could perhaps be a possibility of the revision, but it could be to the upside or the downside even. So of course, we have a great expectation to provide upward our guidance for this year. And if it goes beyond our expectation right now, 78 yen of a dividend is not something that would make our investors happy, for sure. So dependent on the execution of the projects in the pipeline, that will be taken into account. So we may decide to increase the amount of shares we purchase or the dividend payout. So we would have to decide that in light of the situation at the time. and also how do we foresee the business performance trending from here down the road. So I think it will be around October. We hope that we have a little more clarity. So I hope that this would be enough, and I hope that you are satisfied with this answer. Now, with regard to Yayoi and also the unrealized gain, of course we are thinking about what we can do about it. And if I go into much of the details, I think it will be a provision of insider trading information. So therefore, of course, there will be new, of course, investment opportunities as well. So it is not in my, of course, policy to increase the asset in a continuous manner. Rather, I think I am very much for the fact that we would carry out the rebalancing of the portfolio, and inclusive of like Yayoi, as well as in the United States. In other words, I think I will not be discriminatory in terms of making certain decisions. But with regard to MySciR, though, the execution of a MySciR project, and that, of course, is in excess of 1 trillion yen in total amount. So there is a CO2 emission reduction target which will be shared by the government, and how that would translate into carbon credit. But I think the investment amount will be somewhere around 1 trillion in any case. So with MGM and Oryx and Osaka-based companies that have already submitted their LOIs. I think in total of 500 billion or 600 billion yen of equity, and the rest will be procured from banks. So that is the idea for the financing as of now. So that may perhaps put a pressure on the dividend payout, or the shares we purchase is not our option. So I hope this answers your question. Yes, thank you very much. Well understood. Thank you.

Thank you. Diver Securities, Watanabe-san, please ask your question. Yes, this is Watanabe with Diver Securities. Page 7, shareholders return. You want to maintain the dividend level and Total return is indicated here. Do you plan to change this in the future? And also at the interim, do you plan to share with us more specific shareholder return policy? Got to pay right ratio. Interim dividend announcement. is usually done at this point, and we don't usually talk about the four-year dividend. But considering the special situations, 250 billion yen is not really back-to-cruise speed for us. So 250 billion yen, please accept this. But for the four-year, we will come to 78 yen, and 150 billion of share buyback, 157%. But this is all about an extraordinary situation. I hope you understand that. 78 yen dividend, would it be lower? Or if we cannot really achieve 250 billion yen for some reason, we want to commit to 78 yen. And we want to do the share buyback of 150 billion, regardless. We do have sufficient cash flow, so we should be able to cover all this. And net income achievement, to what extent can we achieve that? That's another question. Can we exclude the COVID-19 impact? And for the three businesses that I talked about, can we see improvement in profit very clearly? Well, 99 billion yen, lower than previous year, but if we can see gradual recovery, then we have to make changes to these numbers as well. So hopefully, during the interim announcement in October, we can give you some more specifics about this. And hopefully, after that, mid- to long-term policies, directions can be indicated. And as far as the shareholder return is concerned, we are really hoping that we can give you more specifics at that point in time. But this is all I can share with you right now. And this is me being very honest.

Thank you.

That's very clear. Thank you very much.

Thank you for the question. From JP Morgan Securities, we have Otsuka-san. Thank you for the opportunity. I am Otsuka from JP Morgan. So I have a question with regard to net income. So this year, 250 billion yen is your guidance. which means that you're expecting to recover back 60 billion yen or so. But if you were to break it down by 10 segments, which segments do you foresee the recovery coming from? So aircraft, of course, related businesses, leasing, especially back in December of last year. Abalone, of course, is one example. 30, in fact, bodies, of aircraft will, in fact, have to go through grounding, and that has been decommissioned as well. So therefore, the risk of the financing, in fact, the negotiation has been concluded. So it is in a favorable condition for Avalon, I must say. And as for the aircraft-related businesses, the existing LCC, there are some companies that have failed, but there are new LCC, 100 or so, in fact that have emerged so the narrow body needs in fact are rising from these new lccs so in the second half i hope to see the aircraft businesses starting to recover to be honest hotel businesses as well as in businesses here in japan is very much affected or influenced by the vaccination i am i have a kind of negative perception over the development of vaccination here in japan but still So this is why I am slightly pessimistic in terms of the recovery of these operational businesses in Japan. But of course, there is the renewable energy, Green Co., as well as Elalan, the pipeline. So those projects in the pipeline, in fact, are scheduled to conclude within this year. So therefore, the pension-related fund, we may pass the digest to those kind of companies, or we may decide to continue to operate or we may launch renewable-related funds through GrabBiz Capital. So there are various different options. So to be honest with you, tens of billions of profit can be generated from renewable energy. And also at the same time, the logistics facilities, there are several facilities that we are forcing ourselves disposing as well. So taking those into account, but I don't think I can carry on And you may think that that does not allow us to reach to 250 billion yen, but with the existing line of assets, we should be able to recover back to this level. So, you know, there's Yayoi, as we mentioned by some other person. And also there are some assets that could be securitized in the United States as well. So therefore, I think 250 billion yen is not an aspirational target. But what I'm thinking, so therefore, is not achieving 250 billion yen, but going beyond and going back to the level of 300 billion yen. But if we become too aggressive, we may make mistakes, just like we have done with Kobayashi Kako. So we would remain to be cautious somewhat, but the 250 billion yen is not an unachievable target. So that's the answer to your question, I hope. Well, in short... with base profit. So is there any kind of risk that put a lot of pressure on this base profit? So that was my impression from what you have shared. So especially the corporate financing related businesses, we are not going to be engaging the lower spread businesses and inclusive of regional banks. There is, you know, refinancing that is underway. So therefore, we don't want to stretch ourselves into those areas of businesses. And the new businesses, we have not been expecting very much other than the logistics investment. So the logistics facilities investment. And so more than 5% or ROI, and also NOI of 3% or beyond. So therefore, if there was to be an arbitrage that could be enjoyed, And there are about 10 or so deals in the pipeline. And we may be able to generate some investment gains from the disposition. So like banks, we are, of course, not thinking about depending on those kind of financing institutions for the further financing. Thank you very much for the details. Thank you. Thank you.

Mitsubishi SJ, Morgan Stanley. Sujuno-san, please ask your question. Thank you. You spoke about the current credit ratings, and you said if the current situation continues, downgrade possibility does exist. That's what you mentioned. If the current situation continues, ROE remains to be low. So downgrade is a possibility, I suppose. But why did you intentionally mention this, highlight this in this presentation? And in terms of shareholders' return, you will revisit this before the end of the fiscal year, and you will maybe make some announcements about this in autumn timeframe. So up until then, what can change? Can we expect dramatic improvement in profit? Or can we expect major improvement in the coverage in terms of vaccines in Japan, changing the situation completely? I don't think so. So what would be the factors that need to be materialized in order for us to see a positive revision of shareholders' return? I cannot really think of anything. With regard to mice, IR, there are many conditions now that have to be fulfilled. There are some more restrictions. That's the impression that I got from your presentation today. So maybe the project will be delayed even further or maybe reduced in size dramatically. And if the scenarios come true, how would the scenario develop? Maybe this is just my own thinking, but can you please give us more details? As far as downgrading is concerned, maintaining single A is the standard message from Oryx. And the other one, that was about 80 yuan worth of project. And the other one, once this is executed, S&P RAC ratio is lower than 10%. Which means that it wouldn't happen immediately, but when the timing of review comes around, it's possible that we would be BBB+. So, what we wanted to do was give you a heads up. And Oryx's financing situation or Oryx response would not change at all because of this. It's very simple. We have been talking about simple A all the time, and we will be triple B+. So we just wanted to give you the heads up. That's the only thing that we wanted to do. And of course, there are various assumptions with regard to MySIR. Maybe the way I explained was not sufficient if you had such a negative impression. I would say that this is a very large project. And Osaka Mice IR is Oryx and MGM. There's nobody else. That is the issue. In other words, with the prefecture of Osaka and the city of Osaka, we have to continue to negotiate. And If the state of emergency continues to be in place, how do we do the presentation? Do we want to really push this and force this? And the expo is in 2025. By which time COVID-19 should be over, but will expo really take place? And for the expo, infrastructure must be prepared. But in order to prepare the infrastructures, there's going to be an impact on mice IR as well. If there is no expo and no infrastructure building, then we would be in trouble. So we are providing certain conditions as we negotiate with the prefecture and city of Osaka. That's what I'm saying in terms of conditions. And I don't think you should really take this whole situation too negatively, so I just want to make some corrections. Now, overall... The numbers do not look very positive or rosy, according to your assessment. But we're not really talking about that rosy story. With our existing assets, once the COVID-19 impact is over, 99 billion or 100 billion yen catch-up would be easily done. And we also have new deals in place. Which means that... By entering, we should have a better idea about the outlook and give you a clearer idea. That was the meaning of this explanation today. So I do apologize if you took it too negatively, if the impression of my presentation is too negatively or too rosy. I don't really know how you perceive my presentation, but 25 billion, we believe, is achievable. And there is also potential upside. In which case, at the interim, we will adjust some numbers and give you the present explanation. That was the message that I was intending to deliver today. I see. Susan, does that answer your question? So upside to 250 billion. It was very difficult for me to think that it was going to be realistic as a scenario. I was wondering what kind of environment would enable such a wonderful upside for us. So I just wanted to know more details. 250 billion yen is the achievable level that we are indicating. And we say 250 billion yen. And from your perspective, the number may be too small. Maybe some of you believe that this number is too low. But anyway, we are talking about the 250 billion. And in the meantime, we can catch up with the situation. There could be a potential upside, but we cannot really promise that right now. We need more time to talk about the upside. That's the message. I understand. Thank you very much.

Thank you for the question. So Sasaki-san from Bank of America. My name is Sasaki. I would like you to give me a brief answer to my question. So I think you have made the use of the same kind of schematic previously. So after 26 March, you have no indication of 26 March end, and there is no mention of 500 billion yen. So I just wondered why this was the case. And in terms of the presumption, 2.6 trillion yen worth of pipeline and 1.3 trillion yen. So I believe you have shared with us the pipeline of 2.3 trillion yen or so. So how is this right now? So 192 billion yen is the only amount that we were able to generate this time around. So it's just that we turned a little humble and decided not to mention this 500 billion yen of a target. So immediate target for us, of course, would be 250 and then 300 billion and 400 billion and so on and so forth. So therefore, otherwise, unlike Mr. Sun or Toyota, you know, you may think that, you know, we are almost a negligible company. But of course, we would do our best. You see, 192.8 billion yen of net income is such a humble amount of profit. So this was why we were hesitant in mentioning this target. So one, two years ago, we did generate 300 billion yen, so this is why we have shared with you the target of 400 to 500 billion yen. But even if it was to be just a pie in the sky, but we were hesitant in mentioning this target of 400 to 500 billion yen, we do have various different, of course, projects in the pipeline. On an EVS basis, it will be somewhere around the numbers that you have mentioned. But on the Japanese side, So inclusive of logistics facilities, it is about 200 to 300 billion yen or so. Erawan, Greenco, especially with Greenco, as you know, in India, the COVID-19 pandemic is pretty serious. So therefore, the development, in fact, is delaying. And with regard to Erawan, at the end of May, the construction work will be completed somewhat. So How does that contribute to the profit? So do we divest or do we hold or do we operate? There are various different options. So that would affect the total amount of the deals in the pipeline. We do have this 1.23 billion yen of a deal in the pipeline still. So in the United States recently, 140 billion yen of a deal emerged, but as a result of due diligence, we were not able to carry out the full-fledged due diligence. And going over to the location and engaging ourselves in a thorough discussion was not possible. So this was why we had to decline the deal. But once the COVID-19 is over and done with, we will be able to resume these deals. And although there is a certain kind of, you know, the range may be broad, in terms of what's in the pipeline, but the ROA of more than 3% can be achieved, we think, in terms of the investment that is in the horizon. But it does not, of course, contribute in immediate terms to a P&L. So this is why. When will that start? 23, 24, 25? So we would be very cautious in analyzing the numbers and so that we know when to execute these deals and this is why we have not made a mention of what you have asked for so just to confirm so or excuse for the long term so you have not changed your views on a in a long term no we haven't thank you for that but i think last time in 2024 400 billion yen and 26 500 billion yen we may have shared that so That may delay for maybe one or two years, perhaps. But that is something that was unavoidable because of COVID-19. Yeah, but you see, there are, you know, someone like Mr. Sun who is generating the profit and achieving record highs. So this was why we don't want to give excuses by telling you that it's all COVID-19.

Thank you. North Securities, Takamaki-san, please ask your question. Yes, this is Sakamaki, Numerous Securities. I have a question about page 12. Environment and energy. It seems that you are really highlighting this business a lot. And you have the reduction target. And depending on that, importance of business may change. I was wondering if the size of the business would shrink in some areas. No, that doesn't happen. Several years ago, solar business increased to full scale, and CO2 emission was not considered at all at that time. We just look at cash flow, FIT, about 40 yen, generating enough revenue, so we decided to do this business. And cash flow, once we have enough cash flow, we thought we would sell this business. If we sell this asset right now, capital gain would be maybe 2 to 2.5 times. However, because now we have the CO2 problem, we put a stop to this. If we hold and operate this business, including carbon credit, we may be able to enjoy this as a new asset. This is the perspective. So to be honest, for solar, we just look at the results and it turned out to be a good asset. CO2 reduction. Hotels and inns, this is the biggest concern for us. CO2 emission from this business. We need to do something to reduce the emissions. And as I mentioned before, Hibikidana and Soma, as I mentioned, we have to figure out how to work this out. Luckily or not luckily, METI says that the mixed fuel, including coal, doesn't have to be finished by 38, and if we leave it until 2038, depreciation will be completed, so investment will be zero, which means that if we continue to generate power from mixed fuel, Well, in the past, we could get more revenue, but anyway, by 38, maybe we have to rebuild everything and turn it into power generation based on biomass. We have to consider all these different possibilities. Several years ago, we had a plan that was for this power generation business, but now we have to rewrite the scenario. Other than that, We're not really changing or transforming any of the businesses. Does that answer your question? Yes, thank you.

So thank you for the question. So it's time for us to conclude this session. So the next session will be the last question. So from Citigroup Securities, we have Niwa San. Thank you very much for this opportunity. I'd like to ask a question about new investment. So when you provided the answer to Mr. Sasaki, I'm referring to page 7 and 8. And in the last year, 50 billion yen was the amount. So what is the image for this year? And the second question, on page 8, in order to achieve 400 billion yen of net income in the year after next, or how... much of an investment is needed in order to achieve this goal every year. Because of Kobayashi Kakko, you had shared with us your cautious attitude that you're applying, but how much of a new investment is to be made in order to achieve this numeric target? So as to Kobayashi Kakko, to be honest, we had failed in our due diligence. That was a mistake. We do joke about it, but all those people who graduated from the third-rated kind of university may have arrived at such a deal. So this is why we need to invite an expert for the due diligence of such deal as Kobayashi Kakko. But in any case, it doesn't mean to say that we would kind of shun away from making your investment. It was certainly a valuable learning on our part. So we would, of course, remain to be cautious in carrying out the due diligence. But in any case, my policy is that we need to be thorough in the due diligence processes, and it should not be half-hearted. And if we have some kind of anxiety as a result of due diligence, the rep and warranty may be perhaps made a little more stringent, perhaps. So in any case, we would, of course, remain to be cautious. I just have to describe it in such a way. But for myself, 20, 30 billion yen of a loss can be borne is not what I want to be saying. But I think that amount is not something that is recoverable. So what was the other question? Thank you. As a matter of fact, the current fiscal period that is up and running running as compared to last year how much more would you be investing you know how much would you be investing newly every year in order to achieve that profit the goal I think 300 to 400 billion yen of an investment should be continued and 200 to 300 billion yen of an existing asset can be securitized and we have 13 trillion yen of total assets as of now and I think we have been explaining this over and over again So this 13 trillion yen is to be increased to 14, 15, and 22 trillion yen. I have some doubts about it because 32 trillion yen, perhaps at the most 15 trillion yen, we need to, of course, reshuffle our portfolio, and we want to bring up the ROE to teens percentage. And so this is why, which means that it would push down the ROE, as a matter of fact. So in order for us to achieve our numeric targets, 300 to 400 billion yen worth of new investment may have to be made every year. So 200 to 300 billion yen worth of securitization may have to be done as well. So these are the ideas that I have in order to achieve our target. When you said 500 billion yen, you meant by investment amount or what? Yes, exactly. I was referring to the numbers that you have mentioned in the past. And... So not just the existing line of businesses. There are three areas that are severely affected by COVID-19. 90 billion yen worth of loss, unfortunately, was experienced by these three major businesses. Of course, we will be able to bring this back if the COVID-19, of course, is over and done with. So going back to 300 billion yen level is not a difficult task to be concluded. And of course, if we were to execute all that that is in the pipeline, so 50 billion, 70 billion of our profit contribution can be expected. And also here in Japan, the private equity investment, excluding Kobayashi Kako, that is, in a year or two years' time, I think there are some deals that allow us to generate some capital gain as well. So if we do a good job of managing all this, 300 to 400 billion yen of an achievement is not... That's tough, of course, depending on the market, I would have to add. So that's my idea. Thank you very much for all the details that you have shared. Thank you.

Thank you. That concludes the Q&A session. Mr. Inoue, please give us your conclusion, concluding remarks. Thank you very much. 192.4 billion. We find this number very regrettable. And in relation to that, we will be issuing dividends. Maybe not to your satisfaction, but we will be delivering the dividends. We want to go back to cruise speed and achieve more than 300 billion as soon as we can. So I hope that you can give us some time. Thank you. That concludes the teleconference by Oryx Corporation. We would like to thank all the participants for staying until the end of the program.