ORIX Corporation American Depositary Shares

Good evening, ladies and gentlemen. Thank you for joining this telephone conference of Oryx Corporation for first quarter consolidated financial results for the three-month period ended June 30th, 2021. The attendee at today's conference is Mr. Yano, Executive Officer, Head of Treasury and Accounting Headquarters. Before we begin, we would like to ask you to keep your communication devices such as mobile phone away from the telephone in order to prevent feedback. Or you can also turn them off. If we experience severe feedback during the meeting, we may have to discontinue the meeting for a short while and speak to the participant who may be causing the feedback with your kind understanding. Mr. Yano will do the presentation which will be followed by Q&A. The total duration of the meeting is approximately one hour. Now we would like to begin the meeting. And I would like to send a call over to Mr. Yano. Good afternoon. I am Yano from Oryx. Thank you for joining us today for the FY22 March and first quarter business performance announcement of Oryx. So without further ado, let me explain. Please I understand that you do have the deck in front of you, so please refer to page 2, and let me first share with you the accepted summary for the quarter. So first, the net income and ROE. The net income was up 65.2 billion Japanese yen, up 30% year over year, as well as quarter over quarter, with annualized ROE of 8.6%. With this, we achieved 26.1% of FY22 March and net income forecast of 250 billion Japanese yen, marking a very good start for the year. Next is segment profit growth. Japan, including Tokyo, is still in the middle of the state of emergency due to COVID, and therefore still affecting the three businesses, of real estate facilities operation, aircraft leasing, and concession. However, thanks to the diverse business portfolio of Oryx, we have a number of business units that are performing well. In fact, four segments, namely Oryx Europe, Oryx USA, real estate, corporate financial services, and maintenance leasing, close to sharp profit growth. The third summary point is investment pipeline and new execution. Despite the past environment, we have a rich pipeline that includes renewable energy and mine fire arc. Also, steady progress are made in execution of previously announced projects. While we will remain to be very selective in the choice of the projects, we intend to be active in the new execution as well. The last summary point is the shareholder return. No change to plan for the full-year dividend of 78 Japanese yen per share. 50 billion Japanese yen is the amount for the repurchase program for this year, So far, we are making steady progress by buying back 10.2 billion Japanese yen already as of June end. We will update you on the progress for July very soon. Now, please turn to the next page. As we explained, the net income for the first quarter was up 30.3% year-over-year and 29.5% quarter-on-quarter with annualized ROE of 8.6%. The right-hand side bar chart shows the trend of the quarterly net income and ROE over the past two years. As you can see, a steady recovery is continuing since we hit the bottom in the second quarter of FY21 March end. The result this time has exceeded the level of the fourth quarter of FY20 March end. Now please refer to the next page. This page shows the breakdown of segment profits. the total of segment profit was 106.9 billion Japanese yen. The bar chart on the right shows the trend of the segment profit over the past five quarters with dark blue showing the base profit on pale blue investment gain. Base profit was up 23% year-over-year at 77.2 billion Japanese yen. As I mentioned at the beginning, many of the segments performed well, exceeding the decline of profits in the three businesses that were impacted by COVID-19. On the other hand, investment gain grew significantly to 29.7 billion Japanese yen, almost double of that of the prior year. The result was reflective of timely exits for both domestic and overseas projects, including U.S. private equity investment and logistics facilities in Japan. Let us move on to the next page. This page gives you the further details of the segment profit growth. The chart on the left shows the quarterly trend of the segment profit over the past two years. The three businesses that are affected the most from COVID-19 are shown in gray color, while the others are shown in blue. As you can see, although most of the businesses other than the three businesses were also impacted by COVID at the start of the pandemic in the fourth quarter of FY20 March end, the businesses are recovering steadily with the quarter being the bottom. Moreover, the businesses marked a significant profit growth in this first quarter as compared to the previous quarter. We have made a note of some of the businesses that performed favorably, and I will explain the details later on. Please now turn to page 6 and 7. From this page, we share the breakdown of profits and assets. We confirmed a clear sign of recovery with seven segments expanded their profits as compared to the last quarter, while six segments grew their profits year-over-year. By the way, the table shown here, in fact, is pretty optimal in capturing the overall trend of the segment. However, as for the details by segment, please refer to page 11. So allow me to make use of this, the page 11, in briefly explaining each of the segments by using the page. And we made changes to the calculation method of the segment profit, as a matter of fact. So it is a change to the allocation method of the interest rate payment, as well as HD&A. And we also reflected the changes in a retrospective manner. So please be careful when analyzing these numbers. Please refer to page 11. Third, corporate financial services and maintenance leasing segment. Segment profit was up 53% year-over-year, and the segment ROA had improved to 3.4%. Profit for auto grew significantly as a result of positive used car market as well as recovery of rental costs. Rentex refrained from utilizing the technical center affected by the COVID to the full in the first quarter of the last year, but the business is recovering steadily and showing a robust trend. Taking into the account of lower interest rate environment, corporate financial services are being very selective in both loans and leasing deals, resulting in the decline of the segment assets. So let us move over to the next page, and now we show the real estate. Now, investment as well as facilities operation, in fact, have managed to reduce the amount of losses as a result of improvement in the occupancy, strong new demand at At the backdrop, the segment posted gain on sales of logistics facilities, resulting in the gain of profit. Daikyo, number of units delivered in the first quarter increased year-on-year, increasing the profit on sales of newly built condos. So please refer to page 15. This shows PE investment and concession. Domestic private equity investment, Kobayashi Kako, has not resumed their production yet. but the new investments we made in the last year are all performing well, contributing to the profit growth. We will continue to search for and consider new investment deals. Now, concession units. The financial performance of Kansai International Airport is recognized with three-month lag because in the first quarter of last year included the business result of pre-COVID times. So the profit this time around, unfortunately, posted a decline. However, international cargo is growing, showing some signs of recovery. So please refer to page 17. Environmental energy segment. Gain and appraisal was temporarily posted in Indian wind power generation in the first quarter, and the absence of that in this quarter meant reduced profits. but new businesses are developing in Japan, including PPA model. PPA model means that our company leases land or roof from a client who wants power, and we install solar power generation system and supply the power to that client. This is advantageous for a client because it leads to the reduction of CO2 emission. We expect the market to grow rapidly. New executions are expanding, centering around manufacturing and retail customers, both large and middle sizes. And the profit contribution from overseas new investments will continue to be posted with a three-month lag. Green coal profit will be reflected starting from the second quarter, 11 from the third quarter. Please turn to page 19. This is the insurance segment. Non-face-to-face, including internet and mail order, continue to grow. And insurance agencies, banks, and our own reps providing face-to-face consultation were included in the Omnichannel. And we are providing optimal service depending on our customers' needs. Traditionally, we were focused on the third sector, including medical insurance. But now, our product lineup has improved, including the whole life insurance, denominated yen and US dollars, in order to achieve more balanced source of revenue. Results of liability was posted in the first quarter for former Hartford, and the absence of that meant that the segment suffered a decline in profit, but excluding Hartford, OX Life increased its profit. Page 21 shows banking and credit. Non-face-to-face sales was used taking advantage of online and real estate investment loans grew. Profits have been stable. In credit, we had small positive impacts from reversal of provisions for losses compared to the first quarter, where there was a slow demand for cash because of lockdown. Please turn to page 23. This is aircraft and ships. Other loans reduced the profits due to posting of losses from a lease contract for airlines by H&A Group. But H&A Group's restructuring is going smoothly. We do not see any big concerns going forward. As the vaccine coverage continues to expand in the US, Europe and Japan, the outlook for the aircraft leasing industry is looking brighter. In the second quarter earnings announcement of Avalon last week, Only 1.7% of the aircrafts are on the tarmac, which meant major improvement. And for aircrafts and ships unit, we saw profit increase due to higher level of a maritime mortgage. Please turn to page 25. This is Oryx USA. Gain on sales investment gains were posted in multiple PE projects, leading to significant increase in profit. Oryx Capital Partners dedicated to PE investment, is part of Oryx USA. And the Capital Partners invested into the largest service provider of traffic infrastructure safety called the Road Safe Traffic System, leading to the first exit for Capital Partners in five years after the establishment. It's not just their own money, but external investors have participated, which means that in the United States, we are actually doing asset management business and also in the PE investment business. And the real estate loan origination and asset management of fractured native loans are done by Lumint and the Lumint continues to be strong. Next on the page 27, this is Oryx Europe. Oryx Europe segment does asset management business. AUM is showing a recovery trend. and the balance at the end of the first quarter was 326 billion euros, posting a new record. Robeco is strong with a sustainable fund, and the AUM of this fund increased, leading to a higher level of a fee income. Listen to page 30 for Asia and Australia. Profit increased in smaller local operating companies with a fewer impact of COVID-19. This new execution accelerated in China and South Korea, and the auto lease in Australia also contributed to the profit. That completes the explanation about each segment, and now we would like to turn back to page 8. And lastly, I would like to explain about the future pipeline and new executions. In new executions, we will continue to focus on renewables, PE, asset management, and logistics. And we have a rich pipeline centering around these areas, and we will continue to promote new executions going forward. In environment and energy, we announced the closure of the acquisition of Elevan Energy, which is a major renewable player in Spain. It was made on 27th of July. So we have many development projects led by Elowan and Greenco, and we will continue to accelerate global deployment of our renewable business. Within Japan, I have already spoken about the PPA model, but in addition, we also have a dry biogas power generation. In June, we have completed the construction of the largest biogas power plant in Yorui town, Saitama prefecture. And this is now run on a test basis. And in the same month, in June, our first retail green board bond was issued by Oryx. And other than environmental energy, we have a diverse pipeline and we'll continue to build new executions. Between after March IRR, we submitted the proposal to a prefecture and the city of Osaka on the 20th of July, and the project is currently under bidding, and we will continue to contribute to sustainable growth of our economy and also tourism of the campsite area and the country. And in May, we invested, with a right of refusal, to the concession project of our water supply, industrial waterworks and sewage of Miyagi Prefecture. As for logistics facilities, we have multiple development projects in the metropolitan area where the demand is heightened due to the growth in EC. So we develop, we find the tenants and sell. This is a turn of the model that we will continue. Now, as of today, we're in the middle of a fourth state of emergency and the situation continues to be unpredictable. However, for the first quarter earnings, we could make a very good start. Rocketing coverage in Japan is improving, and we're really hoping that the situation will continue to get better. And we will continue to pay close attention to the shareholder return. So first of all, we want to achieve the 250 billion yen of net income, and regard to the 300 billion level as soon as possible, And at the next step, we will start preparing for the achievement of 400 billion yen. And we will continue new investments and also sales of assets and continue to improve the turnover in order to achieve ROE of 11%. That's all from me. Thank you very much for your kind attention. Thank you, Mr. Yamel. We are now ready for the Q&A session. If you wish to ask a question, please press 01 on your telephone keypad. And please start asking your question once your name is announced. If you wish to cancel the question, please press 02. So let us get started with Q&A. As to the number of questions, I would like you to refrain from asking more than one question. Well, first, from JP Morgan, Otsuka-san, please. Thank you for the opportunity. I am Otsuka from JP Morgan. As for the overseas businesses, so I have a question with regard to the interest rate. And if you could be so kind enough to explain Looking at the interest payment in the fact book, as compared to April to June last year, it has declined by 6 billion yen in terms of the interest payment. And thank you for sharing the numbers. But the 80 basis has declined for the funding cost, and I'm sure it is very much attributable to the interest rate movement in the United States. So this pace, this 17 billion yen of interest payment, Can I take it that this is likely to persist within this year, but the interest rate is, in fact, declining further? So the interest payment may perhaps improve further, and that may affect the yield of the asset as well. So how can I interpret this? Thank you for the question. So let me answer to your question. So with regard to the interest rate payment in the overseas markets, because U.S. interest in fact has declined, so therefore it has declined as well, the amount. But all the countries are in fact reducing their interest rates, so therefore this is likely to persist for now, for the time being. So the interest rate payment, in fact, is going to decline further. But with regard to the financial assets, of course we are thinking about the ALM, and basically... So with regard to the variable assets, we would try to procure the fund by ways of variable, whereas for the fixed versus the fixed. So therefore, while the interest payment, of course, is going to decline, I think the same is applicable for the EU to regain on the assets. And we may have made a mention of this some time ago, but I think it was 2 billion or 200 billion yen there was the mismatch between the fixed versus the variable and the floating rate. But we had halved the fixed rate amount by half or so. So, therefore, I think the mismatch, in fact, has been unwound. And so, therefore, so 1 million or so, in fact, has been fixed now. So, the decline of the interest rate, we have positioned nicely to benefit from the decline of the interest rate now. So that is true for the Asian, the countries of the Asian region. But the assets in Asian region, they tend to be, the duration tends to be about four years. In actual fact, the duration may perhaps be as short as two years. So that's where we are. So I hope this answers your question. Which means on the asset side, the yield that you can enjoy In the short run, you're not affected significantly. May I take it? I think that is correct. Thank you. Thank you. Thank you. SNDC, NICO Securities, Muraki-san. Yes. Environment and energy business, I would like to understand the impact of your investments. LR1 acquisition was closed. And how does it impact the goodwill calculation for the next fiscal year? And also, how does it affect the rating of the company? In terms of P&L, Greenco consolidated starts from the second quarter for Ella Wang asks, from the third quarter, I think that's what you mentioned. For this fiscal year, do you expect them to contribute to the profit at all? Please update us on this information. Thank you for your question. Allow me to explain. Greenco, this is equity method-based, which means that on the balance sheet, this is the equity method, so associated companies' investment is posted and goodwill and intangible assets do exist. For LR1, as we mentioned before, the valuation for future projects is actually possible, and that is why we have acquired them, which means that a certain amount of goodwill and intangible fixed assets will be included. As for the ratings, Moody's is seeing this as a positive move. They have a positive opinion. And S&P, according to RAC calculation, has a slightly negative view. That's the situation. But does it mean that there would be some immediate action? We don't know. We cannot say one way or the other. And impact on profits. Well, as I have mentioned before, This project is forward-looking, future-looking. So in the first year, the contribution may be small, but in the following five years or so, we expect the profit to grow. We expect that for both of the projects that you have mentioned. So maybe 1 billion yen or so for the first year, and over five years, maybe they will grow into tens of billions. And that's the rough estimate that we have for those projects. Does this answer your question? Yes, thank you. As for the rating, in the financial pages for the end of the package, you are mentioning that if there is a change to the rating, so the share buyback, the current plan and the future investments will not be impacted. by the change in the rating. Can you confirm this? Yes, that is our intention. That is the internal consensus. Thank you very much. Thank you for the question. Let us move on to the next person. Watanabe-san from Daira Securities, please. My name is Watanabe from Daira Securities. I have one question. And I would like to ask about the first quarter net income of 5.6 billion yen. Is it almost in line with your initial expectation? I just want to get the feel of your takeaway from this. Do you think that there could perhaps be an upward revision for the full years? and also a revision for the return. So I was kind of anticipating this kind of question to be raised. As a matter of fact, back in May, at the time of announcing of the full year result, the first quarter, as compared to the time then, the first quarter result was better than we had initially anticipated. So we were, of course, expecting the businesses to recover from the impact, negative impact from COVID-19, but also at the same time, I think we have been able to fare our time with COVID days, in other words. So in the first quarter, we did manage to achieve more than 25% of the expected amount of net income that we target to achieve for the whole year, which is a very good start. So What do we think about the full year then? To be honest, at the time of the closing of the first quarter, I think it is too early a stage for us to comment on the full year result. So at the time of the second quarter, we may have a better visibility for the full year. And if there was to be any necessary changes, we would announce the changes then to the full year business performance. But we are fully aware of your expectations. Thank you. I hope this answers your question. Thank you very much. Thank you. Thank you. It's hard to ask just one single question. With this earnings announcement, impact of Kobayashi Kako. This is the investment, business investment segment and all the other projects that are relatively well. And Kobayashi Kako is unable to operate its business. How much negative impact did it actually generate? That's my first question. And also, going forward, I understand that you're considering selling, disposing. What do you think is the likely scenario would be? Thank you for your question. As far as Kobayashi Kako is concerned, manufacturing and sales activities are suspended, so they're running deficit, to be honest. And maybe we did talk about this in the previous meetings before, but the sales is basically zero. And if we continue to operate, we are running about 1 billion yen deficit. And that is probably the amount of the losses that we're posting in this first quarter as well. And naturally, we are focusing on rebuilding, restructuring the company. And I don't remember the exact wording of your question, but you are suggesting that we're considering selling Kobayashi Chicago off. But no, that is not what we're considering. I do understand that from the investor's view, investment view, that may be an option, but for the time being, we are purely focused on restructuring, rebuilding the company. So ¥3 billion deficit generated by Kowei Shikako, and based on that, it means that all the other projects did much better to make up for that. So which ones did well? And do you think that performance would be sustainable, or is it just temporary? Well, we believe that it is sustainable. Our investees do contribute in terms of net profit for the term. For example, last year, you may remember our announcement, the corns. milking robot company, and there are some other companies. Some of the companies that we bought last year are already contributing to our profit. So for our PE investments, no one is really suffering from a big loss due to COVID-19. So in other words, all these projects are making sustainable, positive contributions. But compared to the last year's level, maybe about three companies are doing much better than before. And I was wondering if you could name names. Well, you did mention Korns and you also mentioned companies that you bought last year, I guess. Right. And I'm not very clear about which companies' names I'm allowed to announce. Or not. So that is why I'm struggling with the answer. I'm not trying to hide any information from you. Please don't misunderstand. I'm sorry. Understood. I wonder if there is any list of names I can refer to. Right. Apprecia is another example who did pretty well. I understand. Thank you. Thank you for the question. The next is Sakamaki-san from Nomura Securities, please. I'm Sakamaki from Nomura Securities. I have one question. Oryx Europe is the question. So referring to the segment, the profit, it is very much related to ESG fund, I believe. But how do you foresee the growth of ESG fund from here down the road? What is your growth expectation? excuse me because we really wanted to make a strong appeal of the strength that is enjoyed by OREX Europe and this is why we have made a mention of ESG but the market in fact overall was favorable and this is why the market in fact was supportive of the growth of the business of OREX Europe AUM in fact of course will grow as a result of the price hike of the names of different securities, but also at the same time. As I have said, the new money had flown in as well, and as a result of, of course, OREX Europe's capability being evaluated highly. So OREX Europe, there are four major different asset managers, and the Robico, of course, is playing a central role and which, in fact, has been displaying their capability in the sustainability-related investment and the sustainability-related assets, in fact, has been growing. And they are carrying out an active investment and not passive investment, and thereby they have benefited from the investment that they have been making. I'm sorry, my explanation may perhaps be a little brief. but that is all I can share at this point in time. And talking about, you know, how much of a growth has been enjoyed by sustainability fund, I'm sorry, I don't have any statistics ready available, so I won't be able to share the numbers. That's fine. Thank you. Thank you. BOA Securities, Sasaki-san, please ask your question. Yes, this is Sasaki, Bank of America. I have a question about how to read the performance. First quarter performance ended up being better than what you estimated in May. $250 billion was the original plan. If you exceed this, the difference in profit, will that be returned to the shareholders? or will you spend it in order to strengthen the financial health of the company, or will you invest this? And what is the likely usage of this difference? If the performance, the progress is favorable, when do you think you can go back to 300 billion yen? I do think it will happen earlier than what you announced in May. Thank you for your question. 250 billion, can we achieve this at all? Well, we have to do the 200 billion first for this fiscal year, so we should not sound too courageous at this point, but we will not be satisfied at 250 billion. We will attempt to go higher. And once we exceed the original plan, what do we do with that difference? You have mentioned three options, and depending on the situation, we want to strike the right balance among these three options. That's all I can say at this point in time. But the shelter return, of course, is one of the important themes for us. So we will, of course, keep that in mind. Either way, going forward, after we see some more progress, we will come back to this discussion point maybe at the next opportunity. And at this point in time, I'm sorry, but I cannot really share any more specific details with you. Was there another question? Second part of the question? Yes, when do you think you can return to 300 billion? Is it going to happen earlier than what you said in May? Or is the scenario still the same? Or what are your thoughts? Is it going to be delayed? No, I don't think it's going to be delayed than what we have announced. Of course, we are expecting it to happen earlier rather than later, but it's very difficult to say exactly when. But our hope is to achieve earlier rather than later. In the case of the 300 billion, is it the next fiscal year or this fiscal year or fiscal year after the next? I think that is a question that you're asking, but I have to apologize. I cannot really say anything at this point in time, but our hope is to achieve this number as early as possible. And our feeling is that it will happen earlier than what we expected before. But I cannot really say anything definitive because we don't have solid numbers. So are you already... certain that this will not happen in this fiscal year, before the end of this fiscal year. I cannot really say anything that would give you the wrong impression, so I should not say anything further, because otherwise I'll just be giving you a specific outlook for the performance. I understand. Thank you for the question. The next person is from City Group Facilities. And you have some, please. So one question. So US asset management businesses on page 25, AUM and AUA as well, referring to the chart to the right. So it looks as if you had already peaked out and the decline seemed to be quite significant. So the decline in the first quarter, what was the reason behind this decline? And what do you foresee happening in the future? The organic investment may perhaps be lacking, perhaps. So if you could be so kind enough to explain the trend on this page, 25 to the right. Sorry for that. For the first quarter, the decline for the AUM. So so the Brazil in Brazil there is an RUB capital so we had disposed of the business and this is why RER capital and we do in fact reshuffle our portfolio every now and then and so as for the existing asset management businesses we intend to of course increase the asset under management. And we do have some pipeline as well. And for sure, our intent, of course, is to increase the AUM, and that remains to be unchanged. In the previous fiscal year, SPCM, as you can see, so we had some replacement as well. So we did dispose of some of the investments And we have been, of course, acquiring some of the new assets as well, on the other hand. And I think this is just the future, in other words, a rebalance of the portfolio. So it doesn't mean to say that it is an experience of a rundown, but rather it is as a result of some reshuffling of the portfolio. Okay, thank you very much, Dan. Thank you. MISO Securities, Sato-san, please ask your question. Yes, this is Sato with Amiso Security. Kobayashi Kakko's future risk, that's what I want to ask you about. Specifically, associated companies preparing for litigation for liability, we have heard these comments. What about the risk for liability compensation by the business partners? Have you made assessments? Maybe it's difficult to talk about specific number, but can we expect this not to impact the overall profit in a significant way? As far as Kobayashi Kako is concerned, the biggest risk would be brand impairment of Koei Shikako and how we can rebuild that, how we can restart the production and also the sales activities. As far as the litigation is concerned, I don't think it would be appropriate for us to make any comments about what we are thinking or doing. because there are other companies involved. But of course, we take the situation into account and we are responding to these situations. Asset value estimation has been done and impairment was calculated as necessary. So going forward, we will continue to respond to the situation as necessary. Understood, thank you. Well, either way, as of today, I cannot really show you any optimistic scenario for Kobayashi Kako, but if you think about our group as a whole, on the whole, Kobayashi Kako should not have a huge negative impact for the group's profit. It's very clear. Thank you very much for your answer. Thank you for the question. The next person is from UBS Securities. Okada-san, please. I am Okada from UBS Securities. Thank you very much. So I would like to ask the question with regard to new investment execution amount. And the 500 billion yen is the amount that you have made newly in terms of investment. What is the progress for the first quarter? And with regard to PE investment, dependent on the region, so the level may have been remaining to be at a high level. But what do you think about the investment environment going forward? Thank you. So first of all, so far as the first quarter is concerned, I don't have the accurate number in front of me. But so far as the first quarter is concerned, there were no major investment that was made. Whereas in the second quarter, just as I have mentioned, so Erawan, in fact, will be closing the deal. So therefore, 100 billion yen or so will be the amount of investment. And so we will be consolidating about 200 billion yen or accessing 200 billion yen in terms of assets. So there are some major investments going forward. And as for private equity investments, those in Japan as well as in the United States, China, they have their different ways in making such investments. So let us put that aside. But in any case, not just limited to U.S. or Japan, in Europe as well, in the United Kingdom, in London, we have an office, and we are... We have acquired a company called Gladys, as we had announced previously, and we're putting different deals on the table for discussion. So in different locations of the world, we are considering different deals, and we would remain to be so. And in terms of the investment environment, I think that investment may be favorable, but I don't think the market would allow us to carry through major investment acquisitions It will not be available market for acquisition. But for sure, we do have a rich pipeline. And we are quite hopeful. And we may be able to share with you some results sometime in the future. Thank you. Thank you. Mitsubishi SJ, Morgan Stanley. Tsujino-san, please ask your question. Thank you. Aircraft lease. Oryx. Non-Avalon business. No gain on sales. Posted this time round. Investment into aircraft suites. I think the investor's appetite is coming back. It's recovering. That's what I hear. And maybe you're beginning to see that. Do you think the situation will enable you to have more investment gains from that? Another question about the aircraft, please. Some of the deferred portions. Is it the right way to say this? I don't know. But I think you can collect more. There's more opportunities for that, though. Avalon, but for Oryx Aviation, maybe the situation is the same. But depending on the situation they see, accrual-based is shifting to cash-based and can only be posted as revenue and that's pushing down the profit. If the situation goes back to normal, maybe the profit will increase, it will grow. With Avalon, This cash is about 10% or 11% according to the previous earnings announcement. I want to know the situation with Oryx business, and when do you expect the recovery to take place? When do you expect to go back to the way things were? Thank you for your question. Aircrafts are actually becoming more active, dynamic. And we are actually thinking about buying things that some investors are interested in buying. But Oryx Aviation used to sell to Japanese investors to get a huge investment gain. But those investors have not really come back yet. I think we have to wait for a little bit more. Yes, there are some sales or debasages, but... it hasn't really gone back to the original level. Some investors are professionals who really understand the aircraft and other investors do not understand, but I think things are moving ahead. Investors who used to buy aircrafts are now buying ships, for example. So there are some movements on the ship front. Avalon results are reflected one quarter later So H&A Group, for the first quarter, posted negative figures. But profit coming in June to Avalon will be translated into a number soon. So this will happen more and more going forward. And yes, as you have rightly mentioned, lease revenue, cash-based, and... Maybe sometimes the loss is posted and then there is a recovery afterwards. So we are expecting some recovery, but the question of when? To be honest, I would like to ask you for your opinion. I don't know when the recovery will take place. And we do have a plan or the estimate, and the estimate is not a big recovery in aircraft, even in the second and third quarters. we do not expect a dramatic recovery in this particular segment. In the first quarter, it's especially bad because of Hainan, but we do not really expect significant improvements in our estimates. I hope that this answers your question. Thank you for the question. The next person is Jeffrey's security sponsor, please. So I hope you can hear my voice. Yes, I can hear you well. So you may have already made a mention of what I'm just about to ask. For the first quarter, well, you see your business seem to be following a recovery trajectory despite the COVID-19 pandemic. So first quarter is going to be the jumping board, allowing you to continue to recover your business. So the businesses that were impacted by COVID, you had already made a mention. Does that mean that there are no business units or segments that are going to experience a slowdown from here down the road? And also, credit... I know that you have been quite cautious in terms of the credit business. These are right back from the overseas, but in Japan, the corporate businesses, is there any credit issue that you are watching over the development in a careful manner here in Japan? Well, to be honest, with regard to the credit, Yes, for sure. We are paying a lot of attention. And because there are abundance of money on zero interest rate, but it doesn't mean to say that the principal is not to be paid down. So we have to see how things would land or achieve soft landing. And it doesn't mean to say that we have a major concern. Do we have enough provisions You may wonder, but I would say that we have enough provisions, other ones, to prepare for any kind of mishap. But the asset, in fact, is on the decline. So, therefore, I think the risk on our part is more than one may perhaps anticipate. So I hope this answers your question. If there was to be any kind of area of concern, I may have made a mention during the course of the presentation, Asia, in India, as well as Indonesia, as well as in Malaysia, you know, whether the current situation is going to persist for some time to, you know, some time for now, then that may affect the businesses. So we are remain to be cautious so far as the credit is concerned. Okay, understood. Thank you. So the impact from COVID. So first quarter is going to be the jumping board, may I take it? And I hope that you are going to kind of recover the pace much faster as that quarter kind of proceeds. So of course, we will be affected. We will continue to be affected, especially for the hotels and inns. But it's not that the things have improved dramatically. to our favor. So therefore, I don't think the downside is something that is major. However, as to other businesses here in the Japanese market, I think people are getting used to, the businesses are getting used to COVID and the economy has started to up and run, getting used to the COVID days, and in the U.S. as well, they are recovering faster than Japan, and things are much better than before, for sure. So I hope this answers your question. We are continuing to accept questions. Since we see no further questions, we would like to close the Q&A session. Mr. Ayano, please give us your closing remarks. Again, I would like to thank you all for today. And this is the current status of our performance. I do understand that there are some more details that you would like to check with us, in which case please contact our IR team without hesitation. Thank you very much again for joining us today. That concludes the conference by Oryx Corporation. We would like to thank you all for staying until the end of this meeting. Thank you and goodbye.