ORIX Jumps into Chinese Real Estate Market (IX)

ORIX Corp (IX) is reported to have invested about 5 billion yen (US$42.8 million) to acquire a 10% stake in Hong Kong headquarted, Chinese real estate development firm Tien An China Investments. Among Japanese ADRs, ORIX may be the most liquid and offer the most exposure to Japanese and now also Chinese real estate. The stock has had a tremendous climb in the past year but based on the improving real estate market in Japan and higher commercial tenancy rates in China, it could be poised to move higher. The difficulty with buying is trying to find an entry point. Consider using limit orders since ORIX is thinly traded and as a result can have wide bid-ask spreads.

Yahoo! Finance News reported that ORIX also plans to dispatch officials to serve in executive roles at Tien An. Asia Times Online wrote that ORIX "intends to jointly develop and invest in office buildings, commercial facilities and other projects" with Tien An. ORIX will become its second largest shareholder after Sun Hung Kai & Co., which holds 48.6%. Dow Jones notes "Orix has been expanding its Chinese businesses in recent years, mainly in areas related to its mainline leasing operations. Recently, Orix took a 25% stake in a railway equipment leasing firm set up by China Railway Materials & Supplies Corp., a state-owned trading house."

IX 1-yr chart:

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[Steven Towns:]

In Wednesday trading in Tokyo, Merrill Lynch Japan raised its price target on ORIX to 38,000 yen. ORIX closed up 1.45% at 34,950 yen, setting a new all-time high.

2006 Mar 29 08:59 AM