Pachinko firm aims to win big at home with HK gamble
Dynam Japan, the country's No 1 pachinko operator by number of halls, says it chose Hong Kong to float its shares because the market is recognised worldwide, which will help to improve its status in the industry.
It is the first pachinko company to go public. And with 355 pachinko halls, it is the industry leader in Japan, even though its market share is just 3 per cent.
Dynam is expected to begin its public offering next week and trading in the company's shares would start in early August, according to a market source.
'We tried our best to get our shares listed on the Hong Kong stock exchange,' said chairman and chief executive Yoji Sato. 'We regard Hong Kong as a more preferable listing than the Tokyo stock exchange. Hong Kong is an internationally recognised market.'
He said the company had also considered listing in Singapore and Seoul, but it had faith that a Hong Kong share sale would be a success, so 'we don't have to consider other markets'.
Given recent market volatility, Sato said a relatively low issue price was preferable because 'if the market is improving the price will get higher and higher'. Sato and his family hold an 80 per cent stake in Dynam to make them its biggest shareholder.
He said the company also hoped that Hong Kong could be a platform for the company to expand elsewhere in the region.
'If you look at the Japanese [pachinko] industry as a whole - against the backdrop of it being an ageing society, and the population declining - almost all industries are facing a somewhat negative trend,' he said.
Sato did not elaborate on the Asian expansion but said the company would not open pachinko parlours in Hong Kong. 'Pachinko is strictly regulated. Without the registration we can't do it - that means we can't do it [in Hong Kong],' he said.
The company would instead focus on boosting its market share in Japan, mainly by opening new pachinko halls. It runs three types of parlours there - traditional halls aimed at men who play pachinko frequently, and its Yuttari Kan and Shinrai no Mori halls, which have a broader range of players.
It plans to build 75 new pachinko halls in the next three years, mainly in rural areas.
Pachinko is one of the most popular forms of entertainment in Japan. The industry is worth 19.4 trillion yen (HK$1.90 trillion) and accounted for 28.6 per cent of the country's entertainment market in 2010, according to the Japan Productivity Centre.
But the industry is highly competitive, with more than 4,000 operators. In Japan, 16.7 million people played pachinko in 2010, according to Yano Research.
Dynam rejected any suggestion the company had links to triad groups in business.
Company executive Hisao Katsuta said: 'We had to verify that no anti-social forces were affecting the business, and that's why the Hong Kong stock exchange allowed us [to go public].
'There is no concrete evidence that we are affected by or associated with such forces,' Katsuta said.