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Pachinko operator Dynam eyes more parlours in Japan

It has an ambition to operate 1,000 halls in 10 years and is in talks to start one in Macau

PUBLISHED : Thursday, 29 November, 2012, 12:00am
UPDATED : Thursday, 29 November, 2012, 3:46am

Hong Kong-listed pachinko operator Dynam Japan plans to open more halls in Japan to strengthen its market position while also seeking partnerships in Asia to expand outside its home market.

Chairman and chief executive Yoji Sato said the "internal target" is to increase the number of halls to 1,000 in 10 years from the current 356. But he stressed that it is a goal, not a commitment.

A game akin to vertical pinball, Pachinko is a highly fragmented market in Japan.

As the country's top pachinko operator by number of halls, Dynam occupies 2.72 per cent of the market.

If the Tokyo-based company could reach its goal of more halls, its market share could jump to 10 per cent. Today the aggregate market share of the top 10 pachinko hall operators is 8.7 per cent in terms of the number of halls, according to Dynam.

It has opened one new hall since the stock started trading in Hong Kong in August.

The company said it would increase the number of halls by opening new ones as well as through mergers and acquisitions.

"One third of the new halls will be opened through acquisition," said Sato.

He said that while the company would focus on the Japan market, it would also actively look for opportunities to tap into the other Asian markets, including Macau.

"We are discussing with potential partners, but at this stage it is hard to tell (when the deal can be realised)," he said at a media briefing on the company's latest results briefing yesterday.

Dynam reported a 25 per cent rise in profit for the six months ended September 30 to HK$927 million from a year earlier.

Revenue went up 0.8 per cent to HK$8.2 billion.

Gross pay-in, which is the amount received by pachinko hall operators from renting pachinko balls and pachislot tokens to customers, increased by 5.1 per cent to HK$46.5 billion over the period.

In Japan, the pachinko market measured by gross pay-ins has decreased to HK$2.1 trillion in 2010 from HK$2.7 trillion in 2006, Dynam said.

The company expects the market to bottom out in 2013, when the effect of introducing machines in 2007 that cost players less to play wanes as the market becomes saturated.

The share price of Dynam, the first Japanese company to go public in Hong Kong, fell 10.4 per cent to close at HK$12.54 each on the first day of trading.

The stock went up 2.8 per cent yesterday in a weaker overall market to close at HK$14 apiece, hitting its offer price.

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