The Weekly Comment by Pelham Smithers
Like most westerners, I was completely bemused by pachinko when I first arrived in Japan, but in 1983 there genuinely wasn’t anything else to do of an afternoon and when on a Kinki Nippon Tourist domestic tour of Hokkaido, I joined the rest of the tour in going to play pachinko, and waste time and a bit of money. Actually, I was wasting money pretty quickly, and this was noticed by my fellow tourists, who decided to take charge, initially by trying to explain to me how to play it and then, when I proved incapable of doing what they said, literally holding my hand steady on the wheel, while the balls fell into the appropriate hole. I won enough to get a cheap digital watch, which I didn’t exchange for cash, as it did at least give the impression I was ahead on the day, even if I really wasn’t. Times have changed and pachinko has competition for eyeballs, but it remains hugely profitable even if it is in decline. Pachinko parlour operator Dynam (6889 HK) has annual profits of ¥17bil on ¥152bil in revenues, while equipment maker (for both pachinko and pachislot) Sankyo (6417 JP) has profits of ¥10bil on revenues of ¥86bil. However, the real money is to be made in the sister business, Pachislot, which as the name suggests is a mixture of pachinko and slots. There’s a skill element to Pachislot, so a skilled operator can beat the average, but also Pachislot payout odds can be varied by the parlour operator, and thereby used to entice gamblers. A parlour would have 40 slot machines, with 35 set to lose money but 5 set to win. An average player might think that they are winning because they are skilled, rather than because the odds were set in their favour.
Reports / Flash Notes Published This Week: Headlines at a Glance
1. Rakuten (4755 JP) – Can it Replicate Jio?
2. Isuzu (7202 JP): Upside Earning Potential in FY18
3. Rohm (6367 JP): Powering Up
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics, Electronic Components, Gaming
1. Digitimes Forecasts Strong iPhone Shipments
2. What is Dragalia Lost, and Does it Matter?
3. Square Enix (9684 JP) at Gamescom
4. Capcom (9697 JP) at Gamescom
Chemicals / Materials
5. Shin-Etsu Chemical (4063 JP): Some Clouds on the Horizon for PVC
6. Apple-Related Shares Firm
7. HDD Supply Chain Optimistic Despite SSDs
8. NAFTA: Markets Relieved; Moderate Changes Only
Auto Parts / Machinery
9. Autonomous Driving Still in a Haze
10. Daikin’s (6367 JP) Relative Outperformance
11. Ichikoh (7244 JP) Rises Ahead of Analyst Meeting
12. Could / Should Japanese Mobile Phone Bills be Cut 40%?
13. CyberAgent (4751 JP) Shares Exceed Pre-Earnings Level
List of PSA Published Reports Since ??????? to Date
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