Good read! I agree with your sentiment that it's cheap and that you don't need to do a DCF. If you have to do a DCF to figure out if it's cheap or not, it's not.
I'm totally ignorant on this space and generally bearish on casinos/gambling (at least in the U.S), but Sankyo is obviously cheap. Is Pachislot taking share from traditional Pachinko and can they compete there as well? Even if earnings do decline from here and that's not a given, it's interesting.
Management forecasts increasing revenue next year +11% which is a positive. Op income set to increase +1.7% too.
This is a bit larger market cap than most of my JP basket, but I love the buybacks. Will likely take a small position here as well.
Thanks! It was your substack that kind of rekindled my interest in Japan and I own several of the stocks you've written about.
On pachislot vs pachinko, I don't have great industry wide data (it's all very out of date) but based on recent earnings calls the pachislot category has been growing much faster recently. That could just be because the "smart" pachislot machines hit the market around six months earlier -- and the hit titles are yet to come for smart pachinko. It's also possible the pachislot machines are more appealing to a younger crowd. Somebody who lives in Japan would probably have a better read on this.
I have moderately high conviction that earnings will be strong for at least a couple more years as these new machines boost sales. So the earnings decline is definitely not a given. And yeah, the buybacks are the thing I like most about this stock. I think they'll just keep shrinking the share count.
Idk about you but I don’t like a company that is buying its own stock while it’s declining. Buying its own stock is equivalent to believing in the long-term future of the business.
Good read! I agree with your sentiment that it's cheap and that you don't need to do a DCF. If you have to do a DCF to figure out if it's cheap or not, it's not.
I'm totally ignorant on this space and generally bearish on casinos/gambling (at least in the U.S), but Sankyo is obviously cheap. Is Pachislot taking share from traditional Pachinko and can they compete there as well? Even if earnings do decline from here and that's not a given, it's interesting.
Management forecasts increasing revenue next year +11% which is a positive. Op income set to increase +1.7% too.
This is a bit larger market cap than most of my JP basket, but I love the buybacks. Will likely take a small position here as well.
Thanks! It was your substack that kind of rekindled my interest in Japan and I own several of the stocks you've written about.
On pachislot vs pachinko, I don't have great industry wide data (it's all very out of date) but based on recent earnings calls the pachislot category has been growing much faster recently. That could just be because the "smart" pachislot machines hit the market around six months earlier -- and the hit titles are yet to come for smart pachinko. It's also possible the pachislot machines are more appealing to a younger crowd. Somebody who lives in Japan would probably have a better read on this.
I have moderately high conviction that earnings will be strong for at least a couple more years as these new machines boost sales. So the earnings decline is definitely not a given. And yeah, the buybacks are the thing I like most about this stock. I think they'll just keep shrinking the share count.
Idk about you but I don’t like a company that is buying its own stock while it’s declining. Buying its own stock is equivalent to believing in the long-term future of the business.
They need to put HoloLive on their machines.