Sankyo Co., Ltd. · TSE:6417
Sankyo — CLSA Japan Forum 2014
32 slides from Sankyo's conference presentation, Feb 27, 2014
Slide 1: Presentation on CLSA Japan Forum 2014
Presentation on CLSA Japan p Forum 2014 1st Sec. of the TSE #6417 Current Price: Y4,500 (February 4, 2014) Shares Outstanding: 9797.5 5 million Market Cap: Y439,188 million Kimihisa Tsutsui President & COO The Company's plans, strategies and forecasts, except historical facts, contained in this docu
Slide 2: Company Overview
Company Overview
Slide 3: Company Overview
Company p y Overview SANKYO CO., CO LTD. LTD 1st Sec. of the TSE #6417 Development, Manufacture, and Sales of Pachinko and Pachislot Machines 3 Brands Structure 2
Slide 4: 3 Brands Structure
3 Brands Structure Pachinko Pachinko and Pachislot Pachinko and Pachislot (In preparation of Pachislot ) Development and Development and Development and Manufacture Manufacture Manufacture Sales Sales Sales Masterpiece Masterpiece Masterpiece Fever Mobile Suit Gundam CR Evangelion Series J-RUSH Seri
Slide 5: 5-year Financial Highlights
5-year y Financial Highlights g g Consolidated: mil. yen FY 3/2009 FY 3/2010 FY 3/2011 FY 3/2012 FY 3/2013 Net Sales 187 877 187,877 222 673 222,673 201 606 201,606 173 682 173,682 104 150 104,150 Pachinko Machines 133,195 180,471 149,876 123,353 53,302 Pachislot Machines 33,598 23,698 30,316 24,282
Slide 6: Stock Information
Stock Information Price 4 500 4,500 (February 4, 2014) Currency in JPY M k t Cap Market C 439 188M 439,188M Trailing P/E (ttm) 71.86 Forward P/E (1 yr) 18.28 Price/Book (mrq) 1.01 Forward Annual Dividend Rate 150.00 Forward Annual Dividend Yield 3.33% Payout Ratio 60.96% 5
Slide 7: Analyst Coverage
Analyst y Coverage g Mr. Souichiro Fukuda Mr. Satoshi Tanaka Mr. Masanori Minami Mr. Yusuke Maeda Mr. Takeshi Koyama y Analyst y coverage g Mr Masashi Morita Mr. Mr Eiji Maeda Mr. by 7 firms Source: QUICK 6
Slide 8: Industry Trend
Industry Trend
Slide 9: Pachinko Rental Ball Fee and Leisure Market
30% of the Leisure Market 19.1 trill. yen Pachinko Rental Ball Fee 11.1 mil. people Pachinko Player Population 64.7 trill. yen Leisure Market Source: Japan Productivity Center “Leisure White Paper” 8
Slide 10: Structure of Pachinko Industry
Structure of Pachinko Industryy 19.1 trill. yen About 1.2 trill. yen Pachinko Rental Ball Fee Cost of Machine Purchase About 0.8 trill. yen Pachinko Machine Market About 3 trill. yen G Gross Profit P fit off Parlor P l About 0.4 trill. yyen Pachislot Machine Market 9
Slide 11: Size of Pachinko Machine Market
Size of Pachinko Machine Market 985 886 825 772 720 CY2013 3 332 3,332 About 10% decrease 2,900 2,602 2,494 2,234 Market Size (bn. yen) No. of Sales for Pachinko Machines (thousand units) CY2009 2010 2011 2012 2013 preliminary figures Data for CY2009- CY2012: Survey by Yano Research Institute Prelim
Slide 12: Size of Pachislot Machine Market
Size of Pachislot Machine Market 429 410 375 286 225 CY2013 About 3-4% decrease 1,259 1,326 1,284 979 766 Market Size (bn. yen) No. of Sales for Pachislot Machines (thousand units) CY2009 2010 2011 2012 2013 preliminary figures Data for CY2009- CY2012: Survey by Yano Research Institute Preliminary d
Slide 13: Share of Pachinko Machine Market (unit basis)
Share of Pachinko Machine Market ((unit basis)) 30% 25% Sanyo y 20% Kyoraku 2013 15% 13-14% 10% Newgin Sammy SANKYO 5% Heiwa + Olympia 0% CY2008 2009 2010 2011 2012 Source: Yano Research Institute 12
Slide 14: Share of Pachislot Machine Market (unit basis)
Share of Pachislot Machine Market ((unit basis)) 35% 30% 25% Sammy Yamasa 20% U i Universal l 15% 2013 9-10% 10% Kitac SANKYO 5% Daito 0% CY2008 2009 2010 2011 2012 Source: Yano Research Institute 13
Slide 15: Current Situations and Initiatives
Current Situations and Initiatives
Slide 16: Forecast of FY 3/2014 (Highlights)
Forecast of FY 3/2014 / (Highlights) ( g g ) Consolidated: mill. mill yen FY 3/2013 FY 3/2014 YoY Net Sales 104,150 160,000 +55,850 +53.6% Operating Income 7,023 28,000 +20,977 +298.7% R Recurring i g Income I 9 488 9,488 30 000 30,000 +20,512 +20 512 +216.2% 216 2% Net Income 5,853 , 23,000 , +17,1
Slide 17: Continuation of Challenging Business Environment
Continuation of Challenging g g Business Environment Pachinko Diffusion Index +70 Pachislot machine utilization tili ation rate +0 Overall business conditions -14.9 -31.8 -49.3 Pachinko machine utilization rate -61.2 -70 Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 2011 2012 2013 2014 Source: Enterta
Slide 18: SANKYO's Initiatives
SANKYO’s Initiatives Short-term measures Medium to long-term measures 2014 ((FY 3/2014 / - FY 3/2015) / ) 2015+ ((FY 3/2016+) / ) Consumption tax rate increase Concretization of the casino plan g wages Rising g due to Abenomics g Revision of regulations g governing gggame machine Pachinko/Pachislot
Slide 19: Pachinko Rental Ball Fee Is Linked to Salary Workers' Allowance
Pachinko Rental Ball Fee Is Linked to Salaryy Workers’ Allowance 21.0 19.3 18.8 19.1 45.7 Expect benefits from the 41.9 38.8 39.7 38.4 impact of Abenomics 25.2 25.7 24.8 25.5 20.8 Pachinko Rental Ball Fee (trill. yen) Salary Workers Workers’ Alowance (thous (thous. Yen) Pachinko Budget (thous. yen)
Slide 20: Pachinko/Pachislot Industry Vitalization Project
Pachinko/Pachislot / Industryy Vitalization Project j Cross-sector organization involving pachinko parlor operators, pachinko machine manufacturers, trading companies, and others related to the p pachinko/pachislot /p industryy Nichiyukyo 1. Cultivating more fans 2. Shifting from high-cost structure
Slide 21: Issues Targeting Establishment of Brand Power
Issues Targeting g g Establishment of Brand Power Parlors’ evaluation of products FY 3/2013 Q3 Q4 FY 3/2014 Q1 Q2 Excellent Refine regular products Evangelion 8 Good Fever Mobile Suit J-RUSH 2 GUNDAM Average Withdrawal of products Fever Tiger Mask 2 with low evaluations Below Average Fever Kamata Ko
Slide 22: Dividend Policy
Dividend Policyy Stable dividend Commitment to 25% payout ratio FY 3/2014 No dividend cut since the listing DPS 150 yen Including interim dividend 21
Slide 23: Contact Us
Contact Us +81-3-5778-7773 ir desk@sankyo fever co jp ir-desk@sankyo-fever.co.jp
Slide 24: Appendix
Appendix
Slide 25: Business Results for the First Nine Months of FY 3/2014
Business Results for the First Nine Months of FY 3/2014 / FY 3/2013 FY 3/2014 Forecast FY 3/2013 FY 3/2014 連結：百万円 Consolidated: million yen 9 Months 9 Months YoY (5-Feb) Q1 Q2 Q3 Q4 Q1 Q2 Q3 売上高 売 高 Net Sales 67,525 133,575 +66,050 160,000 22,864 30,918 13,743 36,625 63,456 41,210 28,909 パチンコ Pachin
Slide 26: Pachinko Machines Business
Pachinko Machines Business FY 3/2013 FY 3/2014 Forecast FY 3/2013 FY 3/2014 連結：百万円 Consolidated: million yen 9 Months 9 Months YoY (5-Feb) Q1 Q2 Q3 Q4 Q1 Q2 Q3 売上高 Net Sales 37 061 37,061 91 202 91,202 +54 141 +54,141 10 895 10,895 19 053 19,053 7 113 7,113 16 241 16,241 43 428 43,428 32 956 32,956
Slide 27: Pachislot Machines Business
Pachislot Machines Business FY 3/2013 FY 3/2014 Forecast FY 3/2013 FY 3/2014 連結：百万円 Consolidated: million yen 9 Months 9 Months YoY (5-Feb) Q1 Q2 Q3 Q4 Q1 Q2 Q3 売上高 Net Sales 12,349 26,728 +14,379 5,705 6,449 195 15,473 15,327 3,862 7,539 営業利益 Operating Income 1,793 8,230 +6,437 1,664 1,833 (1,704)
Slide 28: Gross Margin/Operating Margin
Gross Margin/Operating g / p g Margin g FY 3/2013 FY 3/2014 Forecast FY 3/2013 FY 3/2014 連結 Consolidated 9 Months 9 Months YoY (5-Feb) Q1 Q2 Q3 Q4 Q1 Q2 Q3 売上総利益率 Gross Margin 48.1% 48.6% +0.6pt 46.9% 47.7% 53.4% 36.8% 46.1% 50.1% 50.6% 42.6% 営業利益率 Operating Margin 4.6% 21.3% +16.7pt 17.5% 5.3% 18.5
Slide 29: Game Machine Market
Game Machine Market 4,000 全日遊連加盟パーラーの状況 Situation of Parlors that Are Members of Zennichiyuren 営業中の店舗数 3,500 No. of outlets currently in operation 3,339 3,332 11,171 11,137 11,089 11,093 11,069 11,040 11,042 11,033 10,994 10,964 3,000 3,158 3,163 10,935 10,953 3 076 3,076 3,107 , 3,042 2,900 2,806 2
Slide 30: Number of Titles Sold (All Manufacturers)
Number of Titles Sold ((All Manufacturers)) パチンコ機 Pachinko Machines CY2008 107 ・１タイトル当たり販売台数 １タイトル当たり販売台数 2012年度：23,528台（2,494千台÷106） 2009 102 2013年度：21,075台（2,234千台÷106） ・Sales per title 2010 121 CY2012: 23,528 units (2,494,000 units/106) CY2013: 21,075 units (2,234,000 units/106) 2011 107 2012 106
Slide 31: SANKYO Group Companies
SANKYO Group p Companies p （株）ジェイビー JB Co., Ltd. インタ ナショナル カ ド システム（株） インターナショナル・カード・システム（株） 40.0% フィ ルズ（株） フィールズ（株） International Card System Co., Ltd. 100.0% Fields Corporation 15.6% （株）三共エクセル （株）サン・ラック Sankyo Sa yo Excel ce Co Co.,, Ltd. td 100.0% 00 0 Su Luck Sun uc Co Co.,, Ltd. td 95 95.0% 0 （
Slide 32: Contact Us
Contact Us +81-3-5778-7773 ir desk@sankyo fever co jp ir-desk@sankyo-fever.co.jp