GGRAsia – Asia Pioneer bullish on its long-term growth

Asia Pioneer bullish on its long-term growth

Nov 14, 2019 Newsdesk Sponsored Feature

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Management at Hong Kong-listed Asia Pioneer Entertainment Holdings Ltd expects its business to continue to expand, with the firm looking to build its presence in Macau and tap into new markets in Southeast Asia. So says Herman Ng Man Ho, company managing director and chief executive.

“We have been selective when exploring markets outside of Macau,” explains Mr Ng. “But there’s a lot of opportunity out there.”

Asia Pioneer Entertainment Holdings owns Asia Pioneer Entertainment Ltd (APE), a Macau-based distributor of gaming equipment. APE gets much of its revenue from selling and servicing slot machines and electronic table games.

The firm announced recently that the group’s revenue for the nine months to September 30 jumped by about 31.4 percent year-on-year to HKD53.5 million (US$6.8 million). The company attributes the rise in revenue mainly to an increase in income derived from sales and distribution of electronic gaming equipment, and from sales of spare parts.

The revenue increase for the first nine months of 2019 “is a good sign” of company performance, says Mr Ng. He adds that result was despite a slowdown in Macau’s overall gaming industry during the reporting period.

“Finding new business streams” and new sources of recurring business are focuses for the group.

Mr Ng adds that the firm is interested in leasing slot machines and other electronic casino equipment to operators in Southeast Asia – including in Cambodia, Philippines, Vietnam, Laos and even East Timor or India – collecting in return a daily fee. This, he notes, could offer the firm “stable, recurring” revenue.

In addition, Asia Pioneer Entertainment Holdings is also eyeing slot machine leasing in the Macau market. Mr Ng explains that interest has been stimulated by a scheme proposed by the Macau government earlier this year to encourage Macau banks to undertake more financial leasing business with small and medium-sized entreprises. “We want to support this programme,” he says, adding that details are still under negotiation with potential industry partners.

Strong 4Q

Asia Pioneer Entertainment Holdings mentioned in its latest results that during the first nine months of 2019 it sold a total of 202 electronic gaming equipment seats/stations. The firm has plans to deliver at least 166 gaming machines in the fourth quarter: 88 units to Macau-based operators and 78 to be shipped to Vietnam.

Asia Pioneer Entertainment Holdings has distribution and/or technical support deals covering Macau and other places in Southeast Asia, with a number of international electronic gaming equipment suppliers.

One of the firm’s partners is Nasdaq-listed gaming industry supplier TransAct Technologies Inc: APE became last year a non-exclusive distributor in Asia of some of TransAct’s products.

TransAct launched in March the BOHA! suite of apps and hardware solutions. Asia Pioneer Entertainment Holdings said in its third quarter results announcement it expected to benefit from “a new sale” to a Macau-based casino operator– within the final quarter of 2019 – of this food inventory monitoring and food safety tracking system from TransAct.

“This is a good start,” says Mr Ng. He explains Asia Pioneer Entertainment Holdings would be responsible for providing maintenance support to the BOHA! system on behalf of TransAct. “It is a different line of business” from gaming, Mr Ng adds. He expects more Macau resorts eventually to adopt the BOHA! system, providing additional recurring revenue for his firm.

Asia Pioneer Entertainment Holdings also has a partnership with the Konami brand. The firm has helped Konami to deploy in Macau five units of its “Fortune Cup”, a modern twist on arcade-style horse racing games. The units are in operation at respectively Wynn Macau, Wynn Palace, Studio City, MGM Cotai and Venetian Macao.

“Most of the machines have been just installed within the past one or two months,” says Mr Ng. “So far, the feedback from operators is positive. We observe the revenue performance in a longer term. It is an innovative product for the mass market, something that people are always looking for. ”

Expanding network

Other electronic gaming equipment suppliers with partnerships with Asia Pioneer Entertainment Holdings include Taiwan-based Jumbo Technology Co Ltd and Spintec d.o.o. from Slovenia. Mr Ng says his firm also has been providing technical services to Sega Sammy Creation Inc, a Japanese maker of casino gaming equipment.

The Asia Pioneer Entertainment Holdings senior executive notes his firm continues to look for new brands and products to represent and distribute in Macau and in Southeast Asia. He says negotiations on potential deals are currently in progress.

Mr Ng observes that Asia Pioneer Entertainment Holdings offers a lot of benefits to its partner suppliers. “We know the market very well. We can help them out in saving money, and to go in the right direction.”

He adds that his firm can provide not only sales and distribution services for electronic gaming equipment suppliers, but also product installation, support and maintenance.

“We also provide them with suggestions and product performance data,” says Mr Ng. “This is very important because most brands are still finding the best products for the long term in the Macau market. So, they need a lot of data and support.”

He observes that, despite an ongoing decline in overall gross gaming revenue (GGR) in the Macau market – mainly due to decreases in the VIP segment – slot machines and other electronic gaming devices have continued to perform well. Official data shows market-wide slot machine GGR in Macau was up 8.6 percent year-on-year in the third quarter, while overall GGR for the period declined by 4.1 percent.

“The VIP segment fluctuations do not impact us at all,” Mr Ng says. He adds that the Macau market has potential to accommodate up to 50,000 electronic gaming machines depending on the growth rate of mass-market play. Macau currently only has around 20,000 units, according to the Asia Pioneer Entertainment Holdings senior executive.

“I see strong potential in terms of business prospects,” Mr Ng observes.