Macau-registered electronic gaming equipment distributor and technical support company, Asia Pioneer Entertainment Ltd, is to seek listing on the Hong Kong Stock Exchange’s small-cap index, the Growth Enterprise Market, according to papers filed with the bourse.
Information on the likely pricing and size of the offering and the net amount to be realised after fees, was redacted in the application papers available online.
The firm said it would use proceeds from the offering for purposes including: deposits for manufacturers to provide more trial products; for procuring electronic gaming equipment for lease to Macau casino operators; and for procuring and refurbishing used electronic gaming equipment “for resale in Macau for use in Southeast Asia”.
The sole sponsor for the proposed offering is Southwest Securities (HK) Capital Ltd.
Other uses of the net funds under the proposed exercise were: “enhancing our group’s market recognition in Macau and Southeast Asia; identifying more manufacturers of electronic gaming equipment and strengthening our in-house capability to provide repair services.”
Asia Pioneer added: “To this end, we intend to expand our sales and marketing and technical team by hiring 17 additional staff”.
Giving reasons for the potential offering, the firm cited research it had commissioned from China Insights Consultancy Ltd (CIC), which suggested that while the VIP market for table games was likely to grow at a compound annual growth rate (CAGR) of 1 percent in casino gross gaming revenue terms between 2015 and 2020, the mass gaming market was expected to increase at a CAGR of 5.1 percent during the same period.
“Electronic gaming equipment, which is targeted for mass gaming market due to its lower betting limit, higher game efficiency and multiple gaming type compared to traditional gaming tables, is expected to generate more revenue with the positive growth rate of the mass gaming market and will occupy a larger share of the total gaming market in Macau,” stated Asia Pioneer’s application.
The firm added: “According to the CIC report, it is expected that there will be a growing demand for electronic gaming equipment in some of the Asian countries, for example the Philippines, Malaysia, Cambodia, South Korea and Vietnam, based on the expected expansion of existing casinos and building of new casinos in those countries between 2016 and 2020.”
The application papers said that for the two years to December 31, 2016, the firm’s two largest suppliers of casino gaming equipment were Taiwan firm Alphabet Technology Ltd and Slovenia-based Spintec d.o.o., providing respectively 48.7 percent and 49.1 percent of Asia Pioneer’s total purchases for the period.
The application papers also mentioned Asia Pioneer has had client relationships with Taiwan-based equipment maker Jumbo Technology Co Ltd and Konami Australia Pty Ltd.
The company added: “As at the latest practicable date, we are one of the seven gaming machine agents in Macau approved by the DICJ [Gaming Inspection and Coordination Bureau] and we provide products and/or services to all six of Macau’s licensed gaming concessionaires.”
Asia Pioneer said in its submission to GEM that its revenue had increased by approximately 9.1 percent year-on-year in 2016, to approximately HKD52.6 million (US$6.8 million) compared to nearly HKD48.2 million in the prior year. Profit for 2016 decreased by approximately 25.1 percent year-on-year, to HKD9.6 million, from about HKD12.8 million in 2015, according to the application document.
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”Continued negative coverage of the Abe administration, coupled with political losses for the Liberal Democratic Party ... may reduce support for the gaming agenda, which already has only limited public support”
Analyst at brokerage Sanford C. Bernstein