COMPANY RESEARCH AND ANALYSIS REPORTDYNAM JAPAN HOLDINGS
06889
Hong Kong Stock Exchange

6-Jul.-2021
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. In FY3/21 consolidated operating profit remained positive despite the novel coronavirus (COVID-19)
pandemic .. ..................................................................................................................................................

01

2. Aims to post an increase in both revenue and a profit in FY3/22. ................................................................

01

3. Pachinko business growth strategy....... ......................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. History................................................... ......................................................................................................

03

2. DYNAM JAPAN HOLDINGS Group’s features and strengths. ......................................................................

03■FY3/21 results conditions---------------------------------------------------------------------------------------------------------------------------------- 07
1. Summary of FY3/21 results. . ........................................................................................................................

07

2. Financial condition................................. ......................................................................................................

10■FY3/22 Business Strategy---------------------------------------------------------------------------------------------------------------------------------- 11
1. Pachinko business.......................................................................................................................................

11

2. Aircraft leasing business..............................................................................................................................

13

3. Progress in the video slot machine business for casinos. ............................................................................

14■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 15
1. Market trends. . .............................................................................................................................................

15

2. Growth strategy...........................................................................................................................................

17■Returns to shareholders-------------------------------------------------------------------------------------------------------------------------------------- 19■CSR/ESG initiatives-------------------------------------------------------------------------------------------------------------------------------------------------- 20
1. Enhancement of long-term corporate value through CSR............................................................................

20

2. ESG activities. . .............................................................................................................................................

20

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html█ Summary
The Company aims to rekindle growth by bolstering earnings power
through reforming hall operations
DYNAM JAPAN HOLDINGS Co., Ltd. (HK06889; hereinafter, the Company) is the Japan’s top operators of pachinkohalls with the largest number of halls operated. Its strength and characteristics lie in low-cost operations basedon the “chain store theory.” In addition, the Company is a pioneer as the first in its industry to be listed on a stock
market, aided by recognition of its high-quality management with implementation of a customer-first approach,
information disclosure, compliance management, and other measures.
1. In FY3/21 consolidated operating profit remained positive despite the novel coronavirus (COVID-19)
pandemic
In FY3/21 consolidated results, revenue declined 30.8% year-on-year (YoY) to ¥98,602mn, while operating profit
declined 68.7% YoY to ¥6,728mn. The main factors for the decline in both revenue and profit were that the Company
had no choice but to temporarily close halls from April to May 2020 following the government’s declaration of astate of emergency in conjunction with the COVID-19 pandemic, as well as the fact that, even after the resumptionof operations, customers’ return to halls was tepid, and the level of revenue from July onward on a monthly basis
was only 70-80% that of the previous year. The Company has worked to thoroughly reduce costs, including curbing
machine purchases and reviewing hall operating and personnel costs, and the Company also booked ¥5,544mn
in subsidy income from the government. As a result, the Company was able to achieve positive operating profit,
which was its initial target. As the entire industry was forced to deal with a challenging business environment, theCompany’s ability to quickly respond to the changes in the environment and post a profit is worthy of praise. In theaircraft leasing business, which was launched as a new business in FY3/20, the Company continued to lease threeaircraft, and posted revenue of ¥1,461mn in FY3/21 (versus ¥564mn in FY3/20).
2. Aims to post an increase in both revenue and a profit in FY3/22
The Company will aim to secure higher revenue and another year of positive profit in FY3/22. In Japan, despite thecontinued difficulty in predicting when the COVID-19 pandemic will come under control, progress is being madeon vaccine administration, so from July 2021 onward the Company is planning to gradually start activities to bringin customers, and implement measures to increase customers while taking infection risks into consideration. Even
if the same operating as in 2H FY3/21 continues, pachinko business revenue is expected by be 12-13% higher
than in FY3/21. Meanwhile, the factors behind the increase in costs include the rise in machine purchasing costs.
Among the pachinko and pachislot machines in halls, machine models under the former regulations (approximately
105,000 machines) must all be removed by the end of January 2022, and replaced with machines under the new
regulations. Also, regarding the subsidies received from the government that were posted in FY3/21, given the factthat all halls continue to operate normally in FY3/22, it is highly likely that these subsidies will decrease significantly
in FY3/22. Based on this point, the Company will carry out its hall operational reforms at all halls as a measure to
reduce costs, and the Company also plans to increase the number of low-cost, private-brand machines in halls.

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01 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Summary

3. Pachinko business growth strategy
With the aim of achieving growth in the pachinko business, the Company will work on five different fronts: multiple-halloperation, low playing cost operation, product development, data-driven operations, and cost management. Amid
the prolonged COVID-19 pandemic, a total of 666 pachinko halls closed, one of the largest number of closures ever.
Looking at it another way, it is a good opportunity to purchase pachinko halls. If the terms are right, the Company
will consider targeting halls that hold 400-500 machines and that will not eat into the business of other Group halls.
Also, the Company will work to bolster hall profitability by reviewing operations, advancing a strategy of putting inplace machines using a data-driven process, increasing the ratio of private-brand machines, and other measures.
At FISCO, we think that over the next year or two the weeding out and consolidation process in the pachinko hallindustry will gain more steam and the companies that survive will have a road towards growth open up to themthrough an increase in market share.
Key Points
In FY3/21, revenue and operating profit declined by double digits due to the impact of the COVID-19 pandemic,
but an operating profit was secured as a result of thorough cost reductions• In the pachinko business, the Company worked to reduce costs by reforming hall operations and introducing
private-brand machines, and the Company is aiming for an operating profit again in FY3/22.
• As the COVID-19 pandemic has led to weeding out and consolidation in the pachinko hall industry, the Company
will advance initiatives targeting growing again•

Trends in operation results
Revenue (left)

Profit before income taxes (right)

（¥mn）

（¥mn）

160,000

24,00019,36919,506

16,804

120,000

18,00014,82580,000156,869

152,092

146,371

12,000142,483
98,60240,000

6,000
4,342

0

0
FY3/17

FY3/18

FY3/19FY3/20FY3/21

Source: Prepared by FISCO from the Company’s financial statements announcement

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02 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html█ Company profile
Expanded business scope by implementing innovative measures
premised on “chain store theory,” first pachinko hall operator to list
shares
1. History
The Company was founded as Sawa Shoji Co., Ltd. in 1967 by Yohei Sato, the father of Yoji Sato, a current director
and senior corporate advisor. When the founder passed away in 1970, his eldest son, Yoji, who was then aged 24
and working at The Daiei, Inc., took over the business, and steadily expanded operations.
The Company was a pioneer in the pachinko hall industry by acting on new initiatives ahead of peers, including hiring
new university graduates, opening suburban halls and low-cost halls, forming a labor union, and spreading low-feeball rental nationwide. Yoji Sato’s leadership was an important factor in the Company’s adoption of a progressive
corporate culture. He joined Daiei due to interest in the chain store theory that was still a novel concept in Japan.
Subsequently, following the death his father, the founder, he succeeded his father for the Company’s management,
and within this management, he expanded business by consistently applying the chain store theory to pachinko halloperations. The chain store theory is the source of low-cost operations, the Company’s largest strength.
His logical approach rooted in the chain store theory took hold as the corporate culture and served as a fundamental
force lifting the Company to the position of being the top company in the industry. The Company also moved quickly
in embracing the most important concepts for modern management of a customer-first approach, information
disclosure, and compliance, providing a foundation for its listing on the Hong Kong Stock Exchange in August 2012.

Established a robust management foundation that leverages four
strengths, differentiates itself from other companies
2. DYNAM JAPAN HOLDINGS Group’s features and strengths
We focus on four points as the Company’s attributes and strengths – 1) top player in terms of the number of halls
in Japan, 2) low-cost operations, 3) customer-oriented management, and 4) fund-raising capabilities. Importantly
these strengths are mutually interactive. We think it is difficult for other companies to realize the same combined
strength seen at the Company.

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03 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Company profile

Relationship among the four strengths of the Dynam Japan Holdings Group

Source: Prepared by FISCO from interviews(1) The domestic leader with 442 group halls
The Company is the domestic leader with 442 group halls (as of the end of March 2021). While it is not possible
to make precise comparisons due to differences in compilation timing, the Company’s domestic shares for thenumber of halls and machine installations are both at around 5%. The Company’s market share exceeded 1%
in 2003, and since then it has increased its number of halls, including through M&A, and the Company has
maintained its market share amid the decrease in the overall number of halls in the industry.

Trend in number of group halls
DYNAM JAPAN HOLDINGS (left)
Pachinko and pachislot halls nationwide (right)（halls）
500

442 446 450 450 448 442

450
400
334

350
272

300

16,000393

14,00012,000302

10,000

233

250
200

287 280

351 355 362

375（halls）
18,000193

9,035 8,000

152

6,000

150
100

4,000

50

2,000

0

0
FY3/03 FY3/05 FY3/07 FY3/09 FY3/11 FY3/13 FY3/15 FY3/17 FY3/19 FY3/21

Source: Prepared by FISCO from the Company’s website, financial statements announcement and the National Police
Agency’s “Current Situation with Amusement and Entertainment Business and Situation with Policing Amusementand Entertainment-related Crime, etc. in 2020”

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Company profile

The Company’s large number of halls provides it with economies of scale that appear in new hall openings,
renovations, pachinko and pachislot machine purchases, prize procurement, logistics, and other areas. Benefits
in pachinko and pachislot machine purchases and hall operations, which account for a large portion of expenses,
are particularly important. The large number of halls obviously means ownership of a high volume of pachinko
and pachislot machines and stronger buying power toward amusement equipment manufacturers. The Company
also develops and deploys private-brand machines (as of the end of March 2021, 12.7% of installed pachinko
machines were private-brand machines) and realizes economies of scale in this respect too. Furthermore, theCompany has established logistics centers that cover 20-30 halls in 16 locations nationwide, and the Company
is curbing machine costs (costs related to purchasing pachinko and pachislot machines) and reducing shipping
costs by having halls flexibly lend machine models to one another. In addition, the Company is managing halls
in an agile manner, including adjusting machine model lineups according to customers’ needs, and has built asystem enabling it to both increase the number of customers and reduce costs.
(2) Chain store theory
Low-cost operations based on the chain store theory are a vital source of the Company’s competitiveness. Our
understanding is that this aspect is tremendous support in enabling the Company to secure the feasibility andeffectiveness of various measures, including the growth strategy.
Costs of machines and personnel constitute a large portion of the total cost of operating a pachinko hall. Yet it
takes more than just direct cost cutbacks. The Company is succeeding with low-cost operations as an overall
group by deploying hall designs and hall operating systems (such as ball counters at each machine) that facilitate
operations with a small number of employees and by standardizing new halls. The chain store theory plays animportant role in a variety of ways and is enabling low-cost operations for the Group.
The Company is the industry leader in Japan, as mentioned earlier, with 442 halls. Aggressive hall network
expansion supports this position, but the driving force of the chain store theory know-how has been an essential
enabler. Hall network expansion has created a virtuous cycle of cost reductions through economies of scale thathas put the Company in its strong position. We think the customer-oriented management explained below is an
outcrop from the chain store theory as well.
The history section explained the background to the Company’s utilization of the chain store theory in its management. The Company established the Pachinko Chain Store Association (PCSA), an industry group in 2003 withpeers who have a similar view. By promoting the activities of PCSA, the Company is contributing to strengthening
the management foundations of its industry peers, and this leads to Yume Corporation Co., Ltd. joining the Groupin November 2015. In October 2020, PCSA merged with the Japan Association of Pachinko Industry Executives,with the new, post-merger entity named the Mirai Pachinko Industry Federation.
(3) Implementing management from a customer perspective
The Company advocates a customer-first approach as one of its five business policies and has been practicing
it. This stands out because we think few peers who promote a similar policy are actually seeing actions through.
Among the Company’s business policies, we have a favorable view of a) low playing cost and b) operations that
do not rely on gambling appeal. These are also key words for understanding the Company’s business policy andgrowth strategy.

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05 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Company profilea) Low playing cost operations
Low playing cost (Pachinko is a game that is played with rented balls) operations refer to a type of operationin which the ball fee has been lowered to ¥1 or ¥2 per ball, which is cheaper than the standard price of ¥4.
Customers can rent more balls for the same amount, extending their playing time in accordance with the additionalballs. For the Company, whose goal is for everyone to be able to easily enjoy pachinko as part of the infrastructureof a region, it can be said that increasing low playing cost halls is a rational measure. At the end of March 2021, it
had 266 low playing cost halls, which is 60.2% of its total halls. In terms of the ratio of machines installed, the ratioof pachinko machines that are low playing cost machines is 71.8% (compared to an industry average of 42.7%)
and the ratio of low playing cost pachislot machines is 57.3% (compared to an industry average of 16.6%), soboth ratios greatly exceed the industry averages.
Data shows that halls offering low playing cost have attracted more customers than halls charging higher fees.
Yet it takes substantial company wherewithal to adopt this type of strategy. The strategy for covering this is themultiple-hall operation and low-cost operations, and that it exactly what the Company has been doing.

Number of low playing cost halls and high playing cost halls
Low playing cost halls（halls）

High playing cost halls

500

400
181

180

176

174

176

265

270

274

274

266

FY3/17

FY3/18

FY3/19FY3/20FY3/21

300

200

100

0
Source: Prepared by FISCO based on the Company’s annual report, website, news releases, and materials provided by theCompanyb) Operations that do not rely on gambling appeal
The Company does not position models with strong gambling appeal as a central strategy. Pachinko machines
range from ones with high probability of major wins to ones with low probability. Machines with lower probability
give a larger number of balls in a major win and are preferred by pachinko fans. Many pachinko halls hence attract
customers by operating halls with a high ratio of machines with strong gambling features.
However, based on the strengthening of measures to address gambling addiction and related, the regulatory
authorities have been revising the regulations in stages in order to suppress the gambling aspect, and the current
situation is that a style of managing pachinko halls by attracting customers through “selling” gambling is coming
to an end. The Company, meanwhile, has a lower ratio of gambling-type machines than the industry average andconversely the share of machines with the lowest gambling features at 1/100 probability is 20 percentage points
higher than the industry average. The Company cannot avoid the impact of stricter regulations on gambling appeal,but given the fact that the Company has been developing halls that do not rely on gambling appeal for some time
now, we at FISCO feel that the negative impact on the Company will be comparatively minor.

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06 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Company profile(4) Fund-raising capabilities that leverage strength as a listed company
The Company became the first in the pachinko hall industry to list its shares with its IPO on the Hong Kong Stock
Exchange in 2012. Only three companies, including the Company, out of the pachinko hall industry’s roughly 2,600
companies are listed on stock markets as of the end of March 2021. The industry is projected to face realignment
going forward. An important point for a buyer in this environment is obviously whether it has fund-raising capabilities. The Company capitalized on its strength as a listed company to acquire Yume Corporation in November
2015 through a stock swap for all of its shares. With strong demand for potential capital through not only M&A
but investment in halls and new business development, etc., it is likely that the Company’s advantage of being a
listed company will work tremendously in its favor.

█ FY3/21 results conditions
Double-digit declines in both revenue and profit due to the impactsof the COVID-19 pandemic, but profit achieved through thoroughcost-cutting efforts
1. Summary of FY3/21 results
In the FY3/21 consolidated results, revenue and profit declined by double digits. Revenue declined 30.8% to¥98,602mn, operating profit fell 68.7% to ¥6,728mn, profit before income taxes decreased 77.7% to ¥4,342mn,
and net profit attributable to owners of the Company fell 81.5% to ¥2,363mn.
Summary of FY3/21 interim results(¥mn)

Revenue
Revenue from pachinko business
Revenue from aircraft leasing
business
Operating expenses
Pachinko business expenses

FY3/21

FY3/20Results

Results

YoY

Change142,483

98,602-30.8%-43,881

141,919

97,141-31.6%-44,778

564

1,461

159.0%

897

122,31197,564-20.2%-24,747

121,91296,673-20.7%-25,239399

891

123.3%

492

SG&A expenses

5,020

4,340

-13.5%-680

Other income

8,446

11,561

36.9%

3,115

Other operating expenses

2,084

1,531

-26.5%-553

Operating profit

21,514

6,728-68.7%-14,786-175

Aircraft leasing business expenses

Financial income

461

286

-38.0%

Financial expenses

2,469

2,672

8.2%

203

Profit before income taxes

19,506

4,342-77.7%-15,164

Net profit attributable to owners of
the Company

12,7482,363-81.5%-10,385

RemarkHigh playing cost halls 47,655 (-21,964),
low playing cost halls 49,486 (-22,814)
Acquired during FY3/20, full operation in FY3/21

Machine costs -11,264mn, personnel costs -5,880mn,
advertising costs -1,626mn

Vending machine fee income -1,694,
government subsidy income +5,544

Source: Prepared by FISCO from the Company’s financial statements announcement and results briefing materials

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/21 results conditions

Following the Japanese government’s declaration of a state of emergency due to the COVID-19 pandemic, in thepachinko business the Company had no choice but to temporarily close approximately 97% of its halls in the April
through May 2020 period. The halls were then reopened from June after conducting thorough infection prevention
measures, but customers were slow to return due to caution about COVID-19, and from July onward revenue fromthe pachinko business was only 70-80% of the same month of the previous year. This was the main reason for the
decline in revenue. However, the Company worked to thoroughly reduce costs, including the curbing of machinepurchases, narrowing personnel costs, and reviewing other expenses, as well as booked an employment adjustment
subsidy, etc. of ¥5,544mn from the government in other income. All of this led to the Company securing an operating
profit, which was the initial goal.
(1) Pachinko businessLooking at trends in the pachinko industry from April 2020 onward, following the Japanese government’s state of
emergency declaration on April 16, local governments asked pachinko halls in their respective areas to suspend
operations. In response to these requests, 436 of the 448 pachinko halls in the Group had no choice but totemporarily suspend operations. From the beginning of May, the Group’s pachinko halls resumed operations
sequentially, with infection control measures in place, in regions where the state of emergency had been lifted,
but pachinko business revenue in the April – May period fell to approximately 30-40% of the level of the samemonth of the previous year. While all halls were re-opened from June 1, customers were hesitant to return due
to concerns about infections, and since July revenue has remained at 70-80% of the level of the same month in
the previous year. Looking by customer segment, it appears that elderly customers have been the most hesitant
to return to halls.

Pachinko business revenue (Yo Y ）
100%
90%
80%
70%
60%

All halls resumed
operations from June 1

50%
40%
30%
20%
10%

April 16 issuance of stateof emergency declaration

53% YoY decline inoperationg days in May

0%

Source: Prepared by FISCO from the Company’s results briefing materials and materials provided by the Company

Amid this difficult environment, ball rental fee revenue, which corresponds to gross sales, declined 35.2% YoY to¥475,163mn. Breaking this down, it fell 34.3% YoY to ¥211,826mn in low playing cost halls, and declined 35.8%
YoY to ¥263,337mn in high playing cost halls. Meanwhile, prize issuance value, which represents the cost of
goods, declined 36.0% YoY to ¥378,022mn. The difference between ball rental fee revenue and prize issuancevalue is pachinko business revenue, and this declined 31.6% YoY to ¥97,141mn.

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08 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/21 results conditions

The ratio of ball fee revenue to pachinko business revenue is the gross profit margin, and in FY3/21 the grossmargin increased 1.0pp YoY to 20.4%. Breaking it down, the gross margin for low playing cost halls increased
1.0pp YoY to 23.4%, while the gross margin for high playing cost halls increased 1.1pp YoY to 18.1%. Grossmargin is the inverse of the payout rate to customers (percentage of prize issuance value to ball rental fee
revenue), so if that is too high, it might lead to losing customers. Since past trends show gross margin generally
at 18% - 20%, the payout rate in FY3/21 was a bit low.
The Company also thoroughly tightened down on business costs in order to put a stop to the deterioration inearnings. Specifically, the Company reduced machine costs by ¥11,264mn YoY, personnel costs by ¥5,880mn,
and other costs including advertising and utilities by ¥8,095mn. Total costs in the pachinko business declined
20.7% YoY to ¥96,673mn. As a result, the operating profit of the pachinko business, which is the difference
between revenue and business costs, declined 97.7% YoY to ¥468mn, so the initial target of an operating profit
was achieved. As the entire industry faced a business environment more challenging than ever experienced
before, the Company’s ability to post a profit by swiftly managing the business is worthy of praise. Additionally, theCompany booked an employment adjustment subsidy, etc. of ¥5,544mn from the government in other income.
As of March 31, 2021, the Group had 442 halls, a decrease of six halls from March 31, 2020. One hall was newly
opened (renovated hall), while seven halls were closed.
Looking at the results for DYNAM Co., Ltd., which is the Group’s core company, revenue decreased 31.4% YoY
to ¥90,993mn, while operating loss was ¥2,522mn (compared to operating profit of ¥17,016mn in the previous
fiscal year). While consolidated results are presented based on International Financial Reporting Standards (IFRS),DYNAM Co., Ltd.’s results are presented based on Japanese accounting standards, and employment adjustment
subsidy, etc. from the government was booked in non-operating profit. As a result, ordinary profit declined 81.6%
YoY to ¥3,343mn.
DYNAM’s results(¥mn)
FY3/21

FY3/20Results

Results

YoY

Change132,71390,993-31.4%-41,720

Machine costs

24,613

14,719-40.2%-9,893 Suppression of pachinko and pachislot machine purchases

Personnel costs

43,08238,084-11.6%-4,997

Revenue

Summary
Temporary hall closures due to impacts of the COVID-19pandemic,
slow recovery in customers
Suppression of part-time workers’ wages,
reduction of salaries and bonuses

Other costs

48,00340,712-15.2%-7,291 Reduction of hall operating costs

Total expenses

115,698

93,516-19.2%-22,182

Operating profit

17,016-2,522--19,538

Ordinary profit

18,193

3,343-81.6%-14,850 Booked employment adjustment subsidy, etc. from the government

Net profit

11,758

1,782-84.8%-9,976405

401

Pachinko machine operating rate

41.4%

28.2%

-13.2pt Decline in number of customers due to COVID-19

Pachislot machine operating rate

38.2%

27.0%

-11.2pt Decline in number of customers due to COVID-19

No. of machines

189,140

187,843-1,297 Installed machine share 4.7%

No. of private-brand machines

12,65816,742

4,084

Main KPI (key performance indicators)
No. of halls

New hall openings: Ibaraki Inashiki Hall
-4 Closed halls: Gunma Isesaki Hall, Nishi-nippori Pachinko Hall,
Hitachi Hall, Saga Kanzaki Hall, Tottori Yasunaga Hall

Private-brand machine installation rate 12.7%(difference on previous period, +3.2pt)**Private-brand machine installation rate is the percentage of total installed pachinko machines
Note: Accounting method is based on Japanese standards
Source: Prepared by FISCO from the Company’s results briefing materials and materials provided by the Company

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09 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/21 results conditions

Looking operating rate, one KPI (key performance indicator), the operating rate for pachinko machines declined
13.2pp YoY to 28.2%, while the operating rate fell 11.2pp to 27.0% for pachislot machines, so the operating rate
fell significantly for both types of machines due to the decline in customers caused by COVID-19. Additionally, withrespect to pachinko machines, the ratio of private-brand machines increased 3.2pp YoY to 12.7%. This shows
how the Company raised the ratio of low-cost private-brand machines in the purchase of new machine models,
as a part of its effort to reduce costs.
*	The number of actual customers / number of machines at the peak time (around 3:00pm)(2) Aircraft leasing businessIn the aircraft leasing business, which was launched in FY3/20, the Company has limited its scope of businessto narrow body aircraft, which are highly-liquid, and for which demand is expected to be stable. The Company
is refraining from purchasing new aircraft given the ongoing headwinds, including the major blow suffered byairlines around the world caused by the COVID-19 pandemic. Currently, the Company is continuing the leases of
the three aircraft purchased in FY3/20.
Revenue in FY3/21 was ¥1,461mn, an increase of 159.0% YoY. The rise was due to the full-year contribution in
FY3/21 of lease revenue from the three aircraft purchased during FY3/20.
Meanwhile, business expenses increased 123.3% YoY to ¥891mn. As a result, operating profit, including financial
costs and other expenses in order to purchase aircraft, increased 39.1% YoY to ¥224mn. The fleet value for thethree aircraft is ¥15,999mn, and the annualized gross rate of return was 8.8%.
Results for aircraft lease contracts
Leasing party

Contract
periodModel

July 2019

Airbus A320

IndiGo (India)

October 2019

Airbus A320NEO

IndiGo (India)

March 2020

Airbus A321NEO

Vueling Airlines (Spain)

Fleet value

Average age

Averageremaininglease period

Annualized
gross rate of
return¥15,999mn

2.2 years

4.5 years

8.8%

Source: Prepared by FISCO from the Company’s results briefing materials and materials provided by the Company

Increasing borrowings in order to secure cash on hand given theuncertain outlook for the business environment
2. Financial condition
At the end of the FY3/21 period, total assets increased ¥23,834mn versus the end of the previous fiscal period to¥301,073mn. The main factor for the change was the ¥32,851mn increase versus the end of the previous fiscal
period resulting from improved cash flow due to bank borrowings and deferrals in the timing of tax payments. Thesetax payment deferrals were due to special extensions given to companies that were hard hit by the COVID-19
pandemic. Meanwhile, by keeping down machine purchasing costs and by closing unprofitable halls, property, plantand equipment fell ¥8,791mn, and licensing assets declined ¥1,511mn.
Total liabilities were up ¥26,594mn on the end of the previous fiscal period to ¥169,101mn. This was mainly due tothe increase in interest-bearing debt, and there was a ¥21,622mn increase in the pachinko business. In addition,accounts payable and accrued expenses increased ¥5,196mn and lease liabilities declined ¥1,857mn.

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/21 results conditions

Total equity was down ¥2,760mn from the end of the previous fiscal period to ¥131,972mn. While the Company
posted net profit attributable to owners of the Company of ¥2,363mn, dividend payments were ¥4,576mn, and¥1,437mn was used on the acquisition and retirement of treasury shares.
Mainly due to the increase in interest-bearing debt, the capital ratio declined from 48.6% at the end of FY3/20 to43.8%. However, net cash, which is the difference between cash and deposits and interest-bearing debt, was¥40,694mn, a ¥12,112mn increase from the end of the previous period. However, approximately ¥10bn in deferred
tax payments were paid at the end of May 2021, so net cash effectively increased slightly versus the end of theprevious period. As a result of the thorough cost-cutting efforts countering the large decline in revenue, the Company
maintained its financial soundness, and the Company demonstrated its strength of being able to adroitly handlechanges in the environment. This ability is praiseworthy.
Consolidated financial condition(¥mn)
EndFY3/20

EndFY3/21

Change277,239

301,073

23,834

41,81074,66132,851

142,507

169,101

26,594(Interest-bearing debt from pachinko business)

2,007

23,62921,622(Interest-bearing debt from aircraft leasing business)

11,221

10,338-883

134,732

131,972-2,760Total assets(Cash and cash equivalents)
Total liabilities

Total equity(Capital ratio)

48.6%

43.8%

-4.8pt(Net cash)

28,582

40,694

12,112

Changed items
Cash and cash equivalents (+32,851),
property, plant, and equipment (-8,791),
licensing assets (-1,511), deferred tax assets (-1,294)
Interest-bearing debt (+20,739), lease liabilities (-1,857),
accounts payable and accrued expenses (+5,196)

Net profit attributable to owners of the Company (+2,363),
dividend payments (-4,576),
acquisition and retirement of treasury shares (-1,437),
other comprehensive income (+890)

Source: Prepared by FISCO from the Company’s results briefing materials and materials provided by the Company█ FY3/22 Business Strategy
Will work to reduce costs in the pachinko business by reforming
hall operations and installing private-brand machines as it aims tosecure an operating profit for FY3/22
1. Pachinko business(1) Business Strategy
FY3/22 revenue in the pachinko business is expected to increase 12-13% YoY even if the pachinko hall operating
rate stays at the same level as it has been since 2H FY3/21. However, this would be only about 80% the levelcompared to FY3/20.

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11 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/22 Business Strategy

Therefore, as a business policy, the Company will gradually start activities to attract customers from July 2021,
when the elderly people are expected to have finished receiving their COVID-19 vaccines. From the fall, with aneye on the infection situation, the Company will push its efforts to attract customers into high gear, and aim torecover the number of customers and pachinko business revenue, with a goal of recovering pachinko businessrevenue to the level seen before the COVID-19 pandemic by around March 2022.
(2) Cost management
With respect to its business plan for FY3/22, the Company will advance initiatives to secure an operating profit,
even assuming that the 2H FY3/21 operation rate continues throughout all of FY3/22. Even though the pachinkobusiness revenue is expected to increase YoY, pachinko business profit will not grow smoothly, as there are actually
several things that should be cleared. First of all, the employment adjustment subsidy, etc. (¥5,544mn) received
in FY3/21 may decline significantly.
Secondly, there is expected to be a big increase in the number of purchased machines from FY3/22. Thisis because a 2018 amendment to the Act on Control and Improvement of Amusement Business, etc. led toregulation changes aimed at curbing the gambling appeal of pachinko and pachislot machines, and these changes
require hall operators to remove all machines under the former regulations and replace them with machines under
the new regulations by the end of January 2022. In the Company’s case, at the end of FY3/21, approximately
51%, or 105,000 machines, were machines under the former regulations, and the Company must either replace
all of these with machines under the new regulations or simply remove them during FY3/22.

Ratio of expenses to pachinko business revenue
Personnel costs
Depreciation costs
Rent/licensing assets amortization amount

FY3/
21

42.6%

Machine costs
Advertising expenses
Other

17.0%

9.7%

10.2%

18.1%

16.3%

8 5 .9%9 9 .5%

1.8%

FY3/
20

33.3%

19.6%

7.2%

7.2%

2.4%
0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Source: Prepared by FISCO from the Company’s financial statements announcement

The Company plans to work on the two initiatives of reforming hall operations and increasing the installationof private-brand machines. The two major costs involved in hall operations are personnel costs and machinepurchasing costs, and reducing these costs will directly lead to strengthening the earnings power of halls. The
ratio of hall personnel costs to pachinko business revenue increased from 33.3% in FY3/20 to 42.6% in FY3/21,
and the Company will work to lower this personnel cost ratio by carrying out hall operational reforms at all halls.

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/22 Business Strategy

Hall operational reforms will involve reducing out-of-hall operations and reviewing operations, thereby reducing
the total number of hours worked by hall staff and reducing the ratio of personnel costs to hall expenses. The
main out-of-hall operations include the ordering and correction of sales promotion materials, and work related tothe handling of prizes. The Company will work to lessen the work load related to prizes by reducing the numberof items. Specific examples of operational revisions include improving work methods (in-hall meeting bodies,
pre-distribution of plans, etc.) and internal rule revisions (reduction of e-mail/text message confirmation timethrough centralized distribution of information distribution rules, etc.)
In FY3/20, the Group implemented operational reforms on a trial basis at 50 halls (just over 10% of the Group’s
total number of halls), and these reforms resulted in a roughly 20% decline in personnel costs. The Company
plans to start similar reforms at all halls from FY3/22, and a decrease in the personnel cost ratio is expected.
Also, to increase the installation ratio of private-brand machines, the Company plans to strengthen productdevelopment. The Company has built cooperative relationships with manufacturers, and has sold 79 typesof private-brand machines so far. Over the past three years, the price of private-brand machines has become
approximately 15% lower than the price of national brand machines. The machine types are centered on typesof Ama Deji (jackpot probability, less than 1/100). Because the Company can provide the Company’s own hallswith machine types that match customers’ needs and it leads to a reduction in machine purchasing costs, there
is a large advantage to introducing private-brand machines.
For DYNAM Co., Ltd., the ratio of private-brand machines to the total number of installed pachinko machines
was 9.5% in FY3/20 and then increased to 12.7% in FY3/21. In terms of the number of machines, there was a
32.3% increase from the end of the previous period to 16,742 machines, as the slight decline in the overall numberof machines resulted in an increase in the ratio. In FY3/22, the number of installed machines will be increased,
thereby reducing costs. Also, in the future, the target will be to lower the price of private-brand machines to
one-half the current price.

In the aircraft leasing business, the Company plans to maintain thestatus quo until the external environment improves
2. Aircraft leasing businessIn the aircraft leasing business, the situation remains challenging, and in the industry, it is being said that it willtake until 2023 or 2024 for things to return to pre-COVID-19 levels. Domestic flights will likely gradually recover
first, followed by short-distance international flights, and then long-distance international flights. Also, there is nochange to the outlook that over the medium- to long-term horizon global demand for aircraft will continue to expand,especially for narrow body aircraft.
Going forward, the Company has indicated its plan to proceed cautiously with business talks on aircraft, centeredon narrow-body models that are no more than five years old, while keeping a close eye on the financial conditions ofairlines, and the Company aims to build a stable and highly-profitable portfolio. In FY3/22, the Company is expected
to continue the leases for its three existing aircraft.

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

FY3/22 Business Strategy

The Company is preparing to restart sales activities for video slot
machines from the fall of 2021
3. Progress in the video slot machine business for casinos
The Company has been working on the planning and development of mass-market video slot machines for the
Macau casino market as a new business. Video slot machines are time-consumption-type games, and the development concept is to make straightforward games that incorporate elements of pachinko.
The Company worked on development of this video slot machine jointly with WEIKE GAMING TECHNOLOGY (S)PTE. LTD. (WEIKE), which holds a license for manufacturing and selling casino machines in Macau. So far, theCompany has obtained approval for six models from the Macau casino regulatory authorities, and approval for fivemodels in Singapore. In addition, in September 2019 the Company concluded a sales agreement with a Macau
casino operator and in November 2019 the Company deployed on a test basis one of each of the three models (totalof three machines), and deployed 10 machines in a different casino hall from January 2020. The Macau market was
hit hard by the impacts of the COVID-19 pandemic, but currently the Company is using web meetings and othermeans to confirm with key operators that sales activities will restart after the market recovers.
Status of development approval of casino-use video slot machines
Name of model

Conditions

Pachinko Bonus Series No.1 Machine

Has obtained approval in Macau, and has obtained approval in Singapore in May 2020

Pachinko Bonus Series No.2 Machine

Has obtained approval in Macau, and has obtained approval in Singapore in May 2020

Pachinko Bonus Series No.3 Machine

Has obtained approval in Macau, and has obtained approval in Singapore in November 2019

Pachinko Bonus Series No.4 Machine

Has obtained approval in Macau, and has obtained approval in Singapore in January 2021

Source: Prepared by FISCO from the Company’s results briefing materials

The Macau casino market is gradually recovering as the restrictions on entry from mainland China, which accounts
for about 70% of the number of visitors, have been lifted since September 2020. Although the total revenue in April
2021 was still low at 36% compared to two years ago, it is expected to recover to a certain level after the fall of2021, and the Company is preparing to start business talks with a third casino operator. Depending on the situation
with the COVID-19 pandemic going forward, the Company would like to start negotiations around the fall of 2021.
At FISCO, we think that for the time being, some time will be required before the video slot machines businessmakes a fully-fledged contribution to earnings. It is unclear how long it will take from the trial introduction to thefull-scale introduction and the scale (number of units), but if the machines are liked by a lot of customers, it should
lead to a decent contribution to profits. In any case, the most important thing is that the Company's new products
become attractive machines for customers and casino operators, and we would like to monitor the operation andsales status of the machines that will be introduced on a trial basis in the future.

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html█ Business outlook
The Company will work towards achieving growth again amid
consolidation in the pachinko hall industry spurred by the COVID-19
pandemic
1. Market trends
The pachinko market continues to experience a long-term contraction trend. According to the “White Paper on
Leisure 2020” issued by the Japan Productivity Center, Japan’s pachinko and pachislot playing population in 2019was 8.9 million, a 600,000 person decline from 9.5 million in the previous year, and the pachinko hall market size
(total ball rental fee revenue) fell 3.4% YoY to ¥20.0tn, marking the seventh consecutive year of decline. Data for2020 have yet to be released, but it is clear from the Company’s earnings that the market contracted significantly
due to the COVID-19 pandemic.

Trends in the pachinko and pachislot playing populationand pachinko hall market size
Pachinko and pachislot playing population (left)Market size (right)（10,000 people）
2,000
34.9
33.6
1,800

40.0
30.2

1,600

28.8 28.2

1,400

32.0
26.0 25.5 25.7 25.0

1,200
1,580

1,000

1,660
800 1,710
600

1,450

24.5

23.2 22.7

21.4 20.7

1,720

20.0

1,670

24.0
16.0

1,260
1,110

400

（¥tn）

1,150 1,070
970

940 900

950

890

8.0

200
0

0.0

Source: Prepared by FISCO from the Japan Productivity Center’s “White Paper on Leisure”

Reflecting these conditions, the number of pachinko and pachislot halls continues to decrease, and at the endof 2020, the number of halls was down 6.3% versus the end of the previous year to 9,035 halls (according to the
National Police Agency’s “Current Situation with Amusement and Entertainment Business and Situation with Policing
Amusement and Entertainment-related Crime, etc. in 2020”). Also, in terms of the number of machines installed at
the end of 2020, the number of pachinko machines decreased 4.9% on the end of the previous year to 2,432,000
machines, and the number of pachislot machines declined 4.0% to 1,572,000 machines, so both continue to trend
downward.) At FISCO, we think there is a possibility of further weeding out of weaker, small- and medium-sized halls
in 2021 because of the ongoing sluggish operating rate amid the COVID-19 pandemic as well as the increase ininvestment burden in conjunction with the transition from machine models under the former regulations to machinemodels under the new regulations. In fact, looking at the numbers of pachinko and pachislot machines per hall,
the number has been increasing in the last few years, and stood at 443 (+8 YoY) machines at the end of 2020.
Incidentally, for the Group, the number of pachinko and pachislot machines installed per hall as of March 31, 2021,
was 471 machines.

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Business outlook

The ball rental fee revenue per hall in FY3/20 was slightly more than ¥1.6bn, which was lower than the industry
average of ¥2.07bn. The reason why its ball rental fee revenue is low despite the fact that the number of machines
installed is above the industry average is because the percentage of low playing cost pachinko machines for theCompany is slightly above 71%, which is much higher than the industry average of just over 42%. As previously
stated, the Company has positioned pachinko as a form of daily entertainment that anyone can enjoy, and it has
worked on implementing low-cost operations that allow it to secure profitability even with low playing costs, andthis has allowed it to expand business. At FISCO, we think that the low-cost operation know-how that the Company
has cultivated up until this point will be put to good use amid the headwinds created by the COVID-19 pandemic.

Trends in number of installations and ball rental fee revenue per hallNo. of installations (left)
Ball rental fee revenue (right)（machines）
500

（¥bn）
2.5

2.07

2.02

2.07

2.06

400

2.0

300

1.5
419

412

200

443

435

428

1.0

100

0.5

0

0.0

End of 2016

End of 2017

End of 2018

End of 2019

End of 2020

Source: Prepared by FISCO from the Japan Productivity Center’s “White Paper on Leisure” and the National Police Agency’s“Current Situation with Amusement and Entertainment Business and Situation with Policing Amusement andEntertainment-related Crime, etc. in 2020”

Number of installed machines per hall and number of halls（machines）
600

No. of installed machines per hall (right)
10,986

10,596

No. of halls (left)（halls）
12,00010,060

500

9,639

9,035

10,000

400

8,000

300

6,000

200

412

419

428

435

443

100

4,000
2,000

0

0
End of 2016

End of 2017

End of 2018

End of 2019

End of 2020

Source: Prepared by FISCO from the National Police Agency’s “Current Situation with Amusement and Entertainment
Business and Situation with Policing Amusement and Entertainment-related Crime, etc. in 2020”

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Business outlook

2. Growth strategy
As its growth strategy in the pachinko business, the Company will work on five themes: multiple-hall operation; low
playing cost operation; product development; data-driven approach; and cost management.
(1) Multiple-hall operation
The effects of the COVID-19 pandemic have been prolonged, and the weeding out and consolidation of pachinkohalls is accelerating, including the closing of 666 halls in the industry in 2020. Amid this, backed by its abundantfunding strength, the Company will advance multiple-hall operation by purchasing unoccupied properties, aswell as through M&A and other measures. Properties targeted by the Company must be able to accommodate
400-500 machines, which is medium-sized hall of the same scale as the Group, and there must be no other Grouphalls nearby so that halls do not eat into one another’s customer base. However, it seems that the Company will
not actually proceed with multiple-hall operation efforts until the stage when the profits of Group halls can be
expected to be stable.
(2) Low playing cost operation
In general, the Company’s new halls will have low playing costs. The Company has stated its vision of “making
pachinko and pachislot a daily entertainment that everyone can enjoy freely” as a part of the community infrastructure, and will increase the number of low-fee ball rental halls in order to achieve this vision. An advantage offocusing on low playing cost halls is that the Company can open halls in small commercial areas due to the wide
range of customer types that enjoy such halls.
(3) Product development
The Company will strengthen its product development of private-brand machines. As stated earlier, developing
and introducing products matching customers’ needs will reduce costs and differentiate the Company’s halls
from those of its competitors.
(4) Data-driven approach
In its hall operations, the Company will advance efforts taking advantage of big data. Specifically, the Company
will analyze customer needs based on playing data and customer data, and reflect the findings in machine lineups
to raise the operating rate.
(5) Cost management
As discussed above, the Company will improve hall profitability by applying its hall operation revisions to all of
its halls.
At FISCO, we believe that the consolidation in the pachinko hall industry by large capital will proceed, spurredby the COVID-19 pandemic. As a part of this, we forecast that this will be a good opportunity to rekindle growth
based on market share expansion for the Company, which has a wide range of customers as a result of its low
playing cost business and due to the fact that it has firmly established low-cost operations. Although the Groupcurrently is the leader in the industry in terms of the number of Group halls, its market share is approximately 5%,
and we feel there is ample room for growth through an expansion of its market share.

We encourage readers to review our complete legal statement on “Disclaimer” page.

17 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html

Business outlook

Simplified income statement and key indicators(¥mn)
FY3/17

FY3/18

FY3/19FY3/20

Revenue

156,869

152,092

146,371

142,483

98,602

YOY

0.6%

-3.0%

-3.8%

-2.7%

-30.8%

142,142

136,727

128,024

122,31197,564

2.8%

-3.8%

-6.4%

-4.5%

-20.2%

Business expenses
YOY

FY3/21

5,622

5,049

5,023

5,020

4,340

YOY

-3.0%

-10.2%

-0.5%

-0.1%

-13.5%

Other income

9,224

9,458

8,971

8,446

11,561Other expenses

2,430

2,425

2,953

2,084

1,531

Operating profit

15,89917,34919,342

21,514

6,728-12.5%

9.1%

11.5%

11.2%

-68.7%

Financial income

233

236

471

461

286

Financial expenses

1,307

781

444

2,469

2,672

SG&A expenses

YOY

14,825

16,804

19,36919,5064,342

YOY-14.8%

13.3%

15.3%

0.7%

-77.7%

Income taxes

5,520

5,879

6,778

6,759

1,991

Net profit for the year

9,305

10,925

12,591

12,7472,351-11.7%

17.4%

15.2%

1.2%

-81.6%

Profit before income taxes

YOY

9,360

10,87012,596

12,7482,363

YOY-11.2%

16.1%

15.9%

1.2%

-81.5%EBITDA

28,46929,524

31,13631,151

16,781

YOY

-6.6%

3.7%

5.5%

0.0%

-46.1%Net profit attributable to owners of the Company

EPS (¥)

12.2

14.2

16.4

16.6

3.1

Dividend per share (¥)

12.00

12.00

12.00

9.00

5.00

Source: P repared by FISCO from the Company’s financial statements announcement, results briefing materials and materials provided by theCompany

Statement of consolidated financial position(¥mn)
End-FY3/17

End-FY3/18

End-FY3/19

End-FY3/20

End-FY3/21

63,07253,14559,87555,79891,79048,49940,53347,537

41,81074,661

Trade receivables

563

469

614

554

361

Non-current assets

142,043

131,826

125,457

221,441

209,283

Current assets
Cash and cash equivalents

106,687

98,794

95,445105,206

96,415

Licensing assets

-

-

-

79,04877,537

Intangible assets

3,833

3,545

3,112

3,623

3,348

Total assets

205,115

184,971

185,332

277,239

301,073

Current liabilities

Property, plant and equipment

38,496

39,64336,45244,02859,812

Trade and other payables

18,282

19,22019,297

14,801

19,997

Borrowings

7,281

7,351

2,124

3,008

11,380

Lease liabilities

302

256

227

12,185

12,040Non-current liabilities

29,738

7,813

7,080

98,479109,289

22,768

1,221

502

10,22022,587

575

326

353

81,611

79,899Total liabilities

68,23447,45643,532

142,507

169,101

Total equity

136,881

137,515

141,800

134,732

131,972

Total liabilities and equity

205,115

184,971

185,332

277,239

301,073

Borrowings
Lease liabilities

Source: Prepared by FISCO from the Company’s financial statements announcement and results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

18 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html█ Returns to shareholders
FY3/21 period-end dividend of ¥2.0 per share
The Company is highly conscious of the significance of returns to shareholders because it recognizes the importanceof raising shareholder value in order to achieve sustainable growth. Based on this view, its policy is to pay stabledividends.
In light of the current situation with earnings, the Company decided on a FY3/21 period-end dividend of ¥2.0 per
share. The full-year dividend is ¥5.0 per share, and the full-year dividend payout ratio is 160.9%. Also, in FY3/21, theCompany carried out ¥1,437mn in stock buybacks (13,284,600 shares; approximately 1.7% of outstanding shares).

Trends in dividend per share and dividend payout ratio
Interim dividend (left)

Period-end dividend (left)

Dividend payout ratio (right)

（¥mn）
15.0

200.0%
160.9%

12.0

9.0

6.0

160.0%

6.0

6.0

73.0%

98.8%

120.0%

6.0
3.0

80.0%

54.1%

84.1%

2.0

3.0

6.0

6.0

6.0

40.0%

6.0
3.0

0.0

0.0%
FY3/17

FY3/18

FY3/19FY3/20FY3/21

Source: Prepared by FISCO from the Company’s results briefing materials and materials provided by the Company

We encourage readers to review our complete legal statement on “Disclaimer” page.

19 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

DYNAM JAPAN HOLDINGS

6-Jul.-2021

06889 Hong Kong Stock Exchange

https://www.dyjh.co.jp/english/ir/index.html█ CSR/ESG initiatives
Carrying out workplace reforms and developing and appointing
women managers among other measures with the aim of enhancing
long-term corporate value
1. Enhancement of long-term corporate value through CSR
As a listed company, the Company not only conducts compliance management in line with the laws and regulations
and seeks to maximize profits, but also possesses strong awareness of CSR (Corporate Social Responsibility) while
positioning its aim of building “regional infrastructure” as the axis of management.
Details can be found in its “ESG Report 2020.” The Company conducts internal discussions and also interacts withexternal parties (other companies, local communities, etc.) about a variety of topics, including work style reforms,
training women managers, and efforts to prevent second-hand smoking, all with the aim of enhancing long-term
corporate value.

Actively disclosing information on ESG initiatives, and enhancing
tools for dialogue with long-term investors
2. ESG activities
Pursuit of improvements in enterprise value from a long-term perspective, including ESG, is gaining recognition as
a common theme among long-term investors and companies in an environment that encourages closer dialogue
between investors and companies.
Based on its Group Philosophy of “A centurial commitment to building trust and encouraging dreams,” the Groupis advancing ESG initiatives with the ideal of achieving perpetual growth, and it discloses information about its
ESG philosophy and initiatives on the Company website. Also, the detailed content of its initiatives is found in the
Company’s ESG Report 2020, which is also available on the website. This is also expected to fulfill an importantrole as a tool for dialogue with investors.

We encourage readers to review our complete legal statement on “Disclaimer” page.

20 20

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp