Gamecard Joyco Holdings Inc is primarily engaged in operating pachinko prepaid card system related businesses. It has four divisions. The machines division sells card units, ticket vending and payment machines, settlement machines and others primarily through distributors. The cards division sells magnetic cards, IC cards and IC coins itself or through participating stores. The system usage fees division collects usage fees for providing and operating prepaid card systems. The construction and maintenance division is engaged in providing machine installation and maintenance services based on the contracts between distributors and participating stores.
From this balance sheet I can determine the liquidity of assets. Referring to the translated notes in the Annual report the 'deposit money' is a cash deposit settled in the short term so it can be added to our net cash calculation.
This brings the Price/Net Cash to 57% which is a substantial discount to the market price. A current ratio of almost 9x is also very good as it indicated high liquidity.
The total liabilities we can just assume are all payable and hence there is no need to discount anything here.
Using the above information as context to understand the balance sheet, we can see that net cash is higher than what is seen on this Stockopedia balance sheet as it doesn't take into account the other current assets.
On another note, retained earnings are stable or slightly growing while still maintaining a 2.75% dividend yield, giving us further incentive to hold the stock.
Ownership structure is largely Japanese corporations that own the majority of shares outstanding and there is very little trading of these shares.
Some of these strategic entities that own the stock are Pachinko retailers and Pachinko Manufacturers, of which both are key to the industry value chain Gamecard operates in. The below notice outlines the original acquisition of shares and the intent of doing so.
This seems to be a 'Keiretsu' arrangement, which is essentially stakeholders owning eachothers shares to improve relations. See the below definition.
So what does this mean for shareholders? Low turnover is a given as a result and there is also low chance of outside forces having a material impact on the company.
However, another 2.5% of the outstanding shares was bought back by the company, utilising only 500m JPY to do so. Given net cash of close to 40b JPY you can see how cheap they bought these shares. Why are they suddenly implementing this initiative now? There is mention in their announcement that the purpose of purchasing stock is to improve shareholder returns and improve capital efficiency.
Gamecard Joyco offers a deep discount to liquidation value with a strategic structure of shareholders all working towards the common goal of improving the industry. With this in mind it's not difficult to see why earnings have been positive with little deviation. Potential catalysts exist with the sudden intiative to purchase stock recently, with excessive liquidity we could see this initiative continue in the future.