BJCorp/BJtoto ... Feb10

News on BJCorp’s unit in Vietnam is close to receiving a gaming licence in the country – probably the first such permit to be given out there.

The licence will be awarded to BJCorp’s 80% owned subsidiary Berjaya Lottery Vietnam Ltd, in which the group’s gaming arm Berjaya Sports Toto Bhd holds the remaining 20% stake.

At present, it is not clear if the licence is for lottery or for a number forecast operator offering 4D and lotto games. The lottery in Vietnam is now under state governance, with earnings channeled into public amentities.

If all goes well, the licence bodes well for BJCorp. It would mean the emergence of another cash cow in the group besides BJToTO, in which it holds a 48.26% stake.

Going by BJtoto’s earnings track record, Vietnam could prove to be profitable market for the company. Its population of over 80 million would offer BJCorp a much larger market than Malaysia, which is about one third its size. Additionally, Vietnam is a non Muslim country, which means it has a bigger target group to reach out to.

Additionally, competition is heating up in Malaysia. BJtoto’s 20% stake in BLVL will therefore enable it to tap a new market to boost future earnings. If the licence is for 4D and jackpot games – which are new to Vietnam – Berjaya group could have the whole pie to itself.

Be that as it may, there is no record of NFOs, including BJtoto, having done well overseas.

BJcorp’s venture in Vietnam will remind investors of Magnum’s fruitless effort to expand in Indonesia market years ago. But it may not be a fair comparison because Vietnam is not a Muslim nation. It could be a whole different ball games.

Still uncertain about BJcorp’s Vietnam foray as there are still a lot of unresolved issues. The gaming industry there remains a fragmented one. The lottery, in particular, is carried out by the provincial governments, with no centralized regulations.

Given that the lottery provides part of the government’s earnings, things may not be easy for BJCorp. The provincial authorities would be protective about their own business. It would be better to work in a joint venture basis.

The lottery in Vietnam is under the state governance and management, meaning that no private companies are allowed to operate the lottery in Vietnam.

In regards to electronic gaming, like jackpots, only three or four star hotels that are licensed by the government are allowed to operate electronic games on their premises. However, only foreigners are allowed to play electronic games provided by licensed operators.

There are also restrictions on the locals with regard to gaming activities.