Chinese lottery group DJI (DJI:AIM) has had a torrid year as a result of China’s decision to suspend online lottery sales, but the prospects for 2016 are looking a little brighter.
The £51 million cap, which has historically derived 96% of its revenue from online lottery sales in China, has seen its share price plunge 62.6% to 34.4p this year.
The sale of online lottery tickets was halted by the government in March pending a regulatory investigation.
The suspension, which has yet to be lifted, caused DJI’s pre-tax loss to widen from £2.3 million to £3.3 million in the first half of the year.
Sources in China are optimistic the suspension will be lifted in the New Year in time for the start of the UEFA European Championship in June. Football betting is one of the core products of the Chinese sports lottery.
Even if the suspension isn’t lifted soon, DJI’s revenues are expected to grow next year as a result of the joint venture it has formed with Heilongjiang Sports Bureau.
The joint venture has launched a business-to-business online booking platform for sporting events, based on DJI’s technology. A business-to-consumer version of the platform is expected to follow in March 2016.
The platforms are expected to be a higher contributor to DJI’s revenues than online lottery sales, even after the suspension is lifted.
DJI’s key challenges will be persuading investors of the merits of its new platform and overcoming people’s fears of investing in a Chinese AIM stock, following several high profile disasters.
