Investment Bridge, one of Japan's leading independent IR services companies, has released a "Bridge Report" on HAPPINET CORPORATION (TOKYO First Section, 7552) reviewing first half fiscal year March 2012 earnings results and fiscal year March 2012 estimates.

Report Highlights

  • During the first half of fiscal year March 2012, sales and ordinary income exceeded estimates by large margins and rose by 4.0% and 84.2% year-over-year respectively.
  • Full year earnings estimates remain unchanged with sales and ordinary income expected to grow by 0.6% and 6.2% year-over-year, respectively. Despite the stronger than expected first half, estimates are based on conservative assumptions due to the seasonal tendency for a greater amount of earnings to occur in the second half.
  • On December 1, HAPPINET conducted a two for one stock split as a means of expanding its shareholder base and increasing liquidity, and projects a yearend dividend of JPY11.25 per share.

HAPPINET CORPORATION is a comprehensive intermediary distributor operating in the realm of toys and other entertainment products. The Company conducts operations in a wide range of businesses spanning toys, visual and music software, video games, amusement products (Capsule toys, card games, others), and other product areas, in addition to planning and creating original toy products and visual contents. At the end of fiscal year March 2011, NAMCO BANDAI Holdings Inc. was the top shareholder with 2.94 million shares or 24.5% of total shares issued.

Sales during the first half grew by 4.0% year-over-year to JPY88.50 billion. Growth of 12.2% and 32.0% year-over-year in sales of the toys and amusement business segments offset declines of 2.9% and 11.8% in the sales of visual and music, and video game business segments, respectively. The contribution of the amusement business with its higher profit margins, stronger sales, and reductions in inventory liquidation losses allowed gross margins to improve. While labor and other SG&A expenses rose, operating income grew by 86.8% year-over-year to JPY2.31 billion, and operating margin improved from 1.5% in the previous first half to 2.6% in the current first half.

At the end of the first half of the current term, total assets grew by JPY1.88 billion from the end of the previous term to JPY50.39 billion. An increase in inventories is attributed to a deliberate buildup of surplus ahead of the peak gift giving season, but strict inventory controls contributed to a decline in product returns from the end of the previous first half.

Despite the stronger than expected first half earnings, HAPPINET left its outstanding earnings estimates unchanged due to the seasonality of its earnings with a greater amount of earnings occurring in the second half. Consequently sales and ordinary income are expected to grow by 0.6% and 6.2% year-over-year to JPY192 and JPY3.2 billion respectively. But the Bridge Report calls attention to the potential for full year earnings to exceed estimates considering HAPPINET's various business endeavors and new products lineup projected for the second half.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/7552/20111228.html

About Bridge Report:

Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies.

Investment Bridge Co., Ltd.
Kaoru Hosaka, +81-3-5842-5765 (Japanese correspondence only)
happinet@cyber-ir.co.jp (English and Japanese correspondence)