Investment Bridge Announces Investment Opinion: Bridge Report on HAPPINET CORPORATION: FY3/13 Earnings Fall on Weaker Operating Conditions, FY3/14 Estimates Call for Earnings Growth to Return

Investment Bridge, one of Japan’s leading independent IR services companies, has released a "Bridge Report” on HAPPINET CORPORATION (TOKYO First Section, 7552) reviewing fiscal year March 2013 earnings results and fiscal year March 2014 estimates.

Report Highlights

• Consolidated sales and ordinary income declined by 10.7% and 38.8% year-over-year during FY3/13 due to a lack of hit products and the disappearance of extraordinary demand created by the Great East Japan Earthquake.
• HAPPINET’s FY3/14 earnings estimates call for 1.8% and 13.6% year-over-year increases in sales and ordinary income on the back of increases in sales of the video games business due to the introduction of "Play Station 4” game platform and the introduction of in-house products and products with sole distributorship rights.
• The Bridge Report calls attention to the outlook that HAPPINET’s long term profitability remains above the trend line called for by management and that its long term growth strategy remains in play. Over the intermediate term, the "Manga2.5” concept launched in February is a key development to keep a close watch upon.

HAPPINET CORPORATION was originally founded in 1969 and is now one of the Japan’s leading distributors of toys, video and music software, video games and amusement products. The current name HAPPINET was assumed in 1991 when it underwent a merger with two other BANDAI wholesalers with the goal of implementing strategies to cope with changing distribution systems to match changes in the market.

During FY3/13 consolidated sales fell by 10.7% year-over-year to JPY176.7 billion due in part to a lack of hit products and subsequent declines in sales of the Toy and Amusement Businesses, and the disappearance of the positive influence of the Great East Japan Earthquake. Furthermore, competition from distributed software and social games caused the packaged software market to stagnate and led to difficult operating conditions in the Visual and Music, and Video-Game Businesses.

HAPPINET’s FY3/14 earnings estimates call for a recovery in both sales and ordinary income growth of 1.8% and 13.6% year-over-year to JPY180.0 and JPY3.5 billion respectively. The Toy and Amusement Businesses are expected to trend sideways, but sales of the Video-Game Business are expected to rise on the back of the introduction of the new "Play Station 4” game platform. A dividend payment of JPY22.5 per share is anticipated.

The Bridge Report calls attention to several points including the outlook that the long term trend for profit growth has not been broken. The Report also highlights the recently launched "Manga2.5” and "Manga2.5 Platform” concepts, which are designed to cultivate yet to be discovered superior manga (Japanese term for comics) and overseas markets for them. These new concepts will allow HAPPINET to leverage its new capability as a contents manufacturer and its traditional capability as a distributor to diversify its business model as part of its long term growth strategy.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/7552/20130724.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.