Investment Bridge Announces Investment Opinion: Bridge Report on HAPPINET CORPORATION Issued: First Half FY3/13 Earnings Fall On Weaker Market Conditions, FY3/13 Estimates Revised Down

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 2013 earnings results and fiscal year March 2013 estimates.

Report Highlights

• HAPPINET's sales and ordinary income declined by 13.9% and 55.7% year-over-year respectively during the first half due in part to a lack of hit products in the Toy and Amusement Businesses.
• Earnings estimates for the full FY3/13 have been revised down to reflect the weak first half performance and now call for sales and ordinary income to decline by 14.2% and 40.4% year-over-year.
• However, the Bridge Report notes that a number of positive factors have begun to appear, including favorable demand for new products in the Christmas gift giving season, and calls attention to the Sixth Medium-Term Management Plan "CAP14" designed to grow earnings over the intermediate term.

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 the first half of FY3/13, sales declined by 13.9% year-over-year to JPY76.2 billion due to declines in sales of Toy and Amusement Businesses arising from a lack of hit products compared with the previous first half. Popularity of software and social games distributed over the Internet also contributed to difficult conditions in the Visual and Music, and Video-Game Businesses. While gross margin remained in line with the previous first half, reductions in administrative expenses could not offset lower sales and caused operating income to fall 56.5% year-over-year to JPY1.0 billion. Due to the weaker first half earnings, HAPPINET has revised its full year estimates for FY3/13 downwards and now calls for sales and operating income to fall by 14.2% and 40.3% year-over-year to JPY170.0 and JPY2.9 billion respectively.

The Bridge Report calls attention to recent positive factors including favorable reception of new products in the approach to Christmas, the introduction of highly profitable original products, the launch of "Nintendo Wii U", and a bottoming in card games. The Report also highlights the Sixth Medium-Term Management Plan "CAP14" (From FY3/13 to FY3/15) based on the theme of "Grow as a comprehensive entertainment trading company and venture into new business domains". This Plan calls for HAPPINET to grow its intermediate term earnings by its efforts to sustainable growth of existing businesses, venture into new business domains, and strengthen and establish distributing functions. In addition, efforts to expand sales of highly profitable original products, and aggressive development for SNS games and other products in the realm of digital entertainment are also being conducted.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/7552/20130116.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.