HAPPINET CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥196.44B
• Operating Income: ¥8.71B
• Net Income: ¥4.39B
• EPS: ¥303.88

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Happinet (7552) delivered strong FY2026 Q2 (cumulative) results under JGAAP on a consolidated basis, with clear evidence of operating leverage and improving profitability. Revenue grew 16.5% YoY to ¥196.4bn, while operating income rose 33.5% to ¥8.71bn, outpacing sales and lifting operating margin to 4.4–4.5%. Net income increased 52.1% to ¥6.67bn, pushing the net margin to 3.40%, supported by modest non-operating gains (ordinary income above operating income). DuPont metrics indicate ROE of 10.97%, driven by a 3.40% net margin, 1.475x asset turnover, and 2.19x financial leverage—an efficient, distribution-centric model with moderate leverage. Gross margin was 11.0%, and EBITDA margin was 4.8%, reflecting controlled SG&A and disciplined cost management. Liquidity appears robust: current ratio 165.6%, quick ratio 151.7%, and working capital of ¥38.4bn, providing headroom for seasonal swings. Capital structure is balanced, with total liabilities/equity at 1.08x; the reported equity ratio of 0% is an unreported item and should be disregarded. Cash generation tracks earnings: operating cash flow (OCF) was ¥6.99bn versus net income of ¥6.67bn (OCF/NI 1.05), indicating fair earnings quality. Inventory stood at ¥8.16bn; using period-end inventory against cost of sales implies very high turnover, consistent with a fast-moving distribution portfolio. Free cash flow cannot be reliably assessed because investing cash flow (and thus capex) was not disclosed; the zero value reflects non-disclosure rather than true zero. Financing cash outflow of ¥3.43bn suggests shareholder returns and/or debt repayment, but details are not provided. Dividend data (DPS and payout ratio) were not disclosed; despite negative financing CF, we cannot infer the exact dividend policy from this dataset. Share count and cash balance were also not disclosed, limiting per-share and liquidity granularity; EPS was reported at ¥303.88, which is the only reliable per-share metric provided. The effective tax rate appears to be approximately 25–26% based on reported tax expense and pre-tax income, despite a reported 0% metric flag (non-disclosure artifact). Overall, Happinet demonstrates healthy top-line momentum, margin expansion, solid ROE, and adequate liquidity, with the main analytical constraints stemming from unreported cash and investment details.

Profitability Analysis

ROE_decomposition: ROE 10.97% = Net margin 3.40% × Asset turnover 1.475 × Financial leverage 2.19. This reflects a distribution-driven model with strong asset turns and moderate leverage supporting a double-digit ROE. margin_quality: Gross margin 11.0% (¥21.68bn GP on ¥196.44bn revenue) and operating margin ~4.4% (¥8.71bn OI), with net margin 3.40% (¥6.67bn NI). Ordinary margin (~4.5%) exceeds operating margin, implying positive non-operating contributions. Expense discipline is evident as operating profit grew 33.5% on 16.5% revenue growth. operating_leverage: Revenue +16.5% YoY vs operating income +33.5% indicates positive operating leverage. EBITDA grew to ¥9.52bn (margin 4.8%), with D&A at ¥0.81bn, suggesting fixed-cost absorption benefits and controlled overheads.

Growth Assessment

revenue_sustainability: Top-line growth of 16.5% YoY is robust for a distributor, likely driven by strong product pipelines and seasonal titles. Asset turnover of 1.475x underscores efficient throughput, supporting the sustainability of current run-rate barring product cycle volatility. profit_quality: Net margin at 3.40% and OCF/NI at 1.05 point to earnings largely backed by cash generation. The ~25–26% effective tax rate (derived) appears normalized. Ordinary income exceeding operating income suggests stable non-operating items but bears monitoring. outlook: With evidence of operating leverage and adequate liquidity, the near-term outlook is constructive. Key sensitivities include product mix, supplier terms, and holiday-season sell-through. Sustaining mid-single-digit operating margins remains the central lever for continued ROE at ~11%.

Financial Health

liquidity: Current ratio 165.6%, quick ratio 151.7%, working capital ¥38.42bn. Inventory ¥8.16bn is modest relative to cost of sales, limiting obsolescence risk. Cash and equivalents were not disclosed (reported zero reflects non-disclosure). solvency: Total liabilities/equity 1.08x indicates moderate leverage. Interest expense was not disclosed (reported zero), so interest coverage cannot be computed from this dataset, but ordinary income comfortably exceeds operating income, suggesting no material interest drag. capital_structure: Total assets ¥133.22bn vs equity ¥60.80bn (assets/equity 2.19x). The reported equity ratio of 0% is a non-disclosure artifact; based on totals, equity/asset would approximate 45.6% if calculated, but we cite only the disclosed figures.

Cash Flow Quality

earnings_quality: OCF ¥6.99bn vs NI ¥6.67bn gives OCF/NI 1.05, indicating earnings are cash-backed with limited accrual stretch. FCF_analysis: Investing cash flow was not disclosed (reported zero), preventing a reliable FCF estimate. D&A at ¥0.81bn implies some ongoing reinvestment needs; if capex approximates D&A, FCF would likely be positive, but this remains an assumption. working_capital: Inventories ¥8.16bn versus cost of sales ¥146.87bn suggests high turnover. Receivables/payables detail is not provided; however, current ratios imply a net receivable position is manageable.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed (reported zeros). With EPS at ¥303.88 and NI of ¥6.67bn, there appears capacity for distribution, but without DPS we cannot assess payout behavior. FCF_coverage: FCF cannot be determined due to undisclosed investing cash flows. Consequently, dividend coverage by FCF cannot be evaluated from this dataset. policy_outlook: Financing CF of -¥3.43bn suggests capital returns and/or debt repayment, but the breakdown is unavailable. Absent disclosed DPS, we refrain from inferring policy changes.

Risk Assessment

Business Risks:

• Product cycle and hit-dependence in toys/entertainment distribution driving revenue volatility
• Supplier concentration and terms impacting gross margin and working capital
• Seasonality (holiday period) affecting quarterly cash flows and inventory risk
• Channel competition and pricing pressure from e-commerce and mass retailers
• FX and import cost exposure embedded in procurement, depending on hedging

Financial Risks:

• Limited visibility on cash balances and capex due to non-disclosure in this dataset
• Potential working capital swings (receivables and payables) affecting OCF
• Possible off-balance financing or lease obligations not captured in interest expense line
• Dividend or buyback commitments (if any) could compete with reinvestment in peak seasons

Key Concerns:

• Investing cash flow unreported, preventing FCF assessment
• Dividend metrics unreported, obscuring shareholder return policy
• Interest expense and cash balance unreported, limiting coverage and liquidity analysis granularity

Investment Implications

Key Takeaways:

• Strong operating leverage: revenue +16.5% YoY, operating income +33.5%
• Healthy ROE at 10.97% driven by efficient asset turns (1.475x) and moderate leverage (2.19x)
• Earnings quality sound with OCF/NI at 1.05
• Robust liquidity: current ratio 165.6%, quick ratio 151.7%
• Margin profile improving: operating margin ~4.4–4.5%, EBITDA margin 4.8%
• Data gaps on cash, capex, DPS constrain FCF and dividend analysis

Metrics to Watch:

• Sell-through and inventory levels into year-end peak season
• Gross margin trajectory and supplier terms
• SG&A efficiency to sustain operating margin gains
• Capex and investing CF disclosure to firm up FCF
• Ordinary vs operating income gap (non-operating items)
• Working capital intensity (DSO/DPO turns) and OCF/NI ratio

Relative Positioning: Within Japanese distribution/entertainment peers, Happinet exhibits above-average asset turnover and solid mid-cycle ROE with moderate leverage and improving margins; visibility on cash/FCF and explicit shareholder return policy disclosure would enhance comparability.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis