KCR Inc. Announces Investment Opinion: KCR Inc. Issues Report on Scroll Corporation Reviewing Its Business Strategies and Earnings

NOTE TO EDITORS: The following is an investment opinion issued by KCR Inc.

TOKYO--()--KCR Inc., an independent research and investor relations support company providing reports on various publicly traded Japanese companies, has released a report on Scroll Corporation (TOKYO:8005) reviewing its business model and earnings.

Report Highlights

  • Scroll is a direct marketer, which mainly handles women's apparel products. The company also has advantages in the BtoBtoC market.
  • For the period ended March 2015, sales declined to 63,555 million yen (6.9% decrease year-on-year), operating loss of 1,743 million yen, and ordinary loss of 1,442 million yen. However, after a series of investments, profit performance is expected to improve substantially next year.
  • KCR forecasts Scroll's performance for the period ended march 2016 as sales of 68,004 million yen, operating profit of 680 million yen, ordinary profit of 1,020 million yen, and net profit of 765 million yen, all of which are slightly better than planned by the company. Scroll is expected to show an even clearer trend of improvement from next year.
  • Tomohisa Tsurumi will be appointed as President. The current president Mamoru Horita will stay in a decision-making role as Chairman. For the time being, no change will be made to Scroll's company policy.
  • IR activities for individual shareholders will also start in addition to institutional shareholders. The supplemental benefit plan will be provided to long-term shareholders.
  • KCR's earnings estimates indicate that the current stock price of 296 yen is significantly low. KCR rates Scroll +2 (BUY) in its general valuation rating, and set an immediate target price of 400 yen.

Read the full research report: http://www.scroll.jp/up_pdf/8005TH150616Efreep.pdf

Scroll Corporation, founded in 1939, is based in Hamamatsu city, Shizuoka. Its main activity is the catalogue and Internet direct marketing business. Scroll's core business is a mail order business dealing mainly in women's apparel products. It also handles innerwear products, furniture and interior products, accessories, cosmetics, and healthcare products. Furthermore, taking advantage of the group's infrastructure, Scroll provides solution services for other mail order retailers and EC business operators.

The results for the period ended March 2015 were sales of 63,555 million yen (6.9% decrease year-on-year), operating loss of 1,743 million yen (increase from 147 million yen for the previous year), and ordinary loss of 1,442 million yen (decrease from ordinary profit of 233 million yen for the previous year). The dissaving of deferred tax asset resulted in a net loss of 2,649 million yen (decrease from net profit of 517 million yen for the previous year). This was due to weak consumer buying appetite after the adoption of a consumer tax increase, inclement weather, and rising costs caused by a weak yen.

KCR now forecasts that Scroll's earnings power is on a substantial recovery trend after a series of investments. Estimates for the period ended March 2016 are sales of 68,004 million yen, operating profit of 680 million yen, ordinary profit of 1,020 million yen, and net profit of 765 million yen. These suggest that business will improve slightly from the company's forecasts and build a clearer trend toward higher profitability from next year.

For further details about Scroll Corporation please refer to the following website:

http://www.scroll.jp/english/index.html

Attentions

This report is intended to provide reference information for investment decisions, and is not intended to solicit investment. Although figures and opinions in the report are based on data obtained from sources deemed reliable, KCR Inc. does not guarantee their accuracy. KCR will assume no responsibility for any loss or damage caused by using part or all of these materials. Investors are advised to make investment decisions based on their own judgment and responsibility. Opinions and forecasts described in the report were made as of its preparation date, and we do not make any guarantees about their accuracy and completeness. In addition, these opinions and forecasts may change in the future without prior notice. KCR reserves all rights with respect to the contents. Copying or reproducing the contents without prior approval is prohibited.

Contacts

KCR Inc.
Yojiro Kindaichi for Scroll Corporation
+81-6-6965-6100 (Japanese correspondence only)
info@kcr-inc.com (English and Japanese correspondence)

Contacts

KCR Inc.
Yojiro Kindaichi for Scroll Corporation
+81-6-6965-6100 (Japanese correspondence only)
info@kcr-inc.com (English and Japanese correspondence)