Infocom Corporation is a medium-sized IT company that provides digital entertainment content for general consumers (B2C) and business solutions for companies (B2B). In its Digital Entertainment segment, Infocom mainly operates Mecha Comic®, an e-comics store for smartphones and mobile phones. Mecha Comic is the industry’s largest e-comics store by sales (Shared Research estimates a market share of 12%). In the Business Solution segment, the company sells and operates proprietary packages and cloud services targeting medical institutions, companies, and government entities. It also provides systems integration services involving outsourced information systems development and operations to large corporations.

In FY03/21, the Digital Entertainment segment accounted for 64.7% of sales (73.2% of operating profit), and the Business Solution segment accounted for 35.3% of sales (26.7% of operating profit). Of total Digital Entertainment segment sales, more than 99% comes from e-comics, primarily Mecha Comic. The e-comics service is the company’s growth driver with sales growing at a CAGR of 21.6% over the five-year period through FY03/21 and operating profit growing at a CAGR of 32.2%. Incremental profit margins are high because personnel expenses are low and other expenses (including advertising, distribution, and member management systems) are largely fixed.

The Business Solution segment provides a stable source of earnings. It has three subsegments: Health IT (software packages and services for medical institutions and nursing care facilities), Business Software (software packages and cloud services for companies and government entities), and Enterprise Service Management (system integration for large corporations). Software packages developed by the company in-house have high market shares in healthcare, with the iRad® IT system for hospital radiology departments and the Drug Interaction Clinical Support (DICS) system, and for corporations, with GRANDIT® (web-based enterprise resource planning system). Infocom also receives a steady stream of orders from large companies to develop and operate information systems.

Infocom’s business portfolio is balanced between B2C and B2B, unlike many IT companies, which tend to specialize in serving either consumers or businesses. By developing both a B2C business (Digital Entertainment) and a B2B business (Business Solution segment), the company believes it can achieve higher stability and capture more growth opportunities.

Infocom is the result of a 2001 merger of equals between an IT spin-off of what is now Sojitz Corporation and an IT subsidiary of Teijin Limited (TSE Prime: 3401). Today Infocom remains a consolidated subsidiary of Teijin (TSE Prime: 3401; 58.0% stake at end-FY03/21).

Strengths and weaknesses

In full-year FY03/22, Infocom reported sales of JPY64.6bn (-5.1% YoY), operating profit of JPY10.1bn (-6.6% YoY), recurring profit of JPY10.2bn (-6.8% YoY), and net income attributable to owners of the parent of JPY6.9bn (+10.1% YoY). Excluding headquarters relocation expenses of approximately JPY850mn, operating profit was roughly JPY10.9bn (+1.2% YoY).

Digital Entertainment sales fell 7.9% YoY, while Business Solution sales rose 0.1% YoY. The drop in Digital Entertainment sales reflected a decline in advertising effectiveness due to the impact of pirate sites, the absence of special demand associated with voluntary COVID-19 curfews seen a year ago, and a dearth of big hits among the company's original content. Meanwhile, Business Solution sales increased despite effects from the pandemic.

Operating profit in the Digital Entertainment segment fell owing to decreased sales, but the decline was limited to 1.9% thanks to curbs on advertising. Operating profit in the Business Solution segment rose 9.9% YoY (excluding headquarters relocation expenses of JPY850mn), buoyed by work style reforms (working from home, business practice improvement, head office relocation, etc.) and cost reductions. The gross profit margin fell 0.9pp YoY to 48.6%, the SG&A expense ratio fell 0.7pp YoY to 32.9%, and the operating profit margin fell 0.3pp YoY to 15.6%. Excluding approximately JPY850mn in expenses associated with the relocation of the company's headquarters, operating profit rose 1.2% YoY and the operating profit margin was 16.9%.

The company's FY03/23 earnings forecast calls for sales of JPY70.0bn (+8.4% YoY), operating profit of JPY10.5bn (+4.0% YoY), EBITDA of JPY11.9bn (+3.4% YoY), recurring profit of JPY10.5bn (+3.0% YoY), and net income attributable to owners of the parent of JPY7.0bn (+1.3% YoY). The company expects to pay an annual dividend of JPY45 per share (versus JPY50 in FY03/22, comprising an ordinary dividend of JPY40 and commemorative dividend of JPY10). The company’s medium-term management plan (FY03/21–FY3/23) identifies E-comics and Health IT as strategic business areas and sets out key measures for growth. The company expects the e-book market to continue growing, as the user base expanded as a result of stay-at-home demand and remains solid. In the IT-related market, investment had stagnated due to the COVID-19 pandemic, but is now recovering. With use of cloud services also expanding, the company predicts that IT demand will rebound.

Along with its announcement of Q3 FY03/20 results on January 30, 2020, Infocom briefly outlined its medium-term management plan covering the three-year period from FY03/21 through FY03/23. This was followed by a much more detailed description on June 4, 2020. Under the slogan “United Innovation: Value Co-Creation,” the medium-term management plan (April 2020–March 2023) is targeting FY03/23 sales of JPY85.0–115.0bn, EBITDA of JPY13.0–16.0bn, and ROE of 15% or higher in FY03/23. In keeping with its previous medium-term plan, the core strategies under the medium-term plan are still “pursue growth” and “continue to build a strong foundation to support growth.”

Strengths and weaknesses

We believe Infocom’s strengths to be a business portfolio that balances stable revenue base and growth driver businesses, the exclusive distribution and original comic creation framework of its e-comics store Mecha Comic, and in-house developed software with high market share plus the wealth of experience and expertise that helps it maintain relationships with large customers. Weaknesses are dependence on e-comics distribution in the Digital Entertainment segment, new breakthroughs hindered by past success in the Business Solution segment, and limited synergies between the two segments. (Refer to the Strengths and weaknesses section for details.)

Key financial data

Income statement		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Est.
Sales		37,381	39,139	40,309	40,316	41,768	45,774	51,728	58,375	68,055	64,586	70,000
	YoY	2.4%	4.7%	3.0%	0.0%	3.6%	9.6%	13.0%	12.8%	16.6%	-5.1%	8.4%
Gross profit		16,122	17,254	18,030	18,290	19,616	21,605	24,606	28,271	33,708	31,359
	Gross profit margin	43.1%	44.1%	44.7%	45.4%	47.0%	47.2%	47.6%	48.4%	49.5%	48.6%
SG&A expenses		12,620	13,577	14,424	13,863	14,840	15,776	17,717	20,060	22,896	21,261
	YoY	0.4%	7.6%	6.2%	-3.9%	7.0%	6.3%	12.3%	13.2%	14.1%	-7.1%
	SG&A ratio	33.8%	34.7%	35.8%	34.4%	35.5%	34.5%	34.3%	34.4%	33.6%	32.9%
Operating profit		3,502	3,678	3,606	4,427	4,776	5,829	6,889	8,211	10,812	10,098	10,500
	YoY	2.9%	5.0%	-1.9%	22.8%	7.9%	22.0%	18.2%	19.2%	31.7%	-6.6%	4.0%
	Operating profit margin	9.4%	9.4%	8.9%	11.0%	11.4%	12.7%	13.3%	14.1%	15.9%	15.6%	15.0%
Recurring profit		3,489	3,687	3,692	4,558	4,854	5,982	6,875	8,268	10,936	10,196	10,500
	YoY	2.9%	5.7%	0.1%	23.5%	6.5%	23.2%	14.9%	20.3%	32.3%	-6.8%	3.0%
	Recurring profit margin	9.3%	9.4%	9.2%	11.3%	11.6%	13.1%	13.3%	14.2%	16.1%	15.8%	15.0%
Net income attributable to owners of the parent		2,080	2,042	2,171	728	3,261	4,640	4,783	5,543	6,276	6,912	7,000
	YoY	12.3%	-1.8%	6.3%	-66.5%	347.9%	42.3%	3.1%	15.9%	13.2%	10.1%	1.3%
	Net margin	5.6%	5.2%	5.4%	1.8%	7.8%	10.1%	9.2%	9.5%	9.2%	10.7%	10.0%
Per-share data (split-adjusted; JPY)
Shares issued('000 shares)		57,600	57,600	57,600	57,600	57,600	57,600	57,600	57,600	57,600	57,600
EPS (JPY)		37.26	36.99	39.72	13.32	59.64	84.85	87.46	101.32	114.61	126.20	127.80
EPS (fully diluted; JPY)		-	36.95	39.64	13.28	59.42	84.50	87.07	100.86	114.10	125.65
Dividend per share (JPY)		8.25	8.75	9.25	11.00	12.50	19.00	22.00	31.00	37.00	50.00	45.00
Book value per share (JPY)		320.92	349.21	381.08	384.71	430.75	516.08	595.05	653.82	757.76	806.59
Balance sheet (JPYmn)
Current assets		19,437	21,185	21,814	22,750	23,731	27,636	32,445	36,436	43,964	45,166
	Cash and cash equivalents	10,285	10,749	11,945	11,940	12,403	16,625	20,173	23,491	29,956	31,700
	Trade receivables	7,618	8,320	7,819	8,373	8,784	9,707	10,576	11,459	12,502	10,758
	Inventories	316	438	323	274	366	270	558	392	167	86
	Other	1,219	1,678	1,727	2,163	2,178	1,034	1,138	1,094	1,339	2,622
Fixed assets		6,780	6,617	6,713	8,868	8,889	10,601	11,204	11,651	12,471	12,364
	Tangible fixed assets	3,251	2,936	2,713	2,493	2,575	1,004	892	965	1,054	1,259
	Intangible assets	2,164	2,182	2,223	2,369	2,099	2,010	1,738	2,818	1,639	3,097
	Investments and other assets	1,364	1,500	1,777	4,006	4,214	7,586	8,573	7,867	9,776	8,007
Total assets		26,217	27,802	28,528	31,619	32,620	38,237	43,649	48,087	56,435	57,531
Current liabilities		7,978	8,155	7,408	9,924	8,636	9,667	10,645	11,804	14,241	12,432
	Trade payables	2,566	2,509	2,453	3,107	3,062	3,457	4,159	4,564	4,975	4,377
	Short-term debt	180	101	67	63	61	64	66	59	48	25
	Other current liabilities	5,232	5,545	4,888	6,754	5,513	6,146	6,420	7,181	9,218	8,030
Fixed liabilities		365	284	203	546	318	209	296	123	355	519
	Long-term debt	189	107	81	143	184	182	135	81	32	19
	Other	176	177	122	403	134	27	161	42	323	500
Net assets		17,874	19,364	20,916	21,148	23,665	28,360	32,707	36,159	41,839	44,579
	Capital stock	1,590	1,590	1,590	1,590	1,590	1,590	1,590	1,590	1,590	1,590
	Capital surplus	1,442	1,449	1,448	1,448	1,448	1,449	1,447	1,456	1,556	1,480
	Retained earnings	15,244	16,831	18,523	18,746	21,132	25,089	28,833	32,900	37,479	41,402
	Treasury stock	-563	-821	-820	-820	-819	-816	-816	-805	-795	-792
	Accumulated other comprehensive income	2	46	95	71	204	915	1,492	646	1,673	505
	Non-controlling interests	159	243	36	39	11	4	2	194	107	173
	Share subscription rights	-	26	42	73	98	128	157	177	228	220
Total liabilities and capital		26,217	27,802	28,528	31,619	32,620	38,237	43,649	48,087	56,435	57,531
Cash flow statement(JPYmn)
Cash flows from operating activities		3,032	2,353	3,462	4,169	2,540	5,680	5,671	7,355	9,871	7,148
Cash flows from investing activities		-1,638	-1,033	-1,830	-3,579	-1,110	-686	-1,024	-2,472	-1,643	-3,225
Cash flows from financing activities		-938	-895	-574	-576	-969	-747	-1,105	-1,546	-1,761	-2,217
Financial ratios
Interest-bearing debt		369	208	148	206	245	246	201	140	80	44
Net cash		9,916	10,541	11,797	11,734	12,158	16,379	19,972	23,351	29,876	31,656
ROA((RP-based))		13.7%	13.6%	13.1%	15.2%	15.1%	16.9%	16.8%	18.0%	20.9%	17.9%
ROE(自己資本純利益率)		12.2%	11.1%	10.9%	3.5%	14.6%	17.9%	15.7%	16.2%	16.2%	16.1%
Current ratio		244%	260%	294%	229%	275%	286%	305%	309%	309%	363%
Fixed ratio		37.9%	34.2%	32.1%	41.9%	37.6%	37.4%	34.3%	32.2%	29.8%	27.7%
Equity ratio		67.6%	68.7%	73.0%	66.5%	72.2%	73.8%	74.6%	74.4%	73.5%	76.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: On January 21, 2019, the company resolved to execute a 2-for-1 stock split on March 1, 2019. Annual dividend forecast for FY03/19 uses the number of shares after the split (figures for FY03/18 have also been adjusted to refer to the number of shares after the split).

Recent updates

Basic agreement on business alliance with Kyowa Kikaku Ltd.

2022-05-19

Infocom Corporation signed a basic agreement concerning a business alliance with Kyowa Kikaku Ltd., one of the largest healthcare communication agencies in Japan, on April 27, 2022.

Infocom and Kyowa Kikaku will jointly analyze data (on usage, etc.) regarding pharmaceutical-related digital content provided by pharmaceutical companies to doctors, with a view to improving the service quality of both companies and supporting pharmaceutical companies in their digital marketing efforts.

Infocom provides DigiPro, a communication platform for pharmaceutical companies that their medical representatives (MRs) use to provide drug information to doctors. For its part, Kyowa Kikaku provides solutions for pharmaceutical companies and plans and produces educational content for medical professionals.

Amid increasing digitization of pharmaceutical company sales methods—with the COVID-19 pandemic making it difficult for MRs to meet directly with doctors and leading to an increase in online interviews—pharmaceutical companies are grappling with the task of assessing the understanding and needs of doctors regarding drug information provided via digital technology, and strengthening engagement with doctors.

Overview of alliance

By analyzing data such as page views, reactions to, and use in sales activities of the digital content delivered via Infocom's DigiPro platform, the two companies seek to provide a service that gauges doctors' use and understanding of the digital content produced by pharmaceutical companies, and utilizes the findings in identifying and resolving issues. By drawing on these findings in improving the content of drug information and grasping the needs of doctors, Infocom looks to improve the quality of drug information posted on DigiPro, while Kyowa Kikaku aims to improve the quality of its services for pharmaceutical companies, in both cases contributing to enhanced engagement between pharmaceutical companies and doctors.

Over the long term, the two companies seek to respond to changes in work styles at pharmaceutical companies and in their communication methods with medical professionals such as doctors, combining Kyowa Kikaku's strength in marketing support backed by academic knowledge with Infocom's strength in IT, to develop services that support the sales and marketing activities of pharmaceutical companies.

Trends and outlook

Quarterly trends and results

Cumulative		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q1-Q2	Q1-Q3	Q1-Q4	Q1	Q1-Q2	Q1-Q3	Q1-Q4	Q1	Q1-Q2	Q1-Q3	Q1-Q4
Sales		12,687	27,679	41,200	58,375	15,589	33,213	48,914	68,055	15,873	32,456	47,481	64,586
	YoY	21.2%	19.7%	16.0%	12.8%	22.9%	20.0%	18.7%	16.6%	1.8%	-2.3%	-2.9%	-5.1%
Gross profit		6,099	13,416	20,140	28,271	7,680	16,432	23,955	33,708	7,528	15,685	22,911	31,359
	Gross profit margin	48.1%	48.5%	48.9%	48.4%	49.3%	49.5%	49.0%	49.5%	47.4%	48.3%	48.3%	48.6%
SG&A expenses		4,859	9,553	14,312	20,060	5,589	11,511	16,844	22,896	5,371	10,687	15,838	21,261
	YoY	16.6%	12.9%	11.0%	13.2%	15.0%	20.5%	17.7%	14.1%	-3.9%	-7.2%	-6.0%	-7.1%
	SG&A ratio	38.3%	34.5%	34.7%	34.4%	35.9%	34.7%	34.4%	33.6%	33.8%	32.9%	33.4%	32.9%
Operating profit		1,240	3,863	5,827	8,211	2,091	4,920	7,110	10,812	2,157	4,998	7,073	10,098
	YoY	83.2%	48.8%	53.2%	19.2%	68.6%	27.4%	22.0%	31.7%	3.2%	1.6%	-0.5%	-6.6%
	Operating profit margin	9.8%	14.0%	14.1%	14.1%	13.4%	14.8%	14.5%	15.9%	13.6%	15.4%	14.9%	15.6%
Recurring profit		1,268	3,876	5,842	8,268	2,126	4,950	7,213	10,936	2,191	5,055	7,176	10,196
	YoY	76.1%	48.2%	51.8%	20.3%	67.7%	27.7%	23.5%	32.3%	3.1%	2.1%	-0.5%	-6.8%
	Recurring profit margin	10.0%	14.0%	14.2%	14.2%	13.6%	14.9%	14.7%	16.1%	13.8%	15.6%	15.1%	15.8%
Net income attributable to owners of the parent		859	2,575	3,976	5,543	1,441	3,377	4,925	6,276	1,514	3,445	4,884	6,912
	YoY	79.3%	37.2%	46.4%	15.9%	67.8%	31.1%	23.9%	13.2%	5.1%	2.0%	-0.8%	10.1%
	Net margin	6.8%	9.3%	9.7%	9.5%	9.2%	10.2%	10.1%	9.2%	9.5%	10.6%	10.3%	10.7%
Quarterly		FY03/20				FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	% of Est.	FY Est.
Sales		12,687	14,992	13,521	17,175	15,589	17,624	15,701	19,141	15,873	16,583	15,025	17,105	97.9%	66,000
	YoY	21.2%	18.4%	9.2%	5.9%	22.9%	17.6%	16.1%	11.4%	1.8%	-5.9%	-4.3%	-10.6%		-3.0%
Gross profit		6,099	7,317	6,724	8,131	7,680	8,752	7,523	9,753	7,528	8,157	7,226	8,448
	Gross profit margin	48.1%	48.8%	49.7%	0.0%	49.3%	49.7%	47.9%	51.0%	47.4%	49.2%	48.1%	49.4%
SG&A expenses		4,859	4,694	4,759	5,748	5,589	5,922	5,333	6,052	5,371	5,316	5,151	5,423
	YoY	16.6%	9.3%	7.4%	19.1%	15.0%	26.2%	12.1%	5.3%	-3.9%	-10.2%	-3.4%	-10.4%
	SG&A ratio	38.3%	31.3%	35.2%	33.5%	35.9%	33.6%	34.0%	31.6%	33.8%	32.1%	34.3%	31.7%
Operating profit		1,240	2,623	1,964	2,384	2,091	2,829	2,190	3,702	2,157	2,841	2,075	3,025	96.2%	10,500
	YoY	83.2%	36.7%	62.6%	-22.7%	68.6%	7.9%	11.5%	55.3%	3.2%	0.4%	-5.3%	-18.3%		-2.9%
	Operating profit margin	9.8%	17.5%	14.5%	13.9%	13.4%	16.1%	13.9%	19.3%	13.6%	17.1%	13.8%	17.7%		15.9%
Recurring profit		1,268	2,608	1,966	2,426	2,126	2,824	2,263	3,723	2,191	2,864	2,121	3,020	97.1%	10,500
	YoY	76.1%	37.6%	59.4%	-19.8%	67.7%	8.3%	15.1%	53.5%	3.1%	1.4%	-6.3%	-18.9%		-4.0%
	Recurring profit margin	10.0%	17.4%	14.5%	14.1%	13.6%	16.0%	14.4%	19.5%	13.8%	17.3%	14.1%	17.7%		15.9%
Net income attributable to owners of the parent		859	1,716	1,401	1,567	1,441	1,936	1,548	1,351	1,514	1,931	1,439	2,028	98.7%	7,000
	YoY	79.3%	22.7%	67.2%	-24.2%	67.8%	12.8%	10.5%	-13.8%	5.1%	-0.3%	-7.0%	50.1%		11.5%
	Net margin	6.8%	11.4%	10.4%	9.1%	9.2%	11.0%	9.9%	7.1%	9.5%	11.6%	9.6%	11.9%		10.6%
By segment (cumulative)		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q1-Q2	Q1-Q3	Q1-Q4	Q1	Q1-Q2	Q1-Q3	Q1-Q4	Q1	Q1-Q2	Q1-Q3	Q1-Q4
Sales		12,687	27,679	41,200	58,375	15,589	33,213	48,914	68,055	15,873	32,456	47,481	64,586
	Digital Entertainment	7,823	16,047	24,165	32,983	10,603	22,234	33,102	44,027	10,773	21,399	30,867	40,530
	Business Solution	4,863	11,632	17,034	25,391	4,986	10,978	15,811	24,027	5,099	11,056	16,614	24,055
YoY		21.2%	19.7%	16.0%	12.8%	22.9%	20.0%	18.7%	16.6%	1.8%	-2.3%	-2.9%	-5.1%
	Digital Entertainment	30.4%	25.1%	21.2%	20.0%	35.5%	38.6%	37.0%	33.5%	1.6%	-3.8%	-6.8%	-7.9%
	Business Solution	8.9%	12.9%	9.4%	4.8%	2.5%	-5.6%	-7.2%	-5.4%	2.3%	0.7%	5.1%	0.1%
Operating profit		1,240	3,863	5,827	8,211	2,091	4,920	7,110	10,812	2,157	4,998	7,073	10,098
	Digital Entertainment	1,069	2,536	3,933	4,951	1,931	3,827	5,815	7,909	2,090	4,146	6,091	7,760
	Business Solution	168	1,321	1,887	3,250	157	1,088	1,287	2,892	64	846	975	2,329
	Adjustments	2	4	7	9	2	4	7	9	2	4	6	8
Operating profit margin		9.8%	14.0%	14.1%	14.1%	13.4%	14.8%	14.5%	15.9%	13.6%	15.4%	14.9%	15.6%
	Digital Entertainment	13.7%	15.8%	16.3%	15.0%	18.2%	17.2%	17.6%	18.0%	19.4%	19.4%	19.7%	19.1%
	Business Solution	3.5%	11.4%	11.1%	12.8%	3.1%	9.9%	8.1%	12.0%	1.3%	7.7%	5.9%	9.7%
By segment (quarterly)		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		12,687	14,992	13,521	17,175	15,589	17,624	15,701	19,141	15,873	16,583	15,025	17,105
	Digital Entertainment	7,823	8,224	8,118	8,818	10,603	11,631	10,868	10,925	10,773	10,626	9,468	9,663
	Business Solution	4,863	6,769	5,402	8,357	4,986	5,992	4,833	8,216	5,099	5,957	5,558	7,441
YoY		21.2%	18.4%	9.2%	5.9%	22.9%	17.6%	16.1%	11.4%	1.8%	-5.9%	-4.3%	-10.6%
	Digital Entertainment	30.4%	20.4%	14.3%	16.7%	35.5%	41.4%	33.9%	23.9%	1.6%	-8.6%	-12.9%	-11.6%
	Business Solution	8.9%	16.0%	2.4%	-3.5%	2.5%	-11.5%	-10.5%	-1.7%	2.3%	-0.6%	15.0%	-9.4%
Operating profit		1,240	2,623	1,964	2,384	2,091	2,829	2,190	3,702	2,157	2,841	2,075	3,025
	Digital Entertainment	1,069	1,467	1,397	1,018	1,931	1,896	1,988	2,094	2,090	2,056	1,945	1,669
	Business Solution	168	1,153	566	1,363	157	931	199	1,605	64	782	129	1,354
Operating profit margin		9.8%	17.5%	14.5%	13.9%	13.4%	16.1%	13.9%	19.3%	13.6%	17.1%	13.8%	17.7%
	Digital Entertainment	13.7%	17.8%	17.2%	11.5%	18.2%	16.3%	18.3%	19.2%	19.4%	19.3%	20.5%	17.3%
	Business Solution	3.5%	17.0%	10.5%	16.3%	3.1%	15.5%	4.1%	19.5%	1.3%	13.1%	2.3%	18.2%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Full-year FY03/22 results (out April 27, 2022)

Versus the revised full-year FY03/22 forecast (revised forecast announced January 27, 2022*), sales reached 97.9%, operating profit 96.2%, recurring profit 97.1%, and net income attributable to owners of the parent 98.7%. In short, all were slightly lower than the company's revised forecasts.

Sales down 5.1% YoY: Digital Entertainment sales fell 7.9% YoY, while Business Solution sales rose 0.1% YoY. The drop in Digital Entertainment sales reflected a decline in advertising effectiveness due to the impact of pirate sites, the absence of special demand associated with voluntary COVID-19 curfews seen a year ago, and a dearth of big hits among the company's original content. Meanwhile, Business Solution sales increased despite effects from the pandemic.

Operating profit down 6.6% YoY: Operating profit in the Digital Entertainment segment fell owing to decreased sales, but the decline was limited to 1.9% thanks to curbs on advertising. Operating profit in the Business Solution segment rose 9.9% YoY (excluding headquarters relocation expenses of JPY850mn), buoyed by work style reforms (working from home, business practice improvement, head office relocation, etc.) and cost reductions. The gross profit margin fell 0.9pp YoY to 48.6%, the SG&A expense ratio fell 0.7pp YoY to 32.9%, and the operating profit margin fell 0.3pp YoY to 15.6%. Excluding approximately JPY850mn in expenses associated with the relocation of the company's headquarters, operating profit rose 1.2% YoY and the operating profit margin was 16.9%.

Net income up 10.1% YoY: In full-year FY03/22 the company booked impairment charges of JPY43.0mn (versus JPY1.0bn in FY03/21). Net income attributable to owners of the parent reached a new high.

*Revision of full-year earnings forecast for FY03/22 (announced January 27, 2022)
Sales: JPY66.0bn (previous forecast of JPY70.0bn)
Operating profit: JPY10.5bn (JPY11.0bn)
Recurring profit: JPY10.5bn (JPY11.0bn)
Net income attributable to owners of the parent: JPY7.0bn (JPY7.3bn)
Annual dividend per share: JPY50, comprising ordinary dividend of JPY40 and commemorative dividend of JPY10 (JPY40)

Reasons for revision
In cumulative Q3, the e-comic distribution service the company operates within its Digital Entertainment segment was hurt by an expanded impact from pirate sites and the falloff of the boost provided by special demand associated with voluntary COVID-19 curfews, with these factors having an even greater impact on performance than before. The company expects pirate sites will continue to have an impact on its performance going forward. Within its Business Solution segment, however, the company innovated and improved sales activities and other elements of its operations while sustaining impact from the COVID-19 pandemic, and it anticipates strong performance from business targeting hospitals and corporations. Due to these factors, the company revised its previous full-year forecast for sales and all profit categories.

Infocom had previously planned to pay a year-end dividend per share of JPY27 in FY03/22, for a consolidated payout ratio of 30.0%. However, the company now plans to pay a commemorative dividend of JPY10 per share, in addition to the ordinary dividend of JPY27 per share, to mark the 20th anniversary of is stock listing, bringing up its forecast for year-end dividend per share to JPY37. Combined with the interim dividend per share of JPY13 paid at end-1H, the annual dividend per share is expected to amount to JPY50, representing a consolidated payout ratio of 39.1%.

Quarterly sales and YoY comparison

Source: Shared Research based on company data

Quarterly operating profit and YoY comparison

Source: Shared Research based on company data

By segment

Digital Entertainment segment

Segment sales were JPY40.5bn (-7.9% YoY), and segment operating profit was JPY7.8bn (-1.9% YoY).

Sales declined due as the company reined in advertising because of a loss of effectiveness due to an expanded impact from pirate sites. The absence of special demand associated with voluntary COVID-19 curfews seen a year ago further weighed on sales, as did a dearth of big hits among the company's original content. Operating profit fell owing to lower sales, but the decline in profit was smaller than the drop in sales, thanks to cost savings resulting from advertising curbs.

At the Mecha Comic business, the company strengthened the production of original comics and pursued measures to expand its business domain, such as dramatization of works. In addition to domestic measures, Infocom also made preparations for the start of services in the US.

Amutus Corporation, the consolidated subsidiary that operates Mecha Comic, is working on content acquisition, business domain expansion, and market expansion, as well as further improving usability and enhancing system infrastructure by partnering with Link-U, Inc. to establish AmuLink Corp. for the planning and development of systems supporting e-comic distribution services.

Business Solution segment

Segment sales were JPY24.1bn (+0.1% YoY), and segment operating profit was JPY2.3bn (-19.5% YoY; +9.9% YoY excluding headquarters relocation expenses of JPY850mn).

Sales increased despite effects from the COVID-19 pandemic. Operating profit decreased, as the booking of JPY850mn in head office relocation costs offset the boost to operating profit margin from improvement in productivity through work style reforms.

In the Health IT, sales of radiological systems and employment management systems for hospitals were firm. For overseas markets, the company formed a business alliance with Docquity Holdings Pte. Ltd, which provides an SNS platform for doctors, with the aim of expanding product sales in Southeast Asia.

For enterprises, the company started to provide GRANDIT miraimil, a cloud-based version of its GRANDIT ERP software package.

In addition to expanding Health IT sales, the company made Medical Create Co., Ltd a subsidiary for the purpose of improving service quality and made Alterbooth Inc. a subsidiary to promote its transition to a service-oriented company and extend the development and technological expertise in cloud services.

For details on previous quarterly and annual results, see the Historical performance and financial statements section. test

Full-year FY03/23 company forecast

Earnings		FY03/18	FY03/19	FY03/20	FY03/21			FY03/22			FY03/23
(JPYmn)		FY Act.	FY Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Est.	2H Est.	FY Est.
Sales		45,774	51,728	58,375	33,213	34,842	68,055	32,456	32,130	64,586	33,000	37,000	70,000
	YoY	9.6%	13.0%	12.8%	20.0%	13.5%	16.6%	-2.3%	-7.8%	-5.1%	1.7%	15.2%	8.4%
Operating profit		5,829	6,889	8,211	4,920	5,892	10,812	4,998	5,100	10,098	4,000	6,500	10,500
	YoY	22.0%	18.2%	19.2%	27.4%	35.5%	31.7%	1.6%	-13.4%	-6.6%	-20.0%	27.5%	4.0%
	Operating profit margin	12.7%	13.3%	14.1%	14.8%	16.9%	15.9%	15.4%	15.9%	15.6%	12.1%	17.6%	15.0%
Recurring profit		5,982	6,875	8,268	4,950	5,986	10,936	5,055	5,141	10,196	4,000	6,500	10,500
	YoY	23.2%	14.9%	20.3%	27.7%	36.3%	32.3%	2.1%	-14.1%	-6.8%	-20.9%	26.4%	3.0%
	Recurring profit margin	13.1%	13.3%	14.2%	14.9%	17.2%	16.1%	15.6%	16.0%	15.8%	12.1%	17.6%	15.0%
Net income attributable to owners of the parent		4,640	4,783	5,543	3,377	2,899	6,276	3,445	3,467	6,912	2,700	4,300	7,000
	YoY	42.3%	3.1%	15.9%	31.1%	-2.3%	13.2%	2.0%	19.6%	10.1%	-21.6%	24.0%	1.3%
	Net margin	10.1%	9.2%	9.5%	10.2%	8.3%	9.2%	10.6%	10.8%	10.7%	8.2%	11.6%	10.0%
By segment		FY03/18	FY03/19	FY03/20	FY03/21			FY03/22			FY03/23
(JPYmn)		FY Act.	FY Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Est.	2H Est.	FY Est.
Sales		45,774	51,728	58,375	33,213	34,842	68,055	32,456	32,130	64,586	33,000	37,000	70,000
	Digital Entertainment	21,283	27,492	32,983	22,234	21,793	44,027	21,399	19,131	40,530			44,000
	Business Solution	24,491	24,235	25,391	10,978	13,049	24,027	11,056	12,999	24,055			26,000
YoY		9.6%	13.0%	12.8%	20.0%	13.5%	16.6%	-2.3%	-7.8%	-5.1%	1.7%	15.2%	8.4%
	Digital Entertainment	10.0%	29.2%	20.0%	38.6%	28.7%	33.5%	-3.8%	-12.2%	-7.9%			8.6%
	Business Solution	9.3%	-1.0%	4.8%	-5.6%	-5.2%	-5.4%	0.7%	-0.4%	0.1%			8.1%
Operating profit		5,829	6,889	8,211	4,920	5,892	10,812	4,998	5,100	10,098	4,000	6,500	10,500
	Digital Entertainment	3,360	4,391	4,951	3,827	4,082	7,909	4,146	3,614	7,760			7,000
	Business Solution	2,459	2,487	3,250	1,088	1,804	2,892	846	1,483	2,329			3,500
Operating profit margin		12.7%	13.3%	14.1%	14.8%	16.9%	15.9%	15.4%	15.9%	15.6%	12.1%	17.6%	15.0%
	Digital Entertainment	15.8%	16.0%	15.0%	17.2%	18.7%	18.0%	19.4%	18.9%	19.1%			15.9%
	Business Solution	10.0%	10.3%	12.8%	9.9%	13.8%	12.0%	7.7%	11.4%	9.7%			13.5%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Overview

The company’s medium-term management plan (FY03/21–FY3/23) identifies E-comics and Health IT as strategic business areas and sets out key measures for growth.

The company expects the e-book market to continue growing, as the user base expanded as a result of stay-at-home demand and remains solid. In the IT-related market, investment had stagnated due to the COVID-19 pandemic, but is now recovering. With use of cloud services also expanding, the company predicts that IT demand will rebound.

Breakdown by segment

Digital Entertainment segment

The company forecasts sales of JPY44.0bn (+8.6% YoY) and operating profit of JPY7.0bn (-9.8% YoY).

The company expects to achieve renewed sales growth by strengthening its content and marketing. However, it sees profit decreasing as greater marketing activity drives up costs.

Business Solution segment

The company forecasts sales of JPY26.0bn (+8.1% YoY) and operating profit of JPY3.5bn (+50.3% YoY).

The company looks to grow both sales and profit through expansion, mainly in the Health IT business, and an ongoing transition to a service-oriented model.

Medium-term outlook

Medium-term management plan (FY03/21–FY03/23)

Infocom briefly outlined its current medium-term management plan (covering the three-year period from FY03/21 through FY03/23) at the time of its Q3 FY03/20 results announcement on January 30, 2020. It followed with a much more detailed description of its medium-term plan on June 4, 2020.

Overview

Under its medium-term management plan, the company is targeting final-year sales of JPY85.0–115.0bn, EBITDA of JPY13.0–16.0bn, and ROE of 15% or higher, as detailed in the table below.

Medium-term management plan targets

	FY03/21 Act.	FY03/23 Targets
Sales	JPY68,055mn	JPY85,000–115,000mn
EBITDA	JPY11,992mn	JPY13,000–16,000mn
ROE	16.2%	15.0% or higher

Source: Shared Research, based on company data
Note: When the plan was announced on June 4, 2020, figures in the FY03/20 column indicated company projections.

For its medium-term plan, the company adopted the slogan “United Innovation: Value Co-Creation” but will basically stick with the two main strategies of “pursue growth” and “continue to build a strong foundation to support growth” that it followed under its previous medium-term plan.

Value Co-Creation: This statement reflects the company’s desire to become a services company that delivers new value through the co-creation of ICT and real-world businesses. More specifically, Infocom says it is looking to draw upon the expertise of academic institutions, IT companies, and startup IT companies in the field of healthcare IT, and apply that expertise/technology while working together with real world companies, where it can be used to either create new value or enhance existing businesses. The end-users of these new services will be the employees of its client companies (including general businesses, as well as medical institutions) or, in the case of e-comics, the end-users will be consumers.

Company vision

Source: Shared Research based on company materials

Under “pursue growth,” the company will be using three different growth strategies, as detailed below:

Pursue sustained growth at core E-comics and Health IT businesses: In its e-comics business, the company is looking to firmly establishing its brand position with the e-comics market; In its Health IT business, plans call for launching new services in the nursing care and healthcare markets.

E-comics: FY03/23 sales target of JPY60.0bn (versus FY03/20 sales of JPY32.6bn)
Health IT: FY03/23 sales target of JPY15.0bn (versus FY03/20 sales of JPY10.8bn)
Systems integration/IT services: FY03/23 sales target of JPY15.0bn (versus FY03/20 sales of JPY15.0bn)
Sales from mergers and acquisitions: Targeting FY03/23 sales of as much as approximately JPY25.0bn

Evolution into a service-oriented business: The company is looking to raise the proportion of total sales generated from services* to over 80% of JPY90.0bn (versus roughly 60% of JPY58.3bn in FY03/20). The Digital Entertainment segment has entirely consisted of services since its inception. Infocom aims to lift the share of services in the Business Solution segment from roughly 10% of JPY25.3bn in FY03/20 to about 35% of JPY30.0bn. Initiatives include its WELSA corporate health management service, online marketing support for medical representatives, and e-medicine (see the “Strategies for core businesses” and “Infocom’s ‘value creation story’” sections). Going forward, Infocom will work to become a services company that delivers new value through the co-creation of ICT and real-world businesses.

Pursue co-creation through M&A, overseas business development: The company budgeted JPY30.0bn for strategic investments in mergers and acquisitions.

Under “continue to build a strong foundation to support growth,” the company will develop four key areas, as detailed below:

Foster employees capable of creating value: In order to create new value for client and partner companies, the company will work to foster employees with different skill sets from those traditionally required (which, in the case of systems engineering work in the past, was simply to build systems precisely meeting customer specifications).

Promote greater use of AI and data analytics: The company will work to develop employees capable of using AI technology and data analytics and utilize those employees effectively

Improve quality management

Promote work-style reforms: Up until recently, the implementation of work-style reforms at Infocom was left up to individual departments, but with the coronavirus pandemic forcing more than 80% of company employees to work from home, management expects to quickly resolve any problems that arise while working under these new arrangements.

*Sales generated from services refer to the sum of Digital Entertainment sales and a portion of Business Solution sales. The company aims to raise the proportion of Business Solution sales generated from services by 3.5x versus FY03/20.

Company view of external operating environment (and impact of coronavirus pandemic, as of April 30, 2020)

Domestic IT market

The company sees the cloud market driving expansion and traditional IT services gradually shrinking as the market undergoes a structural transition

The company projects that the shortage in IT personnel will expand from 220,000 in 2018 to 450,000 by 2030

In the field of nursing care, build on existing efforts to expand its presence in this focus market

The company sees the digital transformation (DX) picking up momentum as a result of the coronavirus pandemic

IT for nursing care, nursing care record keeping, nursing employee management, and career change support: Infocom has an established track record in providing employee management systems designed for hospitals that help users schedule shifts for nurses while tracking the hours being worked by other hospital staff (including doctors). The company is now looking to rollout systems for nursing care staff or, more specifically, IT systems for nursing care, nursing care record keeping, nursing employee management, and career change support.

E-comics

In the remote field, provide online sales support services for medical representatives and rollout services to support remote medicine.

In addition to the ongoing digitalization of paper-based comics, the company sees the new comic app market growing at a CAGR of 11.9% between 2020 and 2022, with most of the new demand coming from younger readers. This is well above the forecast of 6.6% CAGR made by the Impress Research Institute and also ahead of Infocom’s previous forecast (made prior to the pandemic). Infocom’s forecast for faster growth in the comic app market reflects its belief that more and more people will get used to reading digital comics as they adopt lifestyle changes for which the government is advocating.

Online sales support services for drug sales representatives: The company’s DigiPro software package for pharmaceutical companies provides sales support for the medical representatives of pharmaceutical companies. It also includes features designed to assist compliance with all relevant government regulations by ensuring the submission of only those documents that have been approved by the company; centralized document management; and an interview monitoring function. In addition to those features, starting in June 2020, the company added an online sales support tool for medical representatives that will allow them to use Zoom to provide information to doctors in situations where they cannot meet face to face.

Domestic e-comics market (projections by Impress Research Institute and Shared Research)

Source: Shared Research, based on data from Impress Research Institute’s 2019 E-Book Publishing Business Survey Report (July 2019)

Remote medicine support services: Infocom provides technical support to Air Water Inc. (a provider of hospital facilities and equipment) for a system that allows people outside of the intensive care unit of a hospital to monitor patients on the inside via online cameras. Using this as its basis, Infocom is now looking into creating its own online medical treatment services for supporting the practice of remote medicine. Because large hospitals already have a large number of different on-site systems (including medical imaging systems, clinical record systems, drug prescription systems, supply ordering systems, and medical accounting systems), Infocom understands that an online system for supporting remote medicine would need to be connected to these systems and is thus planning on creating online medical treatment services specifically for large hospitals, where it can make use of its extensive knowledge and technical expertise.

The company sees more alliances forming among e-comic distributors.

Infocom’s “value creation story”

The company also sees changes in lifestyles in the wake of the pandemic prompting more people to read digital comics.

The Infocom group seeks to create value by evolving ahead of changes in markets and technologies, offering high-quality, innovative services that create new ways of using information and communications technology and allow the group to grow along with society.

Health IT

In its Digital Entertainment business, in the early years of mobile phones, Infocom anticipated the creation of new markets and looked for new ways to use this invention. Before the advent of Docomo’s i-mode service and internet connectivity, for example, Infocom offered content such as ringtones over voice lines during the feature phone era and, after the start of the smartphone era, started offering digital comics.

The company has long viewed the health IT market as a slow-but-steady growth market, but, following the experience of doctors who are temporarily authorized to practice remote medicine in response to the coronavirus pandemic, the company sees faster growth in the health IT market as more hospitals move to remote medicine for procedures such as initial consultations and medication counseling.

In its Business Solution business, over the years, Infocom has rolled out a steady stream of packaged software products designed for the commercial market based on the expertise it has gained doing contract development work. It has steadily expanded its field of expertise, moving from systems for individual departments within hospitals to services for nursing homes and health service support systems. Infocom has also rolled out new services that are based on either its own intimate knowledge of hospital processes or expertise in the field of nursing care held by partner company Solasto Corp., with which it has established a business and capital alliance. At the same time, Infocom has also expanded its commercial product and service lineup to include package software business processes, safety confirmation services, and risk management services.

The company sees the health IT market growing rapidly in response to increase in the need for primary nursing care providers

In its e-comics business, Infocom is working to create value for a wide range of stakeholders—providing consumers with enjoyment, stress relief, and chances to broaden their horizons; granting comic publishing companies with opportunities to increase sales; and equipping comic creators with workspaces and a venue through which they can express themselves.

The company anticipates a shortage of some 430,000 primary care nurses by the year 2025

In its Health IT business, Infocom is working to create value by improving medical and nursing care and thereby contributing to the health and well-being of patients. At hospitals, Infocom adds value by aiding improvements in the quality of medical care and reducing related costs by raising hospital efficiency and increasing convenience by providing various types of IT services. Infocom is also working to create value at the national level by aiding advances in the quality of medical care and reducing costs by facilitating the connections that hold together regional comprehensive care systems and other local initiatives in healthcare IT.

In the wake of the jump in unemployment caused by the coronavirus pandemic, the company believes there will be a temporary increase in the number of people going into nursing care

Through its risk management service, Infocom is creating value by working with companies to provide individual safety and security.

Strategies for core businesses

In the wake of the Great East Japan Earthquake and tsunami, Infocom established a recovery support facility for the Tohoku region in the city of Iwanuma (Miyagi Prefecture), one the cities devastated by the disaster. Dubbed Minna no Ie, the new meeting hall was opened by the company through cooperation with the local community, which, after the tsunami, was left with no gathering place. Working from the new facility, the town got together and created an agro-tourism business offering tourists a farm experience on an Iwanuma farm that fostered a sense of unity with the local community. The new business was selected as a new Tohoku leadership model business by the national government’s Reconstruction Agency.

As discussed previously, under the medium-term management plan the company will continue to focus on growing its core businesses in e-comics and healthcare-related IT.

The relationships between the Infocom group’s businesses and sustainable development goals (SDGs) are outlined in the table below:

E-comics

Infocom group businesses and related sustainable development goals

Source: Shared Research based on company materials

Under its medium-term plan, the company has set a sales target of JPY60.0bn for its e-comics business in FY03/23 versus JPY32.6bn in sales in FY03/20. This represents a CAGR of 22.5%, ahead of the CAGR of 20% expected for the e-comics market as a whole. For FY03/21, the company is projecting e-comics sales of JPY42.7bn, an increase of 30.8% over FY03/20. The company has three specific growth strategies in this area: (1) maximize revenues from its Mecha Comic, (2) establish business infrastructure to increase business scale, and (3) expand into new markets.

Going forward, Infocom will work to become a services company that delivers new value through the co-creation of ICT and real-world businesses.

Maximize revenues from Mecha Comic

Returns to shareholders

Expand lineup of original comics: One of the strong points of the company’s Mecha Comic business is its expansive lineup of original comics numbering more than 1,000 to date. One prime example is its Risky comics series, which Infocom developed in 2018 and 2019 based on its findings using data analytics. The Risky series became the company’s second-best seller in 2019 in terms of annual sales. In 2020, earnings from the Risky series comics were surpassed by a new hit title, Aoshima Kun wa Ijiwaru, which sold more than 1mn copies (calculated as books). The company attributes its success in creating hit titles to the buildup of its in-house development/production team for original comics. It is considering using other marketing channels, including taking its titles that were hits in Japan into overseas markets and expanding distribution within Japan by allowing other distributors to handle titles after a certain amount of time has passed. It is also considering using its hit comic titles as the basis for TV dramas.

While maintaining a stable financial position, the company will seek to make appropriate returns to shareholders after prioritizing growth investment in core businesses

Use data analytics and AI to enhance marketing: In the medium to long term, the company will be looking into how AI technology might be used to support the development of new comic titles and, toward this end, is even studying how AI technology might someday be used to automate the development of new comics.

Stable financial position: While maintaining a sound financial position that accounts for the characteristics and risks of the businesses in which group companies are involved, the company will also make appropriate use of financial leverage when making growth investments.

Increase number of initial exclusive distribution rights agreements: On the distribution front, plans call for attracting new subscribers by locking up new e-comic titles with initial exclusive distribution rights so that would-be readers could only find the new titles on Mecha Comic. Currently, Mecha Comic has content co-creation agreements with more than 50 publishers (mainly large publishers) that give it initial exclusive distribution rights to the content created. This arrangement works out well for not only Mecha Comic but also for the publishing companies, as they benefit from the marketing research done by Mecha Comic, which guides decisions such as the size of print runs. Publishing companies also benefit from the advanced promotion done by Mecha Comic under the distribution agreement, as this assures that sufficient “buzz” is created around the time of a new comic’s launch, which in turn leads to higher sales. During FY03/21, the company expects to have initial exclusive distribution rights for more than 2,000 titles.

Growth investments: The company will make investments to sustain and accelerate growth, most of which will go into its core businesses. The company has also budgeted a total of JPY30.0bn for strategic mergers and acquisitions.

Build out business infrastructure to support further business expansion

Returns to shareholders: In addition to maintaining a stable dividend, the company is also looking to increase dividend payments as earnings grow, so as to maintain a dividend payout ratio of 30%.

Complete redesign of Mecha Comic mobile app: Mecha Comic has come of age mainly as a web browser-based service but is now counting more on its mobile app to bring in subscribers from the youth market. As a result, the company has decided to completely redesign its mobile app during FY03/21 with the aim of both expanding its presence in the youth market and increasing its revenue stream from the mobile app market. To support the launch of its newly redesigned mobile app, the company will also be stepping up spending on advertising and promotion.

Reference: Overseas business development activities through FY03/20

Complete move to cloud-based systems

Detailed below are the company’s overseas business development activities through FY03/20.

Ensure 5G compatibility

E-comics business

Expand into new markets

Entry into the Korean e-comics distribution market: In May 2019, consolidated subsidiary Amutus Corporation (Mecha Comic), made Peanutoon Inc., a provider of e-comics distribution services in South Korea, a consolidated subsidiary through underwriting third-party allotment of new shares by Peanutoon.

Develop overseas markets (see below for more details regarding the company’s overseas track record through the end of FY03/20)

In July 2019, Amutus and Papyless (JASDAQ: 3641) established a joint venture Aldo Agency Global Co., Ltd. (AAG) to conduct agency sales of Japanese e-comics to the overseas market and provide translation support (shareholding: Papyless, 66.6% and Amutus, 33.4%). Drawing on Amutus’ brand power in Japan and Papyless’ expertise in overseas agency sales operation, AAG will support publishers to deliver Japanese comics to international readers. The company holds 10.44% of shares in Papyless (third largest shareholder as of September 30, 2019).

On the M&A front, the company plans to continue looking for acquisition targets to facilitate its value co-creation initiatives

Since 2016, the company has collaborated with its strategic partner Fenox Venture Capital (headquartered in Silicon Valley, US) on the acceleration program GnB Accelerator that supports startup companies in Indonesia. In 2017, the company established a local subsidiary PT. GnB Accelerator Asia in Jakarta in an effort to develop the e-comics business in Indonesia on its own.

Health IT

Health IT business

To move into new healthcare-related fields, the company plans to development new businesses and expand overseas.

In September 2013, Infocom concluded a strategic partnership agreement with Fenox Venture Capital (headquartered in Silicon Valley, US).

Develop new businesses in healthcare-related fields: One new business Infocom is considering at this time is a service to handle follow-ups with employees who get bad results on health exams provided through their employers. Infocom launched its WELSA corporate health management service in 2020. Designed to provide centralized management of information related to employee health conditions and stress check results, analysis of health risks and lifestyle-related diseases, and various solution services aimed at helping to remedy any issues, the new WELSA corporate health management service aims to sign up at least 500 corporate users with a total of at least 500,000 employees in its first three years of operation. An app that comes with WELSA will also allow individual employees to take their information with them, thus allowing continued service over their entire lifetime.

In July 2014, the Infocom group established its first corporate fund Fenox Infocom Venture Company V, L.P. in Silicon Valley (USD20mn in scale, investment period of 8 years [max 10 years]; “Infocom fund”). The company plans to invest in the fields of IoT and wearable technology in addition to the company’s areas of strength, health IT and digital entertainment. It plans to find promising startups and companies involved in these new technologies with the potential to expand globally, and invest in them.

Overseas expansion: Having established a solid track record for radiology systems, drug information management systems, clinical information systems, and other systems at hospitals in Japan, Infocom is now looking to put similar systems into hospitals in Southeast Asia.

In Jakarta, Indonesia, the company set up local subsidiary PT. GnB Accelerator Asia.

Hospital systems in Southeast Asia (for radiology, drug information management, clinical information): In countries where advanced IT is being actively used, such as Indonesia and the Philippines, Infocom has started working together with local partners to run demonstrations at local hospitals.

In October 2019, the company signed an agreement to invest in the Fund No. 1 formed by Singapore-based venture capital company HealthXCapital, which specializes in the healthcare field. As economic development progresses in emerging Asian economies, population growth and lifestyle changes have led to a rise in lifestyle-related diseases such as diabetes and hypertension. Expanding the medical systems of these countries and raising health awareness among these populations are becoming more serious issues. Amid such an environment, medical expenses in the 10 ASEAN countries have increased in recent years, followed by higher demand for technology to improve medical standards and enable IT implementation in the healthcare field. HealthXCapital is one of the few venture capital funds in the world with expertise in healthcare that specializes in emerging Asian countries. By investing in the fund, the company has taken a step forward in making concrete plans for development of the health IT business in Asia.

Laying groundwork for rollout of cloud-based services in Southeast Asia: Working through HealthXCapital*, Infocom is collecting local market information, conducting proof-of-concept tests at local hospitals, and undertaking mergers and acquisitions.

Health IT: core business

Source: Shared Research based on company materials

Business

Business description

Infocom is a medium-sized IT company providing both digital entertainment for consumers (B2C) and business solutions for companies (B2B). The Infocom group comprises Infocom Corporation and 10 group companies (nine consolidated subsidiaries and one equity-method affiliate; refer to the group companies section for more information). Infocom is a consolidated subsidiary of Teijin Limited (TSE Prime: 3401), which had a 58.0% stake at end-FY03/21 (*see note below).

In FY03/21, the Digital Entertainment segment accounted for 64.7% of sales (73.2% of operating profit), and the Business Solution segment for 35.3% of sales (26.7% of operating profit). This marks a portfolio balanced between B2C and B2B operations, unlike most IT companies that specialize in one or the other. In the Digital Entertainment segment, the e-comics service accounts for more than 99% of segment sales and is positioned as the company’s growth driver with a CAGR for the five years through FY03/21 of 21.6% for sales and 32.2% for operating profit. The company’s e-comics store Mecha Comic holds the leading position globally in terms of sales with an estimated market share of 12%. The Business Solution segment provides stable sales and has developed multiple products in-house, including the iRad system for medical care (radiology), the DICS pharmaceutical information support system, and the GRANDIT web-based enterprise resource planning (ERP) system for companies, all of which have high market share.

Sales of services and subscription revenue (total of sales of services and subscription revenue in the Digital Entertainment and Business Solution segments) accounted for 84% of sales in FY03/21 (+6pp YoY).

*Infocom was the surviving company of the April 2001 merger of equals between Nissho Iwai Computer Systems, Inc. (renamed Infocom Corporation in April 2000; spun off from the information systems department of general trading company Nissho Iwai Corporation, currently Sojitz Corporation), and Teijin Systems Technology Ltd., a wholly owned subsidiary of Teijin Limited (for details, see the History section). Since its establishment in February 1983, Infocom has developed a variety of IT solutions, systems operation services, and content provision services for companies such as the Nissho Iwai Group, mobile network operators, and consumers. Teijin Systems Technology has a history as a system solutions provider with strengths in healthcare solutions and software packages developed in-house, including digital forms and knowledge management systems.

Sales by segment (FY03/21)

Source: Shared Research based on company data

Long-term trends in sales, operating profit, gross profit margin, and operating profit margin