R Infocom / 4348
COVERAGE INITIATED ON: 2018.02.19 LAST UPDATE: 2021.06.30
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg.
Research Coverage Report by Shared Research Inc. Infocom / 4348 R LAST UPDATE: 2021.06.30 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage
INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report.
Executive summary ------3 Key financial data ------5 Recent updates ------6 Highlights ------6 Trends and outlook ------7 Quarterly trends and results ------7 Medium-term outlook ------15 Business ------23 Business description ------23 Business model ------26 Strengths and weaknesses ------43 Market and value chain------45 Historical performance and financial statements ------53 Historical performance ------53 Income statement ------62 Company forecasts versus actual performance ------64 Balance sheet ------65 Cash flow statement ------66 Other information ------67 News and topics ------67 History ------69 Group companies (as of March 31, 2021) ------70 Origin of company name ------70 Corporate governance and top management ------71 Shareholder returns------71 Major shareholders (as of March 31, 2021) ------72 Employees ------72 Profile ------73
02/74 Infocom / 4348 R LAST UPDATE: 2021.06.30 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage
Executive summary
Business overview
Infocom 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 an average annual rate of 21.6% over the five-year period through FY03/21 and operating profit growing at an average annual rate 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/services for medical institutions/nursing care facilities), Business Software (software packages/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 DICS Drug Interaction Clinical Support 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 (TSE1: 3401). Today Infocom remains a consolidated subsidiary of Teijin (58.0% stake at the end of FY03/20).
Trends and outlook
For FY03/21, Infocom reported sales of JPY68.1bn (+16.6% YoY), operating profit of JPY10.8bn (+31.7% YoY), recurring profit ◤ of JPY10.9bn (+32.3% YoY), and net income attributable to owners of the parent of JPY6.3bn (+13.2% YoY). Sales were up 33.5% in Digital Entertainment segment and down 5.4% in the Business Solution segment. Operating profit was up 59.7% YoY in the Digital Entertainment segment thanks to sales growth and optimization of advertising. Business Solution operating profit was affected by lower sales, falling 11.0% YoY. GPM improved 1.1pp YoY to 49.5% while the SG&A to sales ratio fell by 0.8pp YoY to 33.6%. The OPM was up 1.8pp YoY to 15.9%. The company recorded goodwill when it acquired shares in its e-comics business in South Korea and its nursing care staff placement business in Japan, and after taking into account progress toward initial targets and forthcoming earnings outlooks, the company recorded impairment losses of JPY1.0bn as extraordinary losses.
The full-year FY03/22 company forecast calls for consolidated sales of JPY77.0bn (+13.1% YoY), operating profit of JPY11.0bn ◤ (+1.7% YoY), EBITDA of JPY12.6bn (+3.4% YoY), recurring profit of JPY11.0bn (+0.6% YoY), and net income of JPY7.3bn (+16.3% YoY). Infocom plans an annual dividend of JPY40 per share (compared to JPY37 share in FY03/21). The company projects the cost of relocating its head office as JPY1.0bn.
Japan’s economy is expected to gradually recover as measures to contain COVID-19 infections sink in and effective ◤ vaccinations reach the populace, but there is still no telling quite when the crisis will subside, and the future is likely to remain unpredictable. Based on its medium-term management plan (FY03/21 to FY03/23), the company will position e-comics and
03/74 Infocom / 4348 R LAST UPDATE: 2021.06.30 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage
healthcare as priority businesses and implement key measures accordingly. It also plans to relocate its head office during FY03/22 in light of new work style reforms incorporating Activity Based Working.
Along with its announcements of Q3 FY03/20 results on January 30, 2020, Infocom briefly outlined its new medium-term ◤ business 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 new medium-term business 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 new 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 know-how 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.)
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Key financial data
Income statement FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 34,610 36,497 37,381 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 77,000 YoY 1.3% 5.5% 2.4% 4.7% 3.0% 0.0% 3.6% 9.6% 13.0% 12.8% 16.6% 13.1% Gross profit 14,652 15,978 16,122 17,254 18,030 18,290 19,616 21,605 24,606 28,271 33,708 GPM 42.3% 43.8% 43.1% 44.1% 44.7% 45.4% 47.0% 47.2% 47.6% 48.4% 49.5% SG&A expenses 11,610 12,576 12,620 13,577 14,424 13,863 14,840 15,776 17,717 20,060 22,896 YoY 5.4% 8.3% 0.4% 7.6% 6.2% -3.9% 7.0% 6.3% 12.3% 13.2% 14.1% SG&A ratio 33.5% 34.5% 33.8% 34.7% 35.8% 34.4% 35.5% 34.5% 34.3% 34.4% 33.6% Operating profit 3,042 3,402 3,502 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 11,000 YoY 27.3% 11.8% 2.9% 5.0% -1.9% 22.8% 7.9% 22.0% 18.2% 19.2% 31.7% 1.7% OPM 8.8% 9.3% 9.4% 9.4% 8.9% 11.0% 11.4% 12.7% 13.3% 14.1% 15.9% 14.3% Recurring profit 3,051 3,391 3,489 3,687 3,692 4,558 4,854 5,982 6,875 8,268 10,936 11,000 YoY 25.8% 11.1% 2.9% 5.7% 0.1% 23.5% 6.5% 23.2% 14.9% 20.3% 32.3% 0.6% RPM 8.8% 9.3% 9.3% 9.4% 9.2% 11.3% 11.6% 13.1% 13.3% 14.2% 16.1% 14.3% Net income attributable to owners of the parent 1,723 1,852 2,080 2,042 2,171 728 3,261 4,640 4,783 5,543 6,276 7,300 YoY 41.9% 7.5% 12.3% -1.8% 6.3% -66.5% 347.9% 42.3% 3.1% 15.9% 13.2% 16.3% Ne t ma rgin 5.0% 5.1% 5.6% 5.2% 5.4% 1.8% 7.8% 10.1% 9.2% 9.5% 9.2% 9.5% Per-share data (split-adjusted; JPY) Shares issued (year-end; '000) 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 EPS 29.92 32.39 37.26 36.99 39.72 13.32 59.64 84.85 87.46 101.32 114.61 133.31 EPS (fully dilut ed) - - - 36.95 39.64 13.28 59.42 84.50 87.07 100.86 114.10 Dividend per share 5.00 7.50 8.25 8.75 9.25 11.00 12.50 19.00 22.00 31.00 37.00 40.00 Book value per share 260.60 288.89 320.92 349.21 381.08 384.71 430.75 516.08 595.05 653.82 757.76 Balance sheet (JPYmn) Current assets 16,192 18,187 19,437 21,185 21,814 22,750 23,731 27,636 32,445 36,436 43,964 Cash and cash equivalents 7,206 9,773 10,285 10,749 11,945 11,940 12,403 16,625 20,173 23,491 29,956 Accounts receivable 6,994 7,008 7,618 8,320 7,819 8,373 8,784 9,707 10,576 11,459 12,502 Inventories 519 365 316 438 323 274 366 270 558 392 167 Other 1,473 1,041 1,219 1,678 1,727 2,163 2,178 1,034 1,138 1,094 1,339 Fixed assets 6,751 6,454 6,780 6,617 6,713 8,868 8,889 10,601 11,204 11,651 12,471 T angible fixed asset s 3,590 3,543 3,251 2,936 2,713 2,493 2,575 1,004 892 965 1,054 Int angible asset s 1,913 1,708 2,164 2,182 2,223 2,369 2,099 2,010 1,738 2,818 1,639 Investments and other assets 1,248 1,203 1,364 1,500 1,777 4,006 4,214 7,586 8,573 7,867 9,776 Total assets 22,942 24,641 26,217 27,802 28,528 31,619 32,620 38,237 43,649 48,087 56,435 Current liabilit ies 7,272 7,627 7,978 8,155 7,408 9,924 8,636 9,667 10,645 11,804 14,241 Accounts payable 2,178 2,050 2,566 2,509 2,453 3,107 3,062 3,457 4,159 4,564 4,975 Short-term debt 128 173 180 101 67 63 61 64 66 59 48 Ot her current liabilit ies 4,966 5,404 5,232 5,545 4,888 6,754 5,513 6,146 6,420 7,181 9,218 Fixed liabilit ies 518 564 365 284 203 546 318 209 296 123 355 Long-term debt 295 313 189 107 81 143 184 182 135 81 32 Other 223 251 176 177 122 403 134 27 161 42 323 Net assets 15,153 16,450 17,874 19,364 20,916 21,148 23,665 28,360 32,707 36,159 41,839 Capit al st ock 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 Capit al surplus 1,442 1,442 1,442 1,449 1,448 1,448 1,448 1,449 1,447 1,456 1,556 Retained earnings 12,023 13,587 15,244 16,831 18,523 18,746 21,132 25,089 28,833 32,900 37,479 Treasury stock - -275 -563 -821 -820 -820 -819 -816 -816 -805 -795 Accumulated other comprehensive income -44 -51 2 46 95 71 204 915 1,492 646 1,673 Non-cont rolling int erest s 142 157 159 243 36 39 11 4 2 194 107 Share subscription rights - - - 26 42 73 98 128 157 177 228 T ot al liabilit ies and capit al 22,942 24,641 26,217 27,802 28,528 31,619 32,620 38,237 43,649 48,087 56,435 Statement of cash flows (JPYmn) Cash flow s from operat ing act ivit ies 3,556 3,972 3,032 2,353 3,462 4,169 2,540 5,680 5,671 7,355 9,871 Cash flow s from invest ing act ivit ies -1,574 -721 -1,638 -1,033 -1,830 -3,579 -1,110 -686 -1,024 -2,472 -1,643 Cash flow s from financing act ivit ies -403 -681 -938 -895 -574 -576 -969 -747 -1,105 -1,546 -1,761 Financial rat ios Interest-bearing debt 423 486 369 208 148 206 245 246 201 140 80 Net cash 6,783 9,287 9,916 10,541 11,797 11,734 12,158 16,379 19,972 23,351 29,876 ROA (RP-based) 14.0% 14.3% 13.7% 13.6% 13.1% 15.2% 15.1% 16.9% 16.8% 18.0% 20.9% ROE 12.0% 11.8% 12.2% 11.1% 10.9% 3.5% 14.6% 17.9% 15.7% 16.2% 16.2% Current ratio 223% 238% 244% 260% 294% 229% 275% 286% 305% 309% 309% Fixed rat io 44.6% 39.2% 37.9% 34.2% 32.1% 41.9% 37.6% 37.4% 34.3% 32.2% 29.8% Equit y rat io 65.3% 66.1% 67.6% 68.7% 73.0% 66.5% 72.2% 73.8% 74.6% 74.4% 73.5% 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).
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Recent updates
Highlights
On June 30, 2021, Shared Research updated the report following interviews with Infocom Corporation.
On April 27, 2021, the company announced earnings results for full-year FY03/21; see the results section for details.
For previous releases and developments, please refer to the News and topics section.
06/74 Infocom / 4348 R LAST UPDATE: 2021.06.30 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage
Trends and outlook Quarterly trends and results Cumulative FY03/19 FY03/20 FY03/21 FY03/21 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of Es t . FY Es t . Sales 10,464 23,128 35,509 51,728 12,687 27,679 41,200 58,375 15,589 33,213 48,914 68,055 96.5% 70,500 YoY 5.2% 9.1% 13.0% 13.0% 21.2% 19.7% 16.0% 12.8% 22.9% 20.0% 18.7% 16.6% 20.8% Gross profit 4,845 11,058 16,695 24,606 6,099 13,416 20,140 28,271 7,680 16,432 23,955 33,708 GPM 46.3% 47.8% 47.0% 47.6% 48.1% 48.5% 48.9% 48.4% 49.3% 49.5% 49.0% 49.5% SG&A expenses 4,168 8,461 12,891 17,717 4,859 9,553 14,312 20,060 5,589 11,511 16,844 22,896 YoY 6.7% 9.8% 12.6% 12.3% 16.6% 12.9% 11.0% 13.2% 15.0% 20.5% 17.7% 14.1% SG&A ratio 39.8% 36.6% 36.3% 34.3% 38.3% 34.5% 34.7% 34.4% 35.9% 34.7% 34.4% 33.6% Operating profit 677 2,596 3,804 6,889 1,240 3,863 5,827 8,211 2,091 4,920 7,110 10,812 103.0% 10,500 YoY 4.0% 9.8% 11.8% 18.2% 83.2% 48.8% 53.2% 19.2% 68.6% 27.4% 22.0% 31.7% 27.9% OPM 6.5% 11.2% 10.7% 13.3% 9.8% 14.0% 14.1% 14.1% 13.4% 14.8% 14.5% 15.9% 14.9% Recurring profit 720 2,616 3,849 6,875 1,268 3,876 5,842 8,268 2,126 4,950 7,213 10,936 104.2% 10,500 YoY 6.4% -0.7% 4.0% 14.9% 76.1% 48.2% 51.8% 20.3% 67.7% 27.7% 23.5% 32.3% 27.0% RPM 6.9% 11.3% 10.8% 13.3% 10.0% 14.0% 14.2% 14.2% 13.6% 14.9% 14.7% 16.1% 14.9% Net income attrib. to owners of the parent 479 1,877 2,715 4,783 859 2,575 3,976 5,543 1,441 3,377 4,925 6,276 93.7% 6,700 YoY 11.4% -27.1% -19.0% 3.1% 79.3% 37.2% 46.4% 15.9% 67.8% 31.1% 23.9% 13.2% 20.9% Net margin 4.6% 8.1% 7.6% 9.2% 6.8% 9.3% 9.7% 9.5% 9.2% 10.2% 10.1% 9.2% 9.5% Quarterly FY03/19 FY03/20 FY03/21 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 10,464 12,664 12,381 16,219 12,687 14,992 13,521 17,175 15,589 17,624 15,701 19,141 YoY 5.2% 12.5% 21.2% 13.0% 21.2% 18.4% 9.2% 5.9% 22.9% 17.6% 16.1% 11.4% Gross profit 4,845 6,213 5,637 7,911 6,099 7,317 6,724 8,131 7,680 8,752 7,523 9,753 GPM 46.3% 49.1% 45.5% 48.8% 48.1% 48.8% 49.7% 0.0% 49.3% 49.7% 47.9% 51.0% SG&A expenses 4,168 4,293 4,430 4,826 4,859 4,694 4,759 5,748 5,589 5,922 5,333 6,052 YoY 6.7% 13.1% 18.2% 11.6% 16.6% 9.3% 7.4% 19.1% 15.0% 26.2% 12.1% 5.3% SG&A ratio 39.8% 33.9% 35.8% 29.8% 38.3% 31.3% 35.2% 33.5% 35.9% 33.6% 34.0% 31.6% Operating profit 677 1,919 1,208 3,085 1,240 2,623 1,964 2,384 2,091 2,829 2,190 3,702 YoY 4.0% 12.0% 16.5% 27.1% 83.2% 36.7% 62.6% -22.7% 68.6% 7.9% 11.5% 55.3% OPM 6.5% 15.2% 9.8% 19.0% 9.8% 17.5% 14.5% 13.9% 13.4% 16.1% 13.9% 19.3% Recurring profit 720 1,896 1,233 3,026 1,268 2,608 1,966 2,426 2,126 2,824 2,263 3,723 YoY 6.4% -3.1% 15.4% 32.7% 76.1% 37.6% 59.4% -19.8% 67.7% 8.3% 15.1% 53.5% RPM 6.9% 15.0% 10.0% 18.7% 10.0% 17.4% 14.5% 14.1% 13.6% 16.0% 14.4% 19.5% Net income attrib. to owners of the parent 479 1,398 838 2,068 859 1,716 1,401 1,567 1,441 1,936 1,548 1,351 YoY 11.4% -34.8% 7.9% 60.4% 79.3% 22.7% 67.2% -24.2% 67.8% 12.8% 10.5% -13.8% Net margin 4.6% 11.0% 6.8% 12.8% 6.8% 11.4% 10.4% 9.1% 9.2% 11.0% 9.9% 7.1% By segment (cumulative) FY03/19 FY03/20 FY03/21 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 10,464 23,128 35,509 51,728 12,687 27,679 41,200 58,375 15,589 33,213 48,914 68,055 Digital Entertainment 5,997 12,828 19,933 27,492 7,823 16,047 24,165 32,983 10,603 22,234 33,102 44,027 Business Solution 4,466 10,299 15,575 24,235 4,863 11,632 17,034 25,391 4,986 10,978 15,811 24,027 YoY 5.2% 9.1% 13.0% 13.0% 21.2% 19.7% 16.0% 12.8% 22.9% 20.0% 18.7% 16.6% Digital Entertainment 14.4% 20.5% 25.2% 29.2% 30.4% 25.1% 21.2% 20.0% 35.5% 38.6% 37.0% 33.5% Business Solution -5.1% -2.4% 0.5% -1.0% 8.9% 12.9% 9.4% 4.8% 2.5% -5.6% -7.2% -5.4% Operating profit 677 2,596 3,804 6,889 1,240 3,863 5,827 8,211 2,091 4,920 7,110 10,812 Digital Entertainment 957 2,188 3,262 4,391 1,069 2,536 3,933 4,951 1,931 3,827 5,815 7,909 Business Solution -282 403 534 2,487 168 1,321 1,887 3,250 157 1,088 1,287 2,892 Adjustments 2 5 7 9 2 4 7 9 2 4 7 9 OPM 6.5% 11.2% 10.7% 13.3% 9.8% 14.0% 14.1% 14.1% 13.4% 14.8% 14.5% 15.9% Digital Entertainment 16.0% 17.1% 16.4% 16.0% 13.7% 15.8% 16.3% 15.0% 18.2% 17.2% 17.6% 18.0% Business Solution - 3.9% 3.4% 10.3% 3.5% 11.4% 11.1% 12.8% 3.1% 9.9% 8.1% 12.0% By segment (quarterly) FY03/19 FY03/20 FY03/21 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 10,464 12,664 12,381 16,219 12,687 14,992 13,521 17,175 15,589 17,624 15,701 19,141 Digital Entertainment 5,997 6,831 7,105 7,559 7,823 8,224 8,118 8,818 10,603 11,631 10,868 10,925 Business Solution 4,466 5,833 5,276 8,660 4,863 6,769 5,402 8,357 4,986 5,992 4,833 8,216 YoY 5.2% 12.5% 21.2% 13.0% 21.2% 18.4% 9.2% 5.9% 22.9% 17.6% 16.1% 11.4% Digital Entertainment 14.4% 26.3% 34.9% 40.8% 30.4% 20.4% 14.3% 16.7% 35.5% 41.4% 33.9% 23.9% Business Solution -5.1% -0.2% 6.6% -3.7% 8.9% 16.0% 2.4% -3.5% 2.5% -11.5% -10.5% -1.7% Operating profit 677 1,919 1,208 3,085 1,240 2,623 1,964 2,384 2,091 2,829 2,190 3,702 Digital Entertainment 957 1,231 1,074 1,129 1,069 1,467 1,397 1,018 1,931 1,896 1,988 2,094 Business Solution -282 685 131 1,953 168 1,153 566 1,363 157 931 199 1,605 OPM 6.5% 15.2% 9.8% 19.0% 9.8% 17.5% 14.5% 13.9% 13.4% 16.1% 13.9% 19.3% Digital Entertainment 16.0% 18.0% 15.1% 14.9% 13.7% 17.8% 17.2% 11.5% 18.2% 16.3% 18.3% 19.2% Business Solution - 11.7% 2.5% 22.6% 3.5% 17.0% 10.5% 16.3% 3.1% 15.5% 4.1% 19.5% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
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Full-year consolidated results for FY03/21 (out April 27, 2021)
Earnings overview Full-year results for FY03/21 For FY03/21, Infocom reported sales of JPY68.1bn (+16.6% YoY), operating profit of JPY10.8bn (+31.7% YoY), recurring profit of JPY10.9bn (+32.3% YoY), and net income attributable to owners of the parent of JPY6.3bn (+13.2% YoY). Both sales and all profit items were record highs.
Difference between forecast and actual results (attainment rate) In terms of attainment of the company’s full-year FY03/21 targets* (the upward revisions announced October 28, 2020), sales reached 96.5%, operating profit 103.0%, recurring profit 104.2%, and net income attributable to owners of the parent 93.7%.
*Revision of full-year FY03/21 earnings forecast (out October 28, 2020) Sales: JPY70.5bn (previous forecast: JPY69.0bn) ▷ Operating profit: JPY10.5bn (JPY10.1bn) ▷ Recurring profit: JPY10.5bn (JPY10.1bn) ▷ Net income attributable to owners of the parent: JPY6.7bn (JPY6.6bn) ▷
Reasons for revision The e-comics distribution in the Digital Entertainment segment performed well in 1H FY03/21, and the company expects strong performance to ▷ continue through 2H. In the Business Solution segment, the company expects its business targeting hospitals to see longer project lead times and a stronger-than-usual ▷ Q4 weighting of results. At the same time, the company expects steady growth in its business for corporate clients as it leverages web meetings and online seminars to tap into IT demand. Due to these factors, the company made upward revisions to its full-year sales and profit forecasts. ▷
Sales Overall sales were JPY68.1bn (+16.6% YoY). Digital Entertainment sales rose 33.5% YoY while Business Solution sales fell 5.4% YoY. Of the JPY2.5bn shortfall between the company forecast and actual results, Digital Entertainment sales fell short of forecast by around JPY2.0bn and Business Solution sales fell short of forecast by around JPY500mn. The former was affected by the pirate comic sites, while the latter was impacted by the COVID-19 pandemic, primarily in the Health IT subsegment.
In the Digital Entertainment segment, in addition to the success of various data analysis-driven measures on its Mecha Comic e-comics store such as the expansion of serial manga, initial exclusive distribution rights agreements, and original comics, the rise in demand spurred by voluntary restrictions on going out caused by the COVID-19 pandemic led to higher sales. Although effects from pirate sites emerged in Q4 (January‒March 2021), sales were up by 33.5% YoY, topping JPY40.0bn for the first time since the launch of the service. The company expects the impact of the pirate sites to wane in 1H FY03/22.
In the Business Solution segment, sales to hospitals under the Health IT subsegment were negatively impacted by a drop in one-time demand seen in FY03/20 (work related to era change and consumption tax rate hike) and the COVID-19 pandemic, but earnings were making comeback toward the year-end. Earnings on business from corporate clients were in line with plan thanks to steps taken on sales activities.
Operating profit Operating profit was up 31.7% YoY to JPY10.8bn. Profit consistently outstripped the company’s October 28, 2020 upward forecast revisions. In Digital Entertainment, operating profit rose 59.7% YoY driven by higher sales and optimization of advertising. Meanwhile, Business Solution operating profit was affected by lower sales, falling 11.0% YoY. The GPM improved 1.1pp YoY to 49.5% while the SG&A to sales ratio fell by 0.8pp YoY to 33.6%. The OPM was up 1.8pp YoY to 15.9%.
Net income Net income attributable to owners of the parent was JPY6.3bn (+13.2% YoY). The company recorded goodwill when it acquired shares in its e-comics business in South Korea and its nursing care staff placement business in Japan, and after taking into account
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the progress toward initial targets and forthcoming earnings outlooks, the company recorded impairment losses of JPY1.0bn as extraordinary losses. This caused net income to fall short of forecast.
Quarterly sales and YoY comparison
(JPYmn) Digital Entertainment sales Business Solution sales Total sales YoY (right axis) 30,000 30.0%
22.9% 25.0% 25,000 21.2% 21.2% 18.4% 17.6% 20.0% 16.1% 19,141 20,000 13.1% 12.5% 13.0% 17,175 17,624 11.7% 11.4% 15.0% 15,589 15,701 14,992 9.2% 15,000 7.9% 16,219 10.0% 12,664 12,381 12,687 5.9% 4.9% 14,356 5.2% 5,992 13,521 4,986 4,833 8,216 9,949 5.0% 11,254 10,464 8,357 10,000 8,660 4,863 6,769 5,402 10,215 5,833 5,276 4,466 4,707 5,846 4,949 8,989 0.0% 5,000 -5.0% 5,242 5,407 5,267 5,367 5,997 6,831 7,105 7,559 7,823 8,224 8,118 8,818 10,603 11,631 10,868 10,925 0 -10.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY03/18 FY03/19 FY03/20 FY03/21
Quarterly operating profit and OPM
(JPYmn) Digital Entertainment OP Business Solution OP OPM (right axis)
4,000 3,702 25.0%
3,500 19.0% 19.3% 3,085 20.0% 17.5% 16.1% 3,000 16.9% 15.2% 15.2% 2,829 14.5% 13.9% 2,623 13.4% 13.9% 2,500 2,384 2,190 15.0% 2,427 2,091 1,605 1,964 10.2% 1,919 157 931 199 2,000 1,714 9.8% 9.8% 10.0% 1,153 566 1,500 6.5% 6.5% 685 1,208 1,240 1,037 131 1,953 168 773 677 1,363 1,000 651 176 1,653 5.0%
500 793 936 860 771 957 1,231 1,074 1,129 1,069 1,467 1,397 1,018 1,931 1,896 1,988 2,094 0.0% 0 -143 -282 -500 -5.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY03/18 FY03/19 FY03/20 FY03/21 Source: Shared Research based on company data
By segment Digital Entertainment segment
Segment sales were JPY44.0bn (+33.5% YoY) and segment operating profit was JPY7.9bn (+59.7% YoY). ▷
In the e-comic distribution business, various data analysis-driven measures on its Mecha Comic e-comics store such as the expansion of serial manga, initial exclusive distribution rights agreements, and original comics, proved successful. Due in part to voluntary restrictions on going out, sales rose 33.5% and operating profit rose 59.7% YoY. Total subscribers at end-FY03/21 stood at 15mn (up about 25% from end-FY03/20). Paying subscribers represented about 2mn of the total (up about 20% YoY). Through Q3, YoY subscriber growth was trending at around 30%, but slowed in Q4 due to the impact of pirate sites. Average revenue per user (ARPU) saw double-digit growth in 1H, but just single-digit growth in Q3, followed by a slight YoY decrease in Q4 (Shared Research estimate).
Although effects from pirate sites emerged in Q4 (January‒March 2021), sales were up by 33.5% YoY, topping JPY40.0bn for the first time since the launch of the service. Quarterly sales peaked in Q2 and tapered off somewhat in Q3 and Q4. Nevertheless, all quarters were above the JPY10.0bn threshold (quarterly sales in FY03/20 ranged from JPY7.5bn‒JPY8.5bn). The company expects the impact of the pirate sites to wane in 1H FY03/22.
The company is expanding its line of original comics. In FY03/21, the original comic series Aoshima Kun wa Ijiwaru sold more than 1mn copies (calculated as books). The company’s focus on developing intellectual properties bore fruit: Television drama series
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were produced based on the company’s popular original comics Toshi no Sa Kon (May–December Marriage) and Risky. Infocom sought to roll out its original content across multiple media, such as jointly sponsoring a contest to select a work for simultaneous development as a manga and TV drama with TV Tokyo Corporation. Infocom launched a free daily serial manga in November 2019, increasing the offering to two free postings a day in December 2020. The company feels that this is helping to improve performance. In Q1 FY03/21, targeting a younger user base than the website, the company fully updated its Mecha Comic app, enhancing usability and boosting content. Cumulative downloads of the app had surpassed 4.5mn end-FY03/21.
Business Solution segment
Segment sales were JPY24.0bn (-5.4% YoY) and segment operating profit was JPY2.9bn (-11.0% YoY). ▷
Sales to hospitals under the Health IT subsegment were negatively impacted by a YoY drop in one-time demand seen in FY03/20 (related to Japan’s era change and a consumption tax rate hike) and the COVID-19 pandemic, but earnings were making comeback toward the year-end. Earnings on business from corporate clients were in line with plan thanks to steps taken on sales activities.
Infocom is positioning Health IT as a core business. One growth strategy in the company’s medium-term management plan is the Asia Healthcare Project. The company began marketing its medical imaging management system in Indonesia, and is entering the Southeast Asian market for drug information management systems. In addition, the company entered into a new business alliance with Homage, a Singapore-based company that provides a matching platform for nursing care professionals.
In the area of community-based comprehensive care, the company began providing its CWS for Care cloud-based staff management service to serve the personnel needs of nursing care facilities. For corporations, the company has released a new version of the integrated business software package GRANDIT. For its crisis management services Emergency Call and BC Portal, the company began offering optional functions to support rapid disaster response of companies.
Investments Infocom invested a total of JPY1.8bn in FY03/21 (versus JPY3.7bn in FY03/20), as detailed below:
Business development (planning, surveying, running POCs): JPY440mn (versus JPY390mn in FY03/20) ▷ Equity investments (business tie-up with a developer of a matching platform for nursing care professionals in Singapore, etc.): ▷ JPY170bn (versus JPY2.0bn* in FY03/20) Capital spending (E-comics: app and system development, etc.; Health IT: medical imaging management, drug information ▷ management, services for pharmaceutical manufacturers, etc.; GRANDIT development; others): JPY900mn (versus JPY1.1bn in FY03/20) R&D (AI, cutting-edge technology, digital transformation, etc.): JPY260mn (versus JPY190mn in FY03/20) ▷
*South Korean e-comic distributor, nurse recruiting agency, venture capital investments in healthcare-related companies in Asia
For details on previous quarterly and annual results, see the Historical performance and financial statements section.
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Full-year FY03/22 company forecast
Earnings FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPYmn) FY A ct . FY A ct . FY A ct . 1H Act. 2H Act. FY A ct . 1H Est. 2H Est. FY Est . Sales 45,774 51,728 58,375 33,213 34,842 68,055 35,000 42,000 77,000 YoY 9.6% 13.0% 12.8% 20.0% 13.5% 16.6% 5.4% 20.5% 13.1% Operating profit 5,829 6,889 8,211 4,920 5,892 10,812 4,800 6,200 11,000 YoY 22.0% 18.2% 19.2% 27.4% 35.5% 31.7% -2.4% 5.2% 1.7% OPM 12.7% 13.3% 14.1% 14.8% 16.9% 15.9% 13.7% 14.8% 14.3% Recurring profit 5,982 6,875 8,268 4,950 5,986 10,936 4,800 6,200 11,000 YoY 23.2% 14.9% 20.3% 27.7% 36.3% 32.3% -3.0% 3.6% 0.6% RPM 13.1% 13.3% 14.2% 14.9% 17.2% 16.1% 13.7% 14.8% 14.3% Net income attrib. to owners of the parent 4,640 4,783 5,543 3,377 2,899 6,276 3,250 4,050 7,300 YoY 42.3% 3.1% 15.9% 31.1% -2.3% 13.2% -3.8% 39.7% 16.3% Net margin 10.1% 9.2% 9.5% 10.2% 8.3% 9.2% 9.3% 9.6% 9.5% By segment FY03/18 FY03/20 FY03/21 FY03/22 (JPYmn) FY A ct . FY A ct . FY A ct . 1H Act. 2H Act. FY A ct . 1H Est. 2H Est. FY Est . Sales 45,774 51,728 58,375 33,213 34,842 68,055 35,000 42,000 77,000 Digit al Ent ert ainment 21,283 27,492 32,983 22,234 21,793 44,027 - - 52,000 Business Solution 24,491 24,235 25,391 10,978 13,049 24,027 - - 25,000 YoY 9.6% 13.0% 12.8% 20.0% 13.5% 16.6% 5.4% 20.5% 13.1% Digit al Ent ert ainment 10.0% 29.2% 20.0% 38.6% 28.7% 33.5% - - 18.1% Business Solution 9.3% -1.0% 4.8% -5.6% -5.2% -5.4% - - 4.0% Operating profit 5,829 6,889 8,211 4,920 5,892 10,812 4,800 6,200 11,000 Digit al Ent ert ainment 3,360 4,391 4,951 3,827 4,082 7,909 - - 9,000 Business Solution 2,459 2,487 3,250 1,088 1,804 2,892 - - 3,070 OPM 12.7% 13.3% 14.1% 14.8% 16.9% 15.9% 13.7% 14.8% 14.3% Digit al Ent ert ainment 15.8% 16.0% 15.0% 17.2% 18.7% 18.0% - - 17.3% Business Solution 10.0% 10.3% 12.8% 9.9% 13.8% 12.0% - - 12.3% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Overview The full-year FY03/22 company forecast calls for consolidated sales of JPY77.0bn (+13.1% YoY), operating profit of JPY11.0bn (+1.7% YoY), EBITDA of JPY12.6bn (+3.4% YoY), recurring profit of JPY11.0bn (+0.6% YoY), and net income of JPY7.3bn (+16.3% YoY). Infocom plans an annual dividend of JPY40 per share (versus JPY37 per share in FY03/21). The company projects the cost of relocating its head office as JPY1.0bn. Japan’s economy is expected to gradually recover as measures to contain COVID-19 infections sink in and effective vaccinations reach the populace, but there is still no telling quite when the crisis will subside, and the company anticipates that the future will remain unpredictable. Based on its medium-term management plan (FY03/21‒FY03/23), the company will position e-comics and healthcare as priority businesses and implement key measures accordingly. The company has positioned FY03/22 as a period for growth, and is taking various measures to reach its targets in the final year (FY03/23) of the current management plan.
The plan’s final FY03/23 sales target is JPY85.0bn‒JPY115.0bn (JPY90.0bn due to organic growth; JPY25.0bn from the upside of acquisitions). Of the JPY90.0bn in sales due to organic growth, the company is aiming for JPY60.0bn from the Digital Entertainment business and JPY30.0bn from the Business Solution business. Infocom expects the Digital Entertainment segment to make steady and sustainable progress toward the target sales, but says the Business Solution segment may fall below the target due to the impact of COVID-19. However, the company believes that growth in the Digital Entertainment segment alone will enable it to reach its minimum target of JPY85.0bn. The company says it wants to achieve even higher sales by means of acquisitions.
It also plans to relocate its head office during FY03/22 in order to promote new work style reforms incorporating Activity Based Working (discussed below).
Breakdown by segment Digital Entertainment segment
The company projects segment sales of JPY52.0bn (+18.1% YoY) and segment operating profit of JPY9.0bn (+13.8% YoY). ▷
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The company plans to maintain brisk business and achieve sales growth in the segment by expanding content (original comics, ▷ content imported from South Korea’s Webtoons) and making greater use of data. It expects the impacts of pirate sites to subside in 1H. In the e-books market, although there have been some effects from pirate sites, the company expects them to subside in 1H, ▷ and it forecasts ongoing growth as reading books on smartphones becomes more and more commonplace, user base expands further, and 5G gains full-scale market penetration.
Operating environment and company initiatives Although the e-comic market continues to grow, Infocom recognizes that competition is also intensifying due to the rising popularity in the Japanese market of Webtoon* apps produced by South Korean firms (such as Piccoma by Kakao Japan). Given that content is key to prevailing in the market, the company is exploring producing original manga and importing Korean manga through its South Korean e-comics distribution subsidiary, Peanutoon. Regarding original comics, starting in FY03/20, the company has sought to create a flow from production to sales to TV dramatization, and is aiming to put out more hit titles in FY03/22. As greater competition is expected to pare down the number of successful market players, the company will also pursue tie-ups and acquisitions among the field of competitors.
*Webtoon: A type of digital comic or web comic from South Korea. Webtoons differ from conventional web comics in that they are full-color, vertically scrollable, and incorporate music and animation.
Segment initiatives in FY03/22 Expand content: Strengthen the system for producing original comics, import and market Webtoon titles from South ▷ Korea, strengthen collaboration with publishers (exclusive advance distribution rights, free daily manga posting) Reinforce marketing: TV dramatization of original comics, TV and streamed advertisements, SNS, promotional ▷ campaigns, etc. Strengthen growth businesses: (1) apps (enhance app-specific functions and improve user interface); (2) overseas ▷ operations (expand business with Peanutoon driving promotion) Enhance system infrastructure: Transition in stages to full cloud-based systems, develop and upgrade image processing, ▷ data compression, viewer platforms, etc.
The company renewed its Mecha Comic logo. Reaching out through daily free manga posting and apps, the company will reinforce its online marketing measures to attract potential customers as free subscribers and then convert them to paying subscribers. TV dramatizations of original comics will continue to be a focus. Infocom will also step up its importing and marketing of Webtoon titles from South Korean consolidated subsidiary Peanutoon, and work to bolster Peanutoon’s promotion capabilities to support this. The company plans to make its system fully cloud-based and change the viewer platform. It will use a machine learning model to analyze accumulated user behavior data (browsing, purchase, and behavior histories, time spent online, etc.) and leverage results to recommend content (optimal items in terms of relevance, surprise factor, etc.).
Business Solution segment
The company forecasts segment sales of JPY25.0bn (+4.0% YoY) and segment operating profit of JPY3.7bn (+6.2% YoY). The ▷ company expects sales in the Health IT subsegment to be JPY10.7bn (+10.3% YoY). These figures do not include the costs of head office relocation.
The company is targeting 4.0% YoY growth in sales and 6.2% YoY growth in operating profit as the impact of COVID-19 tapers off toward 2H, particularly in the Health IT subsegment.
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In the IT-related market, the company forecasts that IT demand will recover as the spread of telecommuting and other new lifestyle formats promote further digitalization of society as a whole, use of cloud services expands and application of AI in business grows, and business processes improve.
Segment initiatives in FY03/22 In Japan, the company will continue to expand its business in the fields of healthcare and long-term care (CWS staff management service for long-term care facilities, nursing care staff placement, etc.). In the Health IT subsegment, the company will ramp up sales of WELSA, the corporate health management service it launched in FY03/20. WELSA is a cloud service that centrally manages the results of employee medical exams and stress checks, and analyzes and predicts health risks and lifestyle-related diseases. Specifically, the company will aim to generate sales leads through online marketing. The company will also enhance the user interface and strengthen security and system management functions. The company says it is experimenting with in-house game-based apps, with a view to developing these for the consumer market down the road. The company has its sights on this market in other ways: It is pursuing content collaboration with healthcare service providers, advertising and promotional collaboration with healthcare product manufacturers, and service collaboration with the WELSA.
On the other hand, in Asia, the company will leverage products it develops in Japan to expand its Health IT subsegment with partner companies. Specifically, the company will develop a medical imaging management system (Picture Archiving and Communication System (PACS)) with Terakorp of Indonesia, a drug information management system with a partner company in the Philippines, and a matching platform for nursing care professionals with Singapore-based Homage. Infocom will pursue the co-creation of services through equity tie-ups and acquisitions of companies that offer the resources it needs to grow.
Investment plans Capital spending plans call for a total of JPY2.5bn in new investments in FY03/22, up from JPY1.6bn in FY03/21. The breakdown is as follows.
Business development (planning, surveying, running POCs): JPY400mn (versus prior-year plan of JPY440mn) ▷ Capital spending: JPY1.7bn (versus prior-year plan of JPY900mn) ▷ R&D (AI, community-based comprehensive care, new technology): JPY380mn (versus prior-year plan of JPY260mn) ▷
Of the roughly JPY800mn increase in capital investment YoY, JPY300 ‒JPY400mnis related to the relocation of the head office, and an equivalent amount is related to the Health IT subsegment. Higher R&D investment mainly reflects rising costs for digital transformation initiatives of the head office staff division.
Head office relocation The company plans to relocate its head office to Tokyo Midtown East, 9-7-2 Akasaka, Minato-ku, Tokyo sometime in November‒ December 2021 (current address: Sumitomo Real Estate Harajuku Building, 2-34-17 Jingumae, Shibuya-ku, Tokyo).
Amid the shift to more flexible working styles, including working from home, Infocom took stock of the functions of its head office and the space best suited to its needs, and further considered the concept of Activity Based Working (ABW)* and what would make for more effective internal communication. It then decided to relocate the head office, concluding that it could bring about improvements in productivity and lower costs by the move.
*Activity Based Working (ABW): A working style in which employees work in the optimal location according to type of work activity (focused thinking, meetings, etc.). Determining where to work is at the discretion of each employee according to the work activity. Infocom trialed this approach at its Osaka office and found improvements in productivity and ease of working for employees (improved QOL). With the onset of COVID-19, the company decided to implement the approach at its Tokyo office as well.
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Head office relocation cost About JPY1.0bn, primarily for interior design of the new office and returning the old office to its original condition. Rent is not included in the JPY1.0bn.
Expected outcomes
Lowering costs by using an approximately 40% smaller floor space (Infocom assumes it can recover relocation costs within five ▷ years through lower rental payments)
Enhancing internal communication by consolidating 10 floors into a single floor ▷ Developing and enhancing IT infrastructure to allow employees to work unrestricted by time or location ▷ Improving employee QOL through flexible working styles and a streamlined infrastructure ▷
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Medium-term outlook New medium-term business plan (FY03/21–FY03/23) Infocom briefly outlined its current medium-term business 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 new medium-term plan on June 4, 2020.
Overview Under its new medium-term business 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 When the plan was announced (June 4, 2020), figures in the FY03/20 column indicated company projections.
For its new 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: ▷
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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.
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 businesses 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 ▷ The company sees the digital transformation (DX) picking up momentum as a result of the coronavirus pandemic ▷
E-comics
In addition to the ongoing digitalization of paper-based comics, the company sees the new comic app market growing at an ▷ average annual rate 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% growth made by the Impress Research Institute and also ahead of Infocom’s previous forecast
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(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. The company sees more alliances forming among e-comic distributors. ▷ The company also sees changes in lifestyles in the wake of the pandemic prompting more people to read digital comics. ▷ Domestic e-comics market (projections by Impress Research Institute and Shared Research)
(JPYbn) (JPYbn) Impress forecast Online market (Infocom forecast) App market (Infocom forecast)
600.0 600.0
464.0 500.0 500.0 415.0 370.0 400.0 400.0 323.6 332.4 350.4 298.9 308.3 300.0 300.0 238.7
184.5 200.0 161.7 200.0 127.7 102.4 100.0 73.1 100.0
0.0 0.0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020F FY2021F FY2022F Source: Shared Research, based on data from Impress Research Institute’s 2019 E-Book Publishing Business Survey Report (July 2019)
Health IT
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. The company sees the health IT market growing rapidly in response to increase in the need for primary nursing care providers ▷ The company anticipates a shortage of some 430,000 primary care nurses by the year 2025
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
Strategies for core businesses As discussed previously, under the new medium-term business plan the company will continue to focus on growing its core businesses in e-comics and healthcare-related IT.
E-comics
Under its new 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 an average annual growth rate of 22.5%, ahead of the growth rate 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. Maximize revenues from Mecha Comic ▷ 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
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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.
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.
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.
Build out business infrastructure to support further business expansion ▷ 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.
Complete move to cloud-based systems
Ensure 5G compatibility Expand into new markets ▷ Develop overseas markets (see below for more details regarding the company’s overseas track record through the end of
FY03/20)
On the M&A front, the company plans to continue looking for acquisition targets to facilitate its value co-creation
initiatives
Health IT
To move into new healthcare-related fields, the company plans to development new businesses and expand overseas. ▷ 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
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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.
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.
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.
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
In the field of nursing care, build on existing efforts to expand its presence in this focus market ▷ 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.
In the remote field, provide online sales support services for medical representatives and rollout services to support remote ▷ medicine.
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
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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.
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.
Infocom’s “value creation story”
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. 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. 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. 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. 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. Through its risk management service, Infocom is creating value by working with companies to provide individual safety and ▷ security.
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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. The relationships between the Infocom group’s businesses and sustainable development goals (SDGs) are outlined in the table ▷ below:
Infocom group businesses and related sustainable development goals
Products and services Related SDGs
Digital E-Comics LIFE ON LAND Entertainment Offer a daily enjoyable respit e t hrough digit al cont ent
Information Management Systems for Hospitals GOOD HEALTH AND WELL-BEING Digit alize medical and medical imaging informat ion t o improve medical care qualit y
Services for Nursing Care Facilities GOOD HEALTH AND WELL-BEING Health IT Provide nursing care facility support and nursing career change support DECENT WORK AND ECONOMIC GROWTH
Health Management Services GOOD HEALTH AND WELL-BEING Analyze and forecast employee health risks for disease prevention and health maintenance
Risk Management Services SUSTAINABLE CITIES AND COMMUNITIES Integrated management of safety information during disasters, offering safety and securit y
Business Management System (ERP) DECENT WORK AND ECONOMIC GROWTH Process digitalization for improved management speed, contributing to greater B2B services corporate growth Digital Archives QUALITY EDUCATION Create an academic database available to all, promoting the use of academic materials
Document Management Services LIFE ON LAND Digitize paper documents to encourage move to paperless
INDUSTRY, INNOVATION AND Infocom Fund, Digital Health Connect INFRASTRUCTURE Co-create with Japanese and Asian venture firms to create new businesses PARTNERSHIPS FOR THE GOALS Other businesses INDUSTRY, INNOVATION AND Iwanuma Minna no ie INFRASTRUCTURE Promote recovery support businesses in the agriculture and tourism sectors, making a LIFE ON LAND contribution to disaster areas Source: Shared Research based on company materials
Going forward, Infocom will work to become a services company that delivers new value through the co-creation of ICT and ▷ real-world businesses.
Returns to shareholders
While maintaining a stable financial position, the company will seek to make appropriate returns to shareholders after ▷ prioritizing growth investment in core businesses
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.
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.
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%.
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Reference: Overseas business development activities through FY03/20 Detailed below are the company’s overseas business development activities through FY03/20.
E-comics business
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. 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). 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 business
In September 2013, Infocom concluded a strategic partnership agreement with Fenox Venture Capital (headquartered in ▷ Silicon Valley, US). 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. In Jakarta, Indonesia, the company set up local subsidiary PT. GnB Accelerator Asia. ▷ 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.
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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 (TSE1: 3401), which had a 58.0% stake at the end of 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 an average annual growth rate 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)
2,892 7,909 27% 73% FY03/21 24,027 Sales 44,027 35% 68,055 65%
(JPYmn)
Digital Entertainment Business Solution (Outer circle: sales, inner: OP)
Source: Shared Research based on company data
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Long-term trends in sales, operating profit, gross profit margin, and operating profit margin
(JPYmn) Sales Operating profit OPM (right axis) GPM (right axis) 80,000 77,000 100% 68,055 90% 70,000 58,375 80% 60,000 51,728 70% 45,774 50,000 60% 40,309 40,316 41,768 36,497 39,139 40,000 35,913 34,151 34,610 37,381 50% 31,473 48.4% 49.5% 30,000 45.4% 47.0% 47.2% 47.6% 40% 42.3% 43.8% 43.1% 44.1% 44.7% 39.3% 30% 34.3% 34.9% 20,000 15.9% 12.7% 13.3% 14.1% 14.3% 20% 8.8% 9.3% 9.4% 9.4% 8.9% 11.0% 11.4% 10,000 4.8% 7.0% 1.4% 10,812 11,000 10% 2,390 3,678 4,427 4,776 5,829 6,889 8,211 0 432 1,726 3,042 3,402 3,502 3,606 0% FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 Est.
Source: Shared Research based on company data
Business portfolio The company has two reporting segments: the Digital Entertainment segment (B2C) and the Business Solution segment (B2B).
The Business Solution segment’s contribution to sales was higher until FY03/18 (54% of total sales in FY03/18; 47% of total sales in FY03/19), but in FY0/319 was overtaken by the Digital Entertainment segment (46% of total sales in FY03/18; 53% of total sales in FY03/19). The Digital Entertainment segment also contributes more to operating profit (58% in FY03/18; 64% in FY03/19).
In FY03/21, the proportion of sales coming from the Digital Entertainment segment jumped up to 64.7% while the proportion of operating profit from the segment rose to 73.2%. The Digital Entertainment segment’s operating profit margin of 18.0% in FY03/21 was higher than the operating profit margin of 12.0% in the Business Solution segment. In FY03/20, the operating profit margin for the Digital Entertainment segment was 15.0%.
The Business Solution segment has three subsegments: Health IT (software packages and services for medical and healthcare facilities), Business Software (software packages and cloud services for companies and government organizations), and Enterprise Service Management (system integration for large corporations). The company does not release sales figures by subsegment, but it says that sales are highest in Health IT, followed by Enterprise and Business Software.
If we count the Digital Entertainment segment along with these three subsegments, the company operates in four different areas, Digital Entertainment, Health IT, Enterprise Service Management, and Business Software. According to the company, its profit margin is highest at its Digital Entertainment business, followed in order by Health IT, Enterprise Service Management, and Business Software.
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Overview of segments and subsegments
(% of total) Infocom
Segment (FY03/20) Digital Entertainment Business Solution Sales 64.7% 35.3% Operating profit 73.2% 26.8% Operating profit margin 18.0% 12.0% Number of employees 11.3% 88.7% Enterprise Health IT Business software Subsegment - System integration for large corporations Packaged services for medical institutions Business packages and cloud services System integration Business model Content sales Sales and operation of package products and cloud services developed in-house (contracted development and operation) Sales (relative size; FY03/20) - 0.8 ： 1 ： 0.7 Profitability Extremely high High Very high Mix of high and low
For private corporations and public - Textile manufacturers (e.g. Teijin) For hospitals and clinics institutions - General trading companies Clients - E-comics - iRad® - ERP GRANDIT® (e.g. Sojitz) - Pharmaceutical wholesalers - Emergency contact and Main products and services - Content distribution - Medi (e.g. Medipal Holdings) safety confirmation system For women, music-related - Mobile network operators - DICS、PICS - Document management, other
Long-term care operators, healthcare-related corporations and institutions Source: Shared Research based on company data and interviews with company Note: In calculating the employee ratios, companywide (shared) employees were not included.
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Business model Digital Entertainment segment Core business: Mecha Comic In the Digital Entertainment segment, Infocom provides smartphone and mobile phone content distribution services. The core business is e-comics* service Mecha Comic (launched in 2006) that specializes in providing comics for smartphones and mobile phones (details of services described later). Mecha Comic mainly sells manga on a web browser, and in July 2019, started offering manga via smartphone apps, similar to LINE Manga and other e-comics businesses.
According to the company, it boasts the leading share of e-comics sales. It appears Infocom’s market share is around 12% (calculated by dividing the company’s FY03/21 e-comics sales of JPY43.9bn by the scale of the e-comics market at an estimated growth rate of 20% from FY2019, when it stood at JPY298.9bn according to research by Impress Research Institute). Mecha Comic accounts for more than 99% of segment sales.
Infocom has been involved in digital entertainment for more than twenty years, with milestones including its launch in 1999 of Japan’s first ringtone service** for mobile phones of IDO Corporation (predecessor of the KDDI Corporation). As the popularity of ringtones began to wane, the company turned its attention to e-comics, a business that saw profits balloon from FY03/15 onward as the e-comics market expanded.
Many competitors specializing in e-comics distribution tend to focus entirely on manga, but Infocom believes manga is just one type of content and attempts to offer other content as well. This highlights its user-driven strategy, unlike specialized competitors that have a product-driven strategy. The company’s employees, instead of searching for content themselves, cultivate relationships with publishers, harnessing data analysis from the customer’s perspective to differentiate. Recently, Infocom has focused on releasing its original titles and has produced hit titles by artists discovered on its own (details follow).
*E-comics are content—books and other published material—that has been digitized for viewing on electronic devices rather than in printed form. With the increasing popularity of the internet, it is becoming quite common for online bookstores to sell e-books that users view on their smartphones, tablets, mobile phones, e-book devices, or personal computers. Merits of digital content: lower cost to produce than printed content, no physical deterioration over time, inventory control costs can be ignored, no geographical constraints (content can be sold worldwide), users can begin reading as soon as their orders are processed, and does not take up physical space. Demerits: requires appropriate technology to prevent illegal copies and costs to operate servers for downloads. **Japan’s first ringtone service: Infocom suggested to mobile network operators a method of charging fees for the distribution of music files in downloadable format. The ringtone service provided an opportunity for the company to set up its own facilities and enter a business targeting consumers. According to the company, it secured significant profits because at that time there were no competitors with similar businesses.
Digital Entertainment segment: Operating profit margin soars from 4.4% in FY03/14 to 16.0% in FY03/19, eases back to 15.0% in FY03/20 as company steps up investing spending but climbs back up to 18.0% in FY03/21 Over the five-year period through FY03/20, the average annual growth rate for segment sales was 14.7% for segment sales and for segment operating profit was 32.6%. In FY03/20, the Digital Entertainment segment accounted for 60.3% of the company’s operating profit. Between FY03/15 to FY03/19, the segment’s operating profit margin soared from 7.9% to 16.0%, but then eased back to 15.0% in FY03/20 as the company stepped up investment spending, but climbed back up to 18.0% in FY03/21. The segment has 115 employees (11% of total employees). Personnel expenses are low but advertising and promotional expenses and systems costs for distribution and member management are considered fixed expenses, and are relatively heavy. Economies of scale are easily achieved by increasing sales.
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Digital Entertainment segment: sales, operating profit, operating profit margin
(JPYmn) Sales Operating profit OPM (right axis) 60,000 25% 52,000 50,000 44,027 20% 15.8% 16.0% 15.0% 40,000 14.5% 18.0% 17.3% 15% 11.8% 32,983 30,000 27,492 21,283 19,352 10% 20,000 15,337 16,579 13,722 7.9% 7,909 9,000 5% 10,000 4.4% 4,951 2,800 3,360 4,391 597 1,207 1,956 0 0% FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 Est. Digit al Ent ert ainment FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 13,722 15,337 16,579 19,352 21,283 27,492 32,983 44,027 52,000 YoY 10.3% 11.8% 8.1% 16.7% 10.0% 29.2% 20.0% 33.5% 18.1% % of t ot al sales 35.1% 38.0% 41.1% 46.3% 46.5% 53.1% 56.5% 64.7% 67.5% E-comic sales 10,200 12,300 15,070 18,000 20,230 26,670 32,640 43,910 52,000 % of Digit al Ent ert ainment sales 74.3% 80.2% 90.9% 93.0% 95.1% 97.0% 99.0% 99.7% 100.0% Operating profit 597 1,207 1,956 2,800 3,360 4,391 4,951 7,909 9,000 YoY -2.2% 102.1% 62.1% 43.1% 20.0% 30.7% 12.8% 59.7% 13.8% % of total operating profit 16.3% 33.5% 44.2% 58.5% 57.7% 63.8% 60.4% 73.2% 74.6% OPM 4.4% 7.9% 11.8% 14.5% 15.8% 16.0% 15.0% 18.0% 17.3% Source: Shared Research based on company data
Business model for Infocom’s e-comics distribution business Consolidated subsidiary Amutus Corporation operates the Digital Entertainment segment The e-book value chain comprises players such as the author or production company, publisher, e-book agency, and e-bookstore (see the Market and value chain section for details). Amutus operates e-bookstores, which are platforms for distributing (selling) content to consumers. Amutus gets about 80% of content directly from publishers (it acts as an e-book agency in this case). Recently, the weighting of original comics, in which it discovers artists on its own and plans and edits the comics in-house, has been on the rise (details follow).
In terms of operations, Amutus purchases electronic files from publishers, applies digital rights management (DRM; controls or limits content use or copying in order to protect copyrights), and distributes the content to consumers’ smartphones and mobile phones. Amutus shares revenue generated from customers (monthly fees and fees from the purchase of additional content) with the publishers and authors or production companies. For mainstay smartphone and mobile phone e-comics store, Mecha Comic, Amutus handles member acquisition and management, as well as content management and distribution, while offering consumers payment services, purchase history management, search, viewing, and promotions. We also note that Amutus has greater rights over original content it produces on its own.
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E-book business: Flow of content and user fees
General e-book business Infocom
E-book stores Smartphone Users (devices) - Acquire and manage memberships ⇒ Promote sales Content Payment - Procure and manage content Infocom: Mecha Comic - Manage users' purchase history E-book store ekubostore - Create sales plans Content Payment - Provide feedback on sales to publishers Infocom E-book agents Content Payment Publishers Publishers
Content Payment Authors and producers Authors and producers
Source: Shared Research based on Beaglee Inc. Share Issue and Stock Reporting Prospectus, Basic Textbook on E-Book Production and Circulation, edited by Yashio Uemura, and Infocom material
Content that targets user pastime According to an April 2019 interview with Amutus president, Jun Kuroda, featured on Nikkei xTREND, Mecha Comic vies for share of user pastime. Most users nonchalantly visit the website from banner ads, subscribe to a free trial, and eventually choose to become members. These banner ads draw in visitors by selecting scenes from comics that grip and impress viewers. Mecha Comic handles a wide variety of manga genres from popular titles to niche titles that are only available in digital format. According to president Kuroda, most members visit the website without a genre in mind, and this is something that is unique about its members compared with general consumers of magazines and comics. Furthermore, Mecha Comic distributes manga in smaller, bitesize format of “stories” rather than the traditional notion of selling manga in “volumes.”
Exclusive distribution rights before publication Infocom has been developing close ties with publishers, and it has been able to acquire an increased number of exclusive distribution rights before publication in recent years. In 2016, it distributed 13 titles in digital format before the publication in book format. In 2017, it grew this number to about 300 titles, which also helped counter the negative impact from pirate sites. Unlike digital comics that are distributed in page-view format (i.e., readers flip through manga page by page), Mecha Comic distributes its comics in vertically scrollable scene-view format (i.e., readers flip through manga scene by scene). While this improves user-friendliness, it also requires extra time on the part of Amutus to prepare the comic. This was one of the reasons why it had initially approached magazine publishers (note: comics in Japan are typically published in magazines first, followed by a book version) to acquire exclusive distribution rights before the book version goes out. Note that this scheme also benefits the publishers, because it would mean they would be able to generate profit before the comics are published as books, and if the title becomes a hit in digital format, this would also serve as promotion for the book format. On top of that, the number of books sold on Mecha Comic (digital format) would be a rough indicator of how many comics would be sold in book format. These mutual benefits between Mecha Comic and publishers have recently evolved into collaborations in the publication of comics in magazines* (see note below).
*Publication of magazine in collaboration with publishers Publication of Grand Jump Special Edition: Grand Jump Mecha with Shueisha in November 2017. The first edition was published in November 2017, followed by the second edition in May 2018. Since November 2018, publication has been bimonthly. While manga published on Grand Jump had previously been predominantly male readers, the collaboration with Mecha Comic, for which roughly 80% of readers are female, has proven effective in expanding readership among female readers, helping boost sales. Publication of Mecha Comic fufu with Futabasha in December 2018 Publication of Special Edition: Harlequin Mecha Comic Edition with HarperCollins Japan in February 2019
Data analytics Infocom conducts real-time AI-powered analysis of purchase history and user behavior data. Based on the analysis, it recommends titles to members and works to prevent cancellations by members who are likely to quit through the distribution of points. It also
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conducts A/B testing every day to test the optimal button size and colors that would induce clicks. It has recently expanded the scope of use of AI in data analysis to perform customer analysis and prediction of hit titles.
2016: Infocom introduced an AI-powered automatic tagging system of comics based on theme and keyword. This has ▷ streamlined tagging work (which was previously done manually) and contributed to increased sales. 2017: Infocom started using AI for big data analysis of customer purchase and activity history to optimize its web platform that ▷ had seen a significant enlargement of data volume. The adoption of AI has accelerated processing speed and facilitated marketing efforts through an improved website design. 2018: Infocom started using AI to analyze non-numerical data and began consideration of analysis and prediction methods ▷ harnessing machine learning. The analysis of non-numerical data has helped in offering recommendations tailored to each member, further optimizing the website design, and predicting hit titles. 2019: Infocom had previously used an analytics tool made in Japan, but it switched to the latest analytics tool made in the US ▷ aimed at raising the level of analysis and using it for customer analysis and prediction of hit titles.
Expansion of business scope through original comics Infocom is broadening its offerings of original comics produced by manga artists it discovers on its own and planned and edited in-house. Its original comic Risky: Vengeance is the Taste of Crime (Risky: Fukushu wa Tsumi no Aji) became the No.2 top seller at Mecha Comic in 2018. The company is bolstering these efforts by increasing its in-house staff responsible for planning and editing. It also uses data analytics to uncover the elements that are common to hit titles. Infocom then looks for an artist that aligns with these elements, requests production, and creates its original comic. It says that Risky had exceeded its initial expectation, and that a 2019 title, Aoshima Kun wa Ijiwaru, had overtaken Risky in popularity. Infocom will continue to work to grow sales of original comics.
Expansion of business overseas Infocom’s overseas strategy is to collaborate with Papyless for distribution in Taiwan, China, and North America (details follow); further expand its lineup of original comics in South Korea (details follow); and deploy its business model in South Korea to Indonesia.
Collaboration with Papyless In July 2019, Infocom established a joint venture Aldo Agency Global Co., Ltd. (AAG) with Papyless Co., Ltd. (JASDAQ: 3641), primarily as an agency business to facilitate the company’s overseas expansion. Papyless will have a 66.6% stake in AAG, while Amutus will have 33.4%. This move comes on the back of discussions between both parties after Infocom (the parent company of Amutus) had become a major shareholder* of Papyless in March 2018 (*as of end-FY03/21, Infocom held about 10.5% stake in Papyless). AAG will provide agency services for all kinds of operations required in the overseas distribution of content by publishers, such as translation and localization to tailor comics to local cultures and customs, building partnerships with overseas distributors, and offering a payment system. Initially, AAG will take on agency services for Papyless’ subsidiaries in Taiwan, Hong Kong, and the US, while it builds ties with e-book distributors operating in Taiwan, China, and North America. Infocom says that it looks to expand the scope of AAG’s operations to Europe and other Asian countries in the future.
Operations in South Korea Infocom has already expanded into the digital comic distribution market in South Korea on its own.
In 2016, it entered the South Korean market as an agency business and began selling its original comics. It launched the ▷ wholesale sales of its original comics and conducted marketing surveys. In 2018, it collaborated with local agency businesses and sent its own employees to South Korea to conduct a marketing test ▷ to verify whether advertisements are effective and whether it would be able to deploy its business model that has been successful in Japan to South Korea.
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Based on the test results, Infocom concluded it would be successful if it were to apply its business model in Japan to South ▷ Korea. In May 2019, it acquired shares in Peanutoon Co., Ltd. through third-party allotment and acquired additional shares from a major shareholder through a share transfer, making Peanutoon a subsidiary. Infocom looks to employ the successful business model of Mecha Comic in implementing its advertisement and marketing strategy. In addition, it aims to procure and distribute comics released by Japanese publishers; distribute its own content planned and produced jointly by Amutus and partnering companies (small to mid-sized publishers looking to expand into the South Korean market); and produce comics tailored to the South Korean market. It looks to recoup its investment and generate sales of JPY3.0bn within five years. In South Korea, a manga format called Webtoons has gained widespread popularity. Webtoons are vertically scrollable comics ▷ in digital format that are read on smartphones, and the reading format is very similar to Infocom’s scene-view format. Infocom estimates the South Korean digital comic market is growing at an annual rate of around 20% and stood at about JPY50.0bn in 2019, meaning that the market is mature and second only to Japan’s market worth at roughly JPY200.0bn.
Sales and cost structure Sales can be calculated as the number of paying members monthly ARPU (Average Revenue Per User per month) 12 × × months. The cost of sales (CoS) includes procurement costs (portion of revenue shared with publishers, authors, and other parties), payment platform fees, and usage fees (for content viewers). The largest portion of CoS appears to be procurement. On the other hand, SG&A expenses are mostly advertising and promotional expenses.
Mecha Comic Overview Launched in November 2006 (during the so-called flip-phone age), Mecha Comic has specialized in e-books (both comics and novels) for over ten years, even prior to the spread of smartphones. Mecha Comic is the leading company in the e-comics market. About 80% of its users are women in their 20s and 30s. According to a survey conducted in August 2015 by CM Databank on name recognition and the popularity of commercials, Mecha Comic ranked 4th in terms of name recognition and 1st in terms of the popularity of commercials. According to an e-comics user study conducted by Rakuten Research in October 2016 surveying women in their 20s and 30s, Mecha Comic scored No. 1 for ease of use, readability, enjoyment, and sense of comfort. Infocom does not release figures on the number of paying customers, but according to interviews conducted by Shared Research, the figure at the end of FY03/21 seems to be around 2.0mn. Calculated based on this figure, average revenue per user would be around JPY1,800–1,900 per month (up roughly JPY100 from the end of FY03/19).
System for e-comics Content (data) is stored on the company’s servers, and consumers stream*1 this content. Smartphones and other mobile devices do not save the content, so users do not need to worry about using up the memory of their devices but need a constant internet connection. Users do not need to download an app for viewing*2, as they may view content directly on the Mecha Comic site. When users purchase comics, there is no restriction*3 on the viewing period. Purchased comics are placed in the buyer’s digital bookshelf, and viewing is possible even after the user ends a membership. If member changes devices, points (can be used to buy additional content) and purchase history are transferred*4 to the new device.
*1 Streaming is a technology that allows playback of content even as it is being downloaded from a server. In most cases the downloaded data is discarded after playback. An example of a streaming e-book viewer that permits viewing within a web browser is BS Reader for Browser from CELSYS, Inc. (consolidated subsidiary of ArtSpark Holdings Inc. [TSE2: 3663]). *2 Smartphones using Android OS2.1 or older require a dedicated app to read comics. *3 There are some cases in which a specific viewing period is set by publishing companies or authors, and other cases in which viewing is no longer possible when sales of a particular title are suspended. *4 Data transfer procedures may be required. Transfer from a smartphone to a mobile phone is not possible.
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Viewing method Content (digital data) is viewed in individual frames through which users scroll by tapping, instead of showing all of the frames on one page of a physical manga book. It is also possible to use a vertical scrolling feature.
Genres Manga genres include girls’ manga, women’s manga, boys’ manga, youths’ manga, Harlequin romance manga (drawn by Japanese manga artists based on stories by Western authors), teen love (TL) manga, boys’ love (BL) manga, men’s comics (adult manga), and ladies’ comics. Novel genres are light novels, Harlequin romance, TL, BL, men’s (adult), and erotic novel. Infocom’s main customer base is women in their 20s and 30s, and genres toward the top of the ranking include those that these customers might be reluctant to purchase in a brick-and-mortar bookstore.
Fees for e-comics Fees for e-comics are charged on a monthly basis. Users can choose from seven plans, with fees ranging from JPY330 to JPY22,000 per month (tax included). Users purchase content using the points awarded monthly based on each plan and the bonus points awarded at the time of initial registration. According to the company, Mecha Comic 1000 is the most selected course. ARPU is about JPY1,800–1,900 per month (as of FY03/21). Any user who uses up all their available points can purchase additional points. Content can be purchased for 30 points (equivalent to JPY30) per story. Infocom makes some content freely available to induce users to register (typically the first few stories of a title will be free). In order to increase sales, the company strives to increase user count through initial exclusive distribution (it becomes the exclusive distributor for the first three to six months), television commercials, and online ads. At the same time, it works to improve ARPU through vertical scrolling for streamlined viewing and other measures.
List of monthly options
Monthly fee Plan Regular points Bonus points (tax included) 300 JPY330 300 pt - 500 JPY550 500 pt +50 pt 1000 JPY1,100 1,000 pt +200 pt 2000 JPY2,200 2,000 pt +450 pt 5000 JPY5,500 5,000 pt +1,200 pt 10000 JPY11,000 10,000 pt +2,500 pt 20000 JPY22,000 20,000 pt +5,000 pt Source: Shared Research based on data from Mecha Comic website
Payment Members can pay Mecha Comic fees together with their mobile phone bill paid to mobile network operators (NTT Docomo, au, SoftBank), since Mecha Comic is an official site on those services. Members can also pay by credit card, Yahoo! Wallet, or Rakuten Pay. WebMoney may be used only for the purchase of additional points.
Complete redesign of mobile app for Mecha Comic Over the past several years the company has been working hard on its mobile app for Mecha Comic. Because there are many younger readers that only read comics using mobile apps, the company is seeking to connect these young readers with Mecha Comic via its mobile app with the aim of moving them over to its mainstay web browser for Mecha Comic two or three years down the road. Toward this end, the company launched a completely redesigned mobile app in FY03/21. ekubostore E-comics distribution service ekubostore provides content viewable on a page-by-page basis, similar to reading a printed book, compared to the frame-by-frame method. The company launched the service in November 2013, with the aim of providing e-books in a simple and easily searchable format to help new users become more familiar with e-books. The service uses the e-book viewer BS Reader for Browser from CELSYS, Inc. (subsidiary of ArtSpark Holdings Inc. [TSE2: 3663]). As the service can be used on multiple devices, users can view content on smartphones or tablets when they are out, or on PCs when they are home.
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Other content and apps Infocom distributes the following music distribution services and information services.
Mecha Melodies Women’s Clinic
*Comprehensive women’s health information *Ringtone distribution site for smartphones and distribution website mobile phones that allows users to download as many ringtones as they like. Source: Shared Research based on company website
Business Solution segment
In the Business Solution segment, the company has two broad categories. In the first, it sells and operates proprietary packages and cloud services targeting medical institutions, companies, and government entities. In the second, it provides systems integration services that include the development and operation of information systems for large corporations.
Health IT subsegment The Health IT subsegment uses the business model in the first category above (sells and operates proprietary packages and cloud services). The company develops a package product (described later) that can be used generally for a specific industry or process, which it then sells to the customer before providing operation and maintenance services. Because these products are packages, margins are generally high once a certain number of units are sold. Customers for the Health IT business include hospitals, pharmaceutical companies, nursing care operators, and corporations (health management departments). Teijin Systems Technology Ltd. (TST), one of Infocom’s predecessors, began operations for medical institutions in the 1990s and accumulated expertise in hospital administration. TST also started selling software packages, although it took significant time and money to commercialize a package for radiology departments. The specialized knowledge and expertise Infocom has accumulated in the Health IT business serves as a barrier to entry for other IT companies.
Business Software It is also worthwhile noting that Business Software operates under the business model in the first category above (sells and operates proprietary packages and cloud services). The company develops a packaged product (described later) or service in-house that can be used by a company or in a general-purpose way for specific processes, which it sells/provides to customers. Business Software clients are companies and government organizations. For corporate software packages, Infocom has strengths in ERP (Enterprise Resource Planning) and other specific areas. This is because in the early 2000s, a consortium led by Infocom developed a Japanese-made ERP system (detail follows).
System integration In the Enterprise subsegment, the company develops system integration solutions. Infocom meets clients’ IT system construction needs including IT consulting, requirement definitions (*see note below), design, development, operation, and maintenance. In the Enterprise business, sales tend to be concentrated in March, the typical financial year-end for most Japanese companies and government agencies. The company is able to secure stable profits on an annual basis by limiting personnel count throughout the year, mainly by outsourcing work. Clients include large companies such as Infocom’s parent company Teijin Limited (TSE1: 3401), Sojitz Corporation (TSE1: 2768), pharmaceutical wholesalers, and mobile network operators. Infocom has developed long-term relationships with these companies, securing a steady stream of system integration orders each year. Previously the company owned a data center, assuming it would be providing operational services even after system construction. However, this data center was deemed to lack competitiveness, and in June 2017, Infocom sold off the facility and stopped providing services using its own data center. (*Requirement definitions clarify what functions should be included in systems and software and what capabilities they should have.)
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Business Solution segment operating profit margin is stable at 9–13% Personnel expenses for developers and outsourcing costs are the biggest costs associated with selling and operating proprietary packages and cloud services (Health IT and Business Software) and System Integration (Enterprise). During the five years through FY03/21, the Business Solution segment’s sales ran between JPY22.4 and JPY25.4bn and its operating profit stayed between 9% and 13%.
Business Solution segment: sales, operating profit, operating profit margin
(JPYmn) Sales Operating profit OPM (right axis) 30,000 30% 25,417 24,971 25,391 25,000 23,737 24,491 24,235 24,027 25,000 22,416 25%
20,000 20%
15,000 12.1% 12.8% 12.0% 12.3% 15% 10.4% 10.0% 10.3% 9.6% 8.9% 10,000 10%
5,000 3,074 3,250 3,070 5% 2,398 2,471 1,990 2,459 2,487 2,892
0 0% FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 Est. Business Solut ion FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 25,417 24,971 23,737 22,416 24,491 24,235 25,391 24,027 25,000 YoY 1.9% -1.8% -4.9% -5.6% 9.3% -1.0% 4.8% -5.4% 4.0% % of t ot al sales 64.9% 61.9% 58.9% 53.7% 53.5% 46.9% 43.5% 35.3% 32.5% Healt h IT n.a. n.a. n.a. 7,810 10,120 10,450 10,780 9,700 10,700 % of Business Solution sales n.a. n.a. n.a. 34.8% 41.3% 43.1% 42.5% 40.4% 42.8% Operating profit 3,074 2,398 2,471 1,990 2,459 2,487 3,250 2,892 3,070 YoY 6.8% -22.0% 3.0% -19.5% 23.6% 1.1% 30.7% -11.0% 6.2% % of total operating profit 83.7% 66.5% 55.8% 41.6% 42.3% 36.1% 39.6% 26.8% 25.4% OPM 12.1% 9.6% 10.4% 8.9% 10.0% 10.3% 12.8% 12.0% 12.3% Source: Shared Research based on company data
Main proprietary cloud services and software packages Health IT subsegment The mainstay proprietary software package in the Health IT business is the iRad series, used in radiology departments at hospitals. The series was launched in the 1990s, when Teijin Systems Technology Ltd., one of Infocom’s predecessors, accumulated expertise at hospitals and other medical institutions and began selling software packages. Other software packages targeting medical institutions include the Medi series (supports the day-to-day management of medical information), Drug Interaction Clinical Support (DICS; drug information search system that supports the day-to-day work of pharmacists), and Pharmaceutical Information and Care Support System (PICS; a medicine dosage instruction support system). All three packages are developed by Infocom. The company’s DigiPro® software package for pharmaceutical companies, supporting effective medical representative (MR) activities through the use of smartphones and tablets, has been adopted by companies including Chugai Pharmaceutical Co., Ltd. (TSE1: 4519), Kyorin Pharmaceutical Company, Limited, Mitsubishi Tanabe Pharma Corporation (TSE1: 4508), Eisai Co., Ltd. (TSE1: 4523), and Sumitomo Dainippon Pharma Co., Ltd. (TSE1: 4506).
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Infocom’s business areas within healthcare IT market
Medical information management, surgery, Electronic dispensing, Market size medical other 279.8 record 79.4 (FY2019F) 123.1 Business areas covered by Radiology Infocom department system Medical 38.3 accounting system 39.0 (JPYbn)
Source: Company materials (reference: Outlook of Medical Information/Management System Market 2019 from Yano Research Institute Ltd.)
iRad series This series comprises radiotherapy and search systems that enable flexible system construction at hospitals and support radiologists’ day-to-day work. According to Infocom, it has one of the top sales records in this area, with the series having been adopted by more than a thousand medical facilities nationwide. The company conducts bundled sales of an iRad software package and radiological equipment. An efficient sales and pricing policy of selling software and hardware as a set produces a high margin. That said, as hospitals raise or lower their budgets in response to changes in the government reimbursement prices for medical treatment, sales of software packages to hospitals vary, making the margin vulnerable to fluctuations as well.
iRad-RS: Radiology information system offering a series of optimal functions for radiology departments; receives patient ◤ and examination information from the department’s ordering system* and electronic medical records**; accepts exam orders, records exam information, and sends payment information
*Ordering system: System that digitizes prescription or instruction orders from physicians by using computers in place of the conventional slips for instructions regarding prescriptions and injections, as well as examination, radiograph, and nutrition instructions.
**Electronic medical records (EMRs): Core system for storing in digital form information that was conventionally written on or attached to paper medical records. Core systems such as EMR and ordering systems are typically delivered by major vendors such as Fujitsu, IBM, and NEC. Infocom works in the niche area of peripheral systems that connect to those core systems. In particular, Infocom (and previously its predecessor Teijin Systems Technology) has a long history with NEC, which provides hardware and core systems such as EMR systems, while Infocom provides peripheral systems ordered by NEC. There is a tendency to think that hospital systems are the same as EMR systems, but according to Infocom, core systems account for only about 50% of the market, with the remainder being peripheral systems for specific departments and uses, such as the systems it provides. Hospital IT systems require significant medical knowledge and experience, providing a barrier to entry.
iRad-RW: Radiology reporting system including a variety of tools to support the preparation of reports interpreting ◤ radiographic images. Supports the efficient preparation of accurate, easy-to-understand reports. The system not only helps with filling out reports, but also offers extensive functions that utilize accumulated information, including case searches and data analysis
iRad-RT: Radiology information (radiotherapy) system that supports the workflow of complicated radiotherapy by managing ◤ radiotherapy information and supporting therapeutic device connectivity and intersystem coordination
RT Image ViewerTM: Radiotherapy image viewer supporting online connectivity of radiotherapy planning systems and ◤ therapeutic devices, and long-term storage of DICOM*-RT data for reference; leverages the cultivated radiograph management expertise and technological capabilities
*DICOM: Digital Imaging and Communication of Medicine
iRad-QA: Image inspection system that improves image quality and guarantees safety in a filmless environment ◤
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iRad-OT: Orthopedic image system that supports various types of orthopedic measurements and pre-operative simulations in ◤ a filmless environment iRad- IA: High-performance DICOM image server that enables filmless imaging inside a hospital covering small to a large scale ◤ eFilm WorkstationTM: DICOM image viewer for radiographic image interpretation that has the approval of radiologists ◤ around the world
Overview of iRad series iRad-RS iRad-RW iRad-RT RT Image Viewer (Radiology information system) (Radiology reporting system) (Radiotherapy system) (Radiotherapy viewer)
iRad-QA iRad-OT iRad-IA eFilm Workstation (Image inspection system) (Orthopedic image system) (Medical image information system) (DICOM image viewer for radiographic image interpretation)
Source: Company materials
Medi series This is a series of hospital diagnostic record management systems that support the day-to-day work of managing diagnostic information.
Medi-UNITE: Integrated solution for the preparation and management of various medical documents, secondary use of input ◤ information, and total support for image data
Medi-Bank®: Medical information management system providing total support for discharge summaries, cancer registration, ◤ DPC* form 1 registration, and more
*Diagnosis Procedure Combination (DPC): Comprehensive scoring system for computing per-day fees for acute inpatient care, based on new diagnostic classifications established in 2003
Medi-Bank/DPC: Easy-to-use DPC decision support system that ensures accurate DPC invoicing ◤ Medi-Support Plus: Medical certificate preparation system enabling the smooth coordination of disease and surgery ◤ information accumulated in EMRs and ordering systems; software is certified by the Life Insurance Association of Japan for machine printing of medical certificates
Drug Interaction Clinical Support (DICS) and Pharmaceutical Information and Care Support System (PICS) series The DICS series of drug information search systems and PICS series of pharmaceutical information and care support systems support pharmacists’ day-to-day operations.
DICS: Drug information search system that can respond flexibly to the installation environment, either linking to electronic ◤ medical records, ordering systems, and dispensing systems, or serving in a standalone capacity
DICS-PS: Prescription check system that provides comprehensive support for in-hospital prescription checks ◤ J-Reporter: System that can be coordinated with EMR systems to support the identification of patient-held drugs, report ◤ preparation, and continuance instructions
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DMEntry: Product that supports unification of master drug information from systems used within a hospital, based on the ◤ integrated drug information database DICS-MASTER PICSweb: Pharmaceutical information and care support system (online system) that enables sharing of medical information ◤ PICSks: Next-generation pharmaceutical information and care support system that can be linked flexibly to a variety of ◤ systems (version for linking to dispensing support system)
Ward Meister: System to support drug-related work within hospital wards, offering support on time and performance ◤ management; can be coordinated with drug management operations
DICS-MASTER: Drug information database for use during prescription checking at the time of prescription orders and ◤ dispensing inspection, which can also be used as master drug information for EMR systems and dispensing support systems
Business Software subsegment Infocom provides companies and government organizations with internally developed software such as a web Web-ERP system1 GRANDIT, emergency contact and safety confirmation systems, and document management software. According to Infocom, it had more than a thousand client companies. It also said that its best performing software package was the emergency contact and safety confirmation system (uses various media after earthquakes of a certain scale to reach employees and confirm their safety). Infocom collects monthly fees for the service, and sales are gaining momentum.
GRANDIT GRANDIT is a Web-ERP*1 system that has broad applications from sales management to accounting and payroll. It is fourth in terms of share of the ERP market for medium-sized businesses (source: Infocom). In ERP, even as the market is dominated by foreign software houses such as Germany’s SAP, Infocom has established a solid position with this made-in-Japan web-based ERP system that takes Japanese business practices into account. It was developed from scratch by a consortium*2 of system integrators led by Infocom. It enables full integration with a simple structure. Comprising ten business systems (accounting, claims, obligations, sales, procurement and inventory, manufacturing, human resources, payroll, asset management, and expenses), it also comes with functions including workflow, business intelligence (BI)*3, and e-commerce, which ordinarily have to be added in using additional tools. It handles multiple currencies and languages, can be expanded to cover multiple group companies of large corporations, and can be used with smartphones.
*1 Enterprise Resource Planning (ERP) is a backbone information system (software package) for the appropriate allocation and effective use of management resources (people, goods, money, and information). *2 The consortium comprised 13 members: AJS, NEC Nexa Solutions, NTT Comware, OGIS Research Institute, System Integrator, Synapse Innovation, Nissho Electronics, DACS, Toyobo Information System Create, Panasonic Information Systems, Nittetsu Hitachi Systems Engineering, Benic Solution, and Miroku Jyoho Service. For technical and marketing support, the consortium cooperated with Microsoft, Intel, and Dell. According to Infocom, consortium registration fees were used to offset development costs, and at the start of the project the company offered employment to the engineers involved. *3 Business intelligence (BI): A management, accounting, and information processing term that refers to strategies and technologies for gathering, analyzing, and reporting company data in a manner that is useful in management decision-making.
Web-based ERP system The first-generation ERP system (integrated business package for mainframe and midrange computers) shifted to the second-generation C/S based system once LANs came onto the scene. Now, in line with the spread of the internet, online third-generation ERP systems are the norm. GRANDIT is the first made-in-Japan web-based ERP system and features a user-friendly web app. It uses the latest technological infrastructure to offer a next-generation business platform for medium and large companies.
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GRANDIT: Web-based ERP
First generation Second generation Third generation Mainframes and Client-server system Online apps mid-range computers
Large Product C Product D scale
Mid-range Product A Product B Product E Product F GRANDIT®
Small scale Product G Product H Source: Shared Research based on company materials
GRANDIT: Overview
Module structure covering all the core business processes
Approval process flows
EDI
Manufacturing Procurement, Sales inventory
EC Receivables Payables
Common master
Smart devices Accounting Externalcoordination Asset Expenses management Salaries and Automatic Human allowances notification
Data utilization
Automatic scheduling Business intelligence (BI) Reporting
Source: Shared Research based on company materials
Crisis management service, emergency contact and safety confirmation system Infocom offers Emergency Call®, an emergency contact and safety confirmation system, and BCPortal®, communication infrastructure to gather and share information in times of emergency. Both of these can serve as support tools for business continuity planning (BCP)*1.
Emergency Call: The number of users has been steadily increasing after was used in the Tohoku earthquake and tsunami on March 11, 2011, to confirm the safety of employees and in notifying employees when there are planned power outages. The system is now used by about 1,300 large companies and government offices (covering about 3.0mn individual users). It is the first safety confirmation system to be ISO20000*2 certified, and the company strives to make it a high quality, highly secure, and reliable system.
BCPortal: Provides a simple way to share a variety of information via smart devices*3 in times of emergency.
*1 A Business Continuity Plan (BCP) sets out activities to be conducted in normal times to minimize damage to business assets after a natural disaster, fire, terrorist attack, or other emergency and ensure that core operations can be continued or restored as soon as possible.
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*2 ISO20000 is one of the international standards prescribed by the International Organization for Standardization (ISO). It is a certification standard and guidelines for evaluating whether or not the IT service management of an organization providing IT services functions appropriately. It includes a framework for clarifying the content of and risks associated with the IT services offered by an organization and for ensuring the ongoing management, efficiency, and improvement of services *3 Smart device: Multi-function mobile devices, including smartphones and tablets, that can access the internet and run a variety of apps.
Smart device solutions
CLOMO®: The remote management service that restricts smart device functions and provides countermeasures to deal with ◤ device theft or loss
Any-Mo®: Low-cost SIM ◤
ECM (Enterprise Content Management: IT solutions to manage, analyze, and use internal information held by a company)
NEOSS: Online electronic form system that can handle forms from a variety of platforms. ◤ MyQuick®: Document management system ◤ Eco Deliver Express: Service that reduces costs and improves efficiency via electronic distribution and storing of forms for ◤ external use (including invoices and payment notices).
Digital archives (IT solutions for libraries, museums, and national archives) The company’s InfoLib® series is a digital archive system that enables a variety of digital content to be made widely available online. This series uses a variety of electronic data to quickly and accurately find information regardless of the information type or format. It can be used as an institutional storage repository, database of official documents and valuable materials, or product database.
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Sales and operating profit by segment
Performance by segment FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 34,610 36,497 37,381 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 77,000 Digit al Ent ert ainment - - 12,446 13,722 15,337 16,579 19,352 21,283 27,492 32,983 44,027 52,000 Business Solution - - 24,935 25,417 24,971 23,737 22,416 24,491 24,235 25,391 24,027 25,000 Solutions 17,720 17,752 ------Services 16,891 18,744 ------Frontiers ------YoY 1.3% 5.5% 2.4% 4.7% 3.0% 0.0% 3.6% 9.6% 13.0% 12.8% 16.6% 13.1% Digit al Ent ert ainment - - - 10.3% 11.8% 8.1% 16.7% 10.0% 29.2% 20.0% 33.5% 18.1% Business Solution - - - 1.9% -1.8% -4.9% -5.6% 9.3% -1.0% 4.8% -5.4% 4.0% Solutions -2.1% 0.2% ------Services 5.3% 11.0% ------Frontiers ------% of sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Digit al Ent ert ainment 33.3% 35.1% 38.0% 41.1% 46.3% 46.5% 53.1% 56.5% 64.7% 67.5% Business Solution 66.7% 64.9% 61.9% 58.9% 53.7% 53.5% 46.9% 43.5% 35.3% 32.5% Solutions 51.2% 48.6% ------Services 48.8% 51.4% ------Frontiers ------Operating profit 3,042 3,402 3,502 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 11,000 Digit al Ent ert ainment - - 610 597 1,207 1,956 2,800 3,360 4,391 4,951 7,909 9,000 Business Solution - - 2,878 3,074 2,398 2,471 1,990 2,459 2,487 3,250 2,892 3,070 Solutions 1,440 1,678 ------Services 1,593 1,714 ------Frontiers ------Adjustments 9 9 13 6 - - -13 9 9 9 9 -1,070 YoY 27.3% 11.8% 2.9% 5.0% 1.9% 22.8% 7.9% 22.0% 18.2% 19.2% 31.7% 1.7% Digit al Ent ert ainment - - - 2.2% 102.1% 62.1% 43.1% 20.0% 30.7% 12.8% 59.7% 13.8% Business Solution - - - 6.8% 22.0% 3.0% 19.5% 23.6% 1.1% 30.7% 11.0% 6.2% Solutions 46.1% 16.6% ------Services 14.7% 7.6% ------Frontiers ------OPM (excl. adjustments) 8.8% 9.3% 9.4% 9.4% 8.9% 11.0% 11.4% 12.7% 13.3% 14.1% 15.9% 14.3% Digit al Ent ert ainment - - 4.9% 4.4% 7.9% 11.8% 14.5% 15.8% 16.0% 15.0% 18.0% 17.3% Business Solution - - 11.5% 12.1% 9.6% 10.4% 8.9% 10.0% 10.3% 12.8% 12.0% 12.3% Solutions 8.1% 9.5% ------Services 9.4% 9.1% ------Frontiers ------% of operating profit (incl. adjustments) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Digit al Ent ert ainment - - 17.5% 16.3% 33.5% 44.2% 58.5% 57.7% 63.8% 60.4% 73.2% 74.6% Business Solution - - 82.5% 83.7% 66.5% 55.8% 41.6% 42.3% 36.1% 39.6% 26.8% 25.4% Solutions 47.5% 49.5% ------Services 52.5% 50.5% ------Frontiers ------Source: Shared Research based on company data
(Reference) Historical business segments Through FY03/08
Solutions segment: targeted mobile network operators, companies, and medical institutions ◤ Comprehensive system integration to handle the new technology and services of mobile network operators, focusing on mediation systems (for coordinating information such as fee data between switching equipment and host computers), service node systems (for adding to switching equipment to provide added-value services), reception systems for mobile phone sales agencies. System integration related to network security and internet payment
Comprehensive IT solutions for Teijin, Sojitz, their respective group companies, and other companies; development and sales of the ERP software package GRANDIT
System integration for medical institutions, medical image system integration, and development and sales of drug-related software packages
Services segment: consumer-oriented business and data center business ◤ Ringtone distribution services and e-commerce for mobile phones, PHS devices, and PCs
Data center used by Teijin, Sojitz, and other companies Frontiers segment: sold software packages, including genetic analysis software packages in support of life insurance and ◤ materials research; comprehensive IT service for the management of intellectual property for biotech businesses and companies, including construction of gene database system.
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FY03/09 FY03/12 – Solutions segment: system integration for large customers and development and sales of proprietary software ◤ Services segment: data center business; distribution of ringtones, Ring-Song FULL®, e-books, and other content for mobile ◤ phones and PCs; e-commerce
Competition
No other company provides both IT solutions to companies and e-books (comics) to consumers as Infocom does. Competitors for each area are as follows.
E-book industry A major company operating an e-bookstore similar to Infocom’s (an industry leader) is of course Amazon, but there are numerous other players in the industry as well, including NTT Solmare (a subsidiary of NTT West), Kakao Japan, LINE (TSE1: 3938), Papyless (TSE JASDAQ: 3641), Beaglee (TSE1: 3981), eBOOK Initiative Japan Co., Ltd. (TSE1: 3658), and Amazia (TSE Mothers: 4424).
SoftBank consolidated subsidiary Z Holdings (TSE1: 4689, formerly Yahoo) made eBOOK Initiative Japan a subsidiary via a takeover bid in June 2016. It owns the Yahoo! Bookstore and eBOOK. Z Holdings’ merger with LINE was completed in October 2020, but shares of LINE Digital Frontier, which operates LINE Manga, were transferred to Webtoon Entertainment in August 2020.
Main companies involved in e-book business
Fis c a l Sales OP Category Store Operator Service since Ticker OPM Notes (shareholding ratio) year (JPYmn) (JPYmn)
Mecha Comic Nov. 2006 Wholly owned subsidiary of E- comic amutus - FY03/21 44,027 7,909 18.0% ekubostore Nov. 2013 Infocom (4348)
Transferred from LINE to Webtoon E-comic (app) LINE Manga LINE Digital Frontier Apr. 2013 - FY12/19 24,900 n.a. n.a. Entertainment in August 2020
E-comic The E-book Store "Renta!" Papyless Global Apr. 2007 3641 FY03/21 25,392 2227 8.8%
E-comic Manga Okoku (kingdom) Beaglee Apr. 2006 3981 FY12/20 12,378 1,136 9.2%
E-comic eBookJapan eBOOK Initiative Japan Dec. 2006 3658 FY03/21 23,017 810 3.5% Figures only for e-book business
E-book agent Smart Book Store Media Do Dec. 2012 3678 FY02/21 82,349 2,594 2.8% Figures only for e-book business
Portal iBooks Store Apple Mar. 2013 - n.a. n.a. n.a. n.a.
Portal Rakuten Kobo Rakuten Kobo Jul. 2012 - n.a. n.a. n.a. n.a.
Portal Google Play Google Sep. 2012 - n.a. n.a. n.a. n.a.
Portal Kindle Store Amazon Oct. 2012 - n.a. n.a. n.a. n.a.
NTT Solmare Wholly owned subsidiary of NTT Telecom Comic C'moA Aug. 2004 - n.a. n.a. n.a. n.a. (NTT West group) West 2Dfacto Acquired by Dai Nippon Printing in Printing honto Nov. 2010 Unlisted FY03/18 7,024 -1,038 -14.8% (Dai Nippon Printing group) July 2018 Cons. subsidiary (72.2%) of Toppan Printing (7911); Tsutaya, BookLive Printing BookLive! Feb. 2011 Unlisted FY03/19 14,427 824 5.7% Toshiba Client Solutions, (Toppan Printing group) Development Bank of Japan, NEC, Mitsui & Co.
Physical book store Kinoppy Kinokuniya Dec. 2010 - n.a. n.a. n.a. n.a.
Book Walker Wholly owned subsidiary of Publishing BOOK WALKER Dec. 2010 - n.a. n.a. n.a. n.a. (Kadokawa group) Kadokawa Source: Shared Research with reference to government gazettes and materials from the various companies
E-books: Comparison with key competitors (part 1)
Ticker Company Fiscal Sales OP OPM ROA ROE Equity Main businesses year (JPYmn) (JPYmn) (RP-based) ratio (% of total sales) 4348 Infocom FY03/21 68,055 10,812 15.9% 20.9% 16.2% 73.5% Digital Entertainment (65), Business Solution (35) 3641 Papy les FY03/21 25,392 2,227 8.8% 16.2% 18.7% 59.2% Sales of e-books (100) 3658 eBOOK Initiative Japan FY03/21 29,951 957 3.2% 9.3% 16.2% 38.7% E-books (77), cross media (23) 3981 Beaglee FY12/20 12,378 1,136 9.2% 5.0% 9.0% 26.5% Platform (90), Content (10) 3678 Media Do FY02/21 83,540 2,664 3.2% 7.0% 17.0% 28.0% E-books (99), other (1) Average 43,863 3,559 8.0% 11.7% 15.4% 45.2% Source: Shared Research based on data from the various companies
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E-books: Comparison with key competitors (part 2)
Comparison of KPI FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 ("C": consolidated, "P": parent; JPYmn) Infocom (4348) FY03/14 C. FY03/15 C. FY03/16 C. FY03/17 C. FY03/18 C. FY03/19 C. FY03/20 C. FY03/21 C. FY03/22 Est. Sales 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 77,000 YoY 4.7% 3.0% 0.0% 3.6% 9.6% 13.0% 12.8% 16.6% 13.1% Digit al Ent ert ainment (most ly e-books) 13,722 15,337 16,579 19,352 21,283 27,492 32,983 44,027 52,000 YoY 10.3% 11.8% 8.1% 16.7% 10.0% 29.2% 20.0% 33.5% 18.1% Business Solution 25,417 24,971 23,737 22,416 24,491 24,235 25,391 24,027 25,000 YoY 1.9% -1.8% -4.9% -5.6% 9.3% -1.0% 4.8% -5.4% 4.0% Operating profit 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 11,000 OPM 9.4% 8.9% 11.0% 11.4% 12.7% 13.3% 14.1% 15.9% 14.3% Digit al Ent ert ainment (most ly e-books) 597 1,207 1,956 2,800 3,360 4,391 4,951 7,909 9,000 OPM 4.4% 7.9% 11.8% 14.5% 15.8% 16.0% 15.0% 18.0% 17.3% Business Solution 3,074 2,398 2,471 1,990 2,459 2,487 3,250 2,892 3,070 OPM 12.1% 9.6% 10.4% 8.9% 10.0% 10.3% 12.8% 12.0% 12.3% Net income attrib. to owners of the parent 2,042 2,171 728 3,261 4,640 4,783 5,543 6,276 7,300 ROE 11.1% 10.9% 3.5% 14.6% 17.9% 15.7% 16.2% 16.2% - Equit y rat io 68.7% 73.0% 66.5% 72.2% 73.8% 74.6% 74.4% 73.5% - Number of employees 1,285 1,171 1,109 1,074 1,074 1,082 1,170 1,196 - Digit al Ent ert ainment (most ly e-books) 168 105 68 68 67 72 101 115 - Business Solution 963 909 892 862 846 847 902 905 - Company-wide 154 157 149 144 161 163 168 176 - Sales per employee 31.1 32.8 35.4 38.3 42.6 48.0 51.8 57.5 - Digit al Ent ert ainment 80.7 112.4 191.7 284.6 315.3 395.6 381.3 407.7 - Business Solution 26.7 26.7 26.4 25.6 28.7 28.6 29.0 26.6 - OP per employee 2.9 2.9 3.9 4.4 5.4 6.4 7.3 9.1 - Digit al Ent ert ainment 3.5 8.8 22.6 41.2 49.8 63.2 57.2 73.2 - Business Solution 3.2 2.6 2.7 2.3 2.9 2.9 3.7 3.2 - Papyless (3641) FY03/14 P. FY03/15 P. FY03/16 C. FY03/17 C. FY03/18 C. FY03/19 C. FY03/20 C. FY03/21 C. FY03/22 Est. Sales 6,921 8,425 10,452 14,141 16,202 19,162 23,347 25,392 24,215 YoY 24.1% 21.7% 24.1% 35.3% 14.6% 18.3% 21.8% 8.8% -4.6% E-book business 6,921 8,425 10,452 14,141 16,202 19,162 23,347 25,392 - YoY 24.1% 21.7% 24.1% 35.3% 14.6% 18.3% 21.8% 8.8% - Operating profit 661 527 1,019 1,657 1,278 1,970 1,532 2,227 1,154 OPM 9.5% 6.3% 9.7% 11.7% 7.9% 10.3% 6.6% 8.8% 4.8% E-book business 661 527 1,019 1,657 1,278 1,970 1,532 2,227 - OPM 9.5% 6.3% 9.7% 11.7% 7.9% 10.3% 6.6% 8.8% - Net income attrib. to owners of the parent 434 355 651 1,134 853 1,348 967 1,542 757 ROE 17.8% 12.8% 18.9% 28.4% 17.2% 22.5% 13.7% 18.7% - Equit y rat io 62.0% 60.1% 55.6% 55.3% 60.4% 56.2% 57.6% 59.2% - No. of employees 58 61 76 83 90 103 116 125 - E-book business 58 61 76 83 90 103 116 125 - Sales per employee 122.5 141.6 152.6 177.9 187.3 198.6 213.2 210.7 - E-book business sales per employee 122.5 141.6 152.6 177.9 187.3 198.6 213.2 210.7 - OP per employee 11.7 8.9 14.9 20.8 14.8 20.4 14.0 18.5 - E-book business OP per employee 11.7 8.9 14.9 20.8 14.8 20.4 14.0 18.5 - eBOOK Initiative Japan (3658) FY03/14 P. FY03/15 C. FY03/16 C. FY03/17 C. FY03/18 C. FY03/19 P. FY03/20 P. FY03/21 P. FY03/22 Est. Sales 4,155 5,129 7,184 11,983 11,882 14,786 21,281 29,951 33,900 YoY 36.5% 23.4% 40.1% - - 24.4% 43.9% 40.7% - E-book business 4,155 5,129 5,199 6,741 7,433 10,425 16,236 23,017 - YoY 36.5% 23.4% 1.4% - - 40.3% 55.7% 41.8% - Operating profit 451 313 -166 17 255 583 793 957 1,300 OPM 10.8% 6.1% -2.3% 0.1% 2.1% 3.9% 3.7% 3.2% - E-book business sales per employee 451 313 -150 55 326 662 702 810 - OPM 10.8% 6.1% -2.9% 0.8% 4.4% 6.3% 4.3% 3.5% - Net income attrib. to owners of the parent 253 184 -163 11 167 166 544 663 900 ROE 16.8% 8.6% -7.3% 0.4% 5.5% 5.1% 15.3% 16.2% - Equit y rat io 65.0% 59.3% 53.1% 60.2% 58.4% 46.8% 42.0% 38.7% - No. of employees 48 80 141 149 155 157 145 148 - E-book business 48 80 85 114 118 124 107 - - Sales per employee 95.5 80.1 65.0 82.6 78.2 94.8 140.9 204.4 - E-book business sales per employee 95.5 80.1 63.0 67.8 64.1 86.2 140.6 - - OP per employee 10.4 4.9 -1.5 0.1 1.7 3.7 5.3 6.5 - E-book business OP per employee 10.4 4.9 -1.8 0.6 2.8 5.5 6.1 - - Media Do (3678) FY02/14 P. FY02/15 P. FY02/16 P. FY02/17 P. FY02/18 C. FY02/19 C. FY02/20 C. FY02/21 C. FY02/22 Est. Sales 5,545 8,075 11,243 15,533 37,213 50,568 65,860 83,540 100,000 YoY 35.7% 45.6% 39.2% 38.2% - 35.9% 30.2% 26.8% 19.7% E-book business 4,627 7,030 10,622 14,223 36,256 50,164 64,529 82,349 - YoY 51.6% 52.0% 51.1% 33.9% - 38.4% 28.6% 27.6% - Operating profit 252 413 552 656 930 1,468 1,853 2,664 3,000 OPM 4.6% 5.1% 4.9% 4.2% - 57.8% 26.2% 43.8% 12.6% E-book business 209 340 475 585 915 1,618 1,861 2,594 - OPM 4.5% 4.8% 4.5% 4.1% 2.5% 3.2% 2.9% 3.2% - Net income 176 240 335 415 358 -1,243 884 1,519 1,600 ROE 20.0% 14.6% 16.4% 16.8% 8.7% -29.4% 17.4% 17.0% - Equit y rat io 49.4% 44.9% 40.7% 31.3% 15.3% 14.1% 17.0% 28.0% - No. of employees 91 92 100 130 279 362 350 379 - E-book business 64 73 76 108 221 254 229 263 - Sales per employee 60.9 88.2 117.1 135.1 182.0 157.8 185.0 229.2 - E-book business sales per employee 72.3 102.6 142.6 154.6 220.4 211.2 267.2 334.8 - OP per employee 2.8 4.5 5.8 5.7 4.5 4.6 5.2 7.3 - E-book business OP per employee 3.3 5.0 6.4 6.4 5.6 6.8 7.7 10.5 - Source: Shared Research based on data from the various companies
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Infocom’s sales are higher than for other companies involved with e-books. This is because it also provides business solutions (Business Solution segment). In addition, the Digital Entertainment segment, centered on e-book (comics) distribution, has an operating profit margin of 18.0% (FY03/21), which is high compared to the 3.2–9.2% consolidated operating profit margins of its competitors and compared to the average of 8.0% for the top five-companies (including Infocom). Infocom is one of the largest e-book distributors, and it seems likely that economies of scale help it absorb advertising expenses, which Infocom considers fixed costs.
Information services industry There are many companies operating information services similar to those of Infocom’s Business Solution segment (refer to the Market and value chain section). The leader is NTT Data Corporation (TSE1: 9613), but information services companies with sales on a similar scale to Infocom include Ai Holdings Corporation (TSE1: 3076), Systena Corporation (TSE1: 2317), Computer Engineering & Consulting, Ltd. (CEC; TSE1: 9692), SRA Holdings, Inc. (TSE1: 3817), JFE Systems, Inc. (TSE2: 4832), and INES Corporation (TSE1: 9742). Infocom has higher OPM, ROA, and ROE than these companies, excluding Ai Holdings. This is because these competitors do not operate an e-comics distribution business as Infocom does, so Infocom has higher profitability and efficiency.
Information services: Comparison with similar companies
Ticker Company Fiscal Sales OP OPM ROA ROE Equity Main businesses year (JPYmn) (JPYmn) (RP-based) ratio (% of total sales) Solution Design (39), Framework Design (8), IT Service (15), Solution Sales 2317 Systena FY03/21 60,871 8,006 13.2% 20.1% 20.6% 65.9% (35), Other (3) 4348 Infocom FY03/21 68,055 10,812 20.9% 20.9% 16.2% 73.5% Business Solution (65), Digital Entertainment (35)
9692 CEC FY01/21 48,003 5,048 10.5% 12.1% 12.4% 78.1% Digital Industry (34), Service Integration (66)
Security Equip. (29), Card Equp. and Other Office Equip. (11), Information 3076 Ai Holdings FY06/20 43,179 7,596 17.6% 13.1% 9.6% 81.1% Equip. (35), Measurement and Environmental Testing Equip. (4), Design (11),Other (11) 4832 JFE Systems FY03/21 46,468 4,666 10.0% 13.4% 16.1% 56.4% Information Services (100) Systems Development (52), System Operations and Infrastructure 3817 SRA Holdings FY03/21 39,386 5,026 12.8% 14.5% 14.5% 59.2% Development (14), Product Sales (33) System development (40), System operation (30), System maintenance 9742 INES FY03/21 41,573 2,786 6.7% 5.6% 3.7% 75.7% (12), Information equipment sales (5), Other (12) Average 49,648 6,277 13.1% 14.2% 13.3% 70.0% Source: Shared Research based on data from the various companies
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Strengths and weaknesses Strengths Business portfolio balanced between stable revenue base and growth driver: Infocom’s business portfolio is balanced ◤ between B2C and B2B businesses, and consists of the Digital Entertainment segment, which drives growth, and the Business Solution segment, which is a source of stable earnings. 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). In the Digital Entertainment segment 99% of segment sales come from e-book (comics) distribution, the current growth driver (average annual growth for the five years through FY03/21 was 11.0% for sales and 19.6% for operating profit). Meanwhile, the Business Solution segment––in which the company provides system integration for large corporations and proprietary software packages for medical institutions, companies, and government organizations––is characterized by stable revenues. Many IT companies tend to target either consumers or businesses, so Infocom stands out by serving both; by developing both the Digital Entertainment and Business Solution segments, the company can achieve higher stability and capture more growth opportunities.
Exclusive distribution and original comic creation framework of e-comics store Mecha Comic: The e-comics market ◤ has been displaying remarkable growth, but the company says that barriers to entry are low and there are many players in the industry. Even so, the Mecha Comic brand is well-known among consumers and has top market share (Shared Research estimates a 12% share) thanks to its brand power and ease of use. With e-comics, once a user purchases content, the switching cost is high (cannot carry over content), so there is a tendency for the user to continue using the same e-bookstore. In addition, having a leading share of the e-comics market and a track record of exclusive distribution gives the company advantages when purchasing from publishers and makes it easier to obtain favorable conditions such as exclusive distribution agreements. In recent years, Infocom has seen a growing popularity of its original comics produced by artists discovered on its own and planned and edited in-house leveraging data analytics. Its original comic series Aoshima Kun wa Ijiwaru was a huge hit, with over 1mn copies sold (calculated as books).
Business Solution segment’s proprietary software with high market share, wealth of experience and know-how, ◤ and relationships with large customers: In the niche areas of ERP and IT solutions for medical institutions, the company developed proprietary software packages with high market shares, including the iRad series for radiology departments (one of the top sellers in the industry) and the web-based ERP GRANDIT (4th in the ERP market targeting medium-sized businesses according to Infocom). Through these products, the company has built solid relationships with customers over many years. In the Health IT business, positioned as a core business in its new medium-term plan, Infocom can utilize the experience and know-how acquired over many years in doing business with healthcare-related companies and other major customers. We believe this represents a high entry barrier to potential competitors in the Health IT business. Further, in system integration, earnings are stable as the company primarily develops and operates software under contract for long-standing major corporate customers such as its parent company, Teijin, Sojitz, and large pharmaceutical wholesalers.
Weaknesses
Dependence on e-comics in the Digital Entertainment segment: Almost all (99%) of Digital Entertainment segment ◤ sales come from e-book distribution, primarily Mecha Comic. Despite further growth anticipated in the e-book market (the company had been projecting average annual growth in the e-comics market of 11.9%, from JPY370.0bn in FY03/21 to JPY464.0bn, in FY03/23, but, with the rapid changes in lifestyles in the wake of the novel coronavirus pandemic, is now expecting the e-book market to expand at an even faster rate), Amazon and some other distributors have entered the e-comics distribution market with subscription models that offer users unlimited reading for a monthly fee. If large tech companies like Amazon and Rakuten, which have a variety of services and content in addition to comics, normalize comprehensive services like the single-price unlimited model, Infocom would find it difficult to compete. In addition, at present the company has nothing to fall back on when e-comics demand peaks.
Past success in the Business Solution segment hinders new breakthroughs: Infocom’s proprietary software packages in ◤ niche markets, such as iRad and GRANDIT, have achieved high market share, but the initial development of such packages
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occurred more than ten years ago. Although these products generate stable revenue supported by recurring demand for upgrades, the company seems to have less motivation to develop such innovative products.
Limited synergies between the two segments: Infocom believes having these two segments allows it to achieve higher ◤ stability and capture more growth opportunities. There has been some shared utilization of resources, such as applying the AI technology of the Business Solution segment in the e-comics business for data analysis. Yet personnel exchanges and synergies between the two segments are somewhat limited. Although the e-comics service is still developing into a growth driver, we think that the company can further grow by leveraging and combining the respective strengths of each segment.
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Market and value chain
E-book industry Market scale According to research by Impress Research Institute, the e-book market was worth JPY347.3bn (+22.9% YoY) in FY2019. This represents average annual growth rate of 22.4% from JPY126.6bn in FY2014. Impress expects the e-book market to continue growing, reaching JPY566.9bn in FY2023 (CAGR of 10.9% over the four years from FY2019 through FY2023).
Digital publishing (e-books + e-magazines) market scale
(JPYbn) E-books E-magazines 600 566.9
512.4 500 481.2 444.2
400 375.0 27.7 312.2 300 29.6 255.6 227.8 31.5 30.2 200 182.6 347.3 141.1 24.2 282.6 101.3 14.5 7.7 224.1 100 65.1 76.8 197.6 57.4 65.6 2.2 3.9 158.4 46.4 126.6 35.5 93.6 18.2 72.9 1.0 1.8 4.5 9.4 62.9 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20F FY21F FY22F FY23F
Source: Shared Research based on data from Impress Research Institute
E-book market scale
(JPYbn) E-comics Other e-books E-comics as % of total publishing industry market (right axis) E-books as % of total publishing industry market (right axis)
400 30.0% 28.1%
347.3 350 25.0% 21.9% 48.4 300 282.6 24.2%
20.0% 16.4% 250 43.9 224.1 18.5% 197.6 13.4% 200 39.6 15.0% 35.9 158.4 10.4% 13.5% 150 126.6 30.8 10.0% 7.9% 11.0% 93.6 24.2 100 72.9 5.6% 8.4% 62.9 20.5 6.4% 15.5 4.2% 5.0% 11.5 3.5% 50 4.3% 2.8% 3.3% 51.4 57.4 73.1 102.4 127.7 161.7 184.5 238.7 298.9 0 0.0% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Source: Shared Research based on data from Impress Research Institute and All Japan Magazine and Book Publisher’s and Editor’s Association
E-comics account for 86% of e-books, driving growth in the e-book market. E-comics logged an average annual growth rate of 24.5% between FY2011, when the market was worth JPY51.4bn, and FY2019, when it was worth JPY298.9bn. This is in direct
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contrast to the publishing industry (mainly printed books and manga), which shrank at an annual average rate of 3.2% to JPY1.2bn in 2020 over the 23 years since its peak at JPY2.7tn in 1996. The e-comics market accounted for 2.8% of the overall publishing market in FY2011, but this was up to 24.2% by FY2019, an increase of 21.3pp over seven years. (Reference) Publishing industry market scale
(JPYbn)
3,000 Magazines 2,656.4 Books 2,500
2,000
1,500 1,223.7
1,000
500
74.4 0 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Shared Research based on data from the All Japan Magazine and Book Publisher’s and Editor’s Association
Factors in e-book market expansion We see the following factors as being behind the expansion of the e-book market, with e-comics as the growth driver.
Increasing popularity of smartphones, tablets, and other smart devices: Since 2010, the possession of smart devices by ◤ consumers has rapidly increased, to the point that most people now regularly have a device close at hand. Smartphones have larger screens than older mobile phones, making them easier on the eyes, and many people also have tablets with even bigger screens.
Ratio of households using mobile phones, smartphones, and tablets (Japan)
Mobile phones Smartphones Tablets 96.3% 96.1% 94.4% 95.0% 95.6% 93.2% 94.5% 94.5% 94.5% 94.8% 94.6% 94.7% 94.8% 95.7% 100% 92.2% 90.0% 91.3% 90% 82.6% 83.4% 78.5% 78.2% 79.2% 75.1% 80% 72.0% 71.8% 70% 62.6% 64.2%
60% 49.5% 50% 40.1% 36.4% 37.4% 40% 33.3% 34.4% 29.3% 26.3% 30% 21.9% 20% 15.3% 9.7% 8.5% 10% 0% 7.2% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Shared Research based on Survey on IT Use from the Ministry of Internal Affairs and Communications Note: “Mobile phones” includes PHS, PDAs from 2009 to 2012, and smartphones from 2010.
Shift to broadband for wireless LANs: There has been a shift toward broadband (LTE) for mobile phone and smartphone ◤ communications, with the number increasing to 153mn LTE users (83% of mobile phone and smartphone users) as of the end of March 2020.
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LTE contract holders and their ratio to the total number of mobile phone and smartphone users
(mn) Number of LTE contracts % of total subscribers of mobile phones and smartphones (right axis) 160 83% 90% 77% 140 71% 80% 120 63% 70% 56% 60% 100 46% 50% 80 153 33% 137 40% 60 121 103 30% 40 15% 87 68 20% 46 20 2% 10% 0% 20 0 0 2 0% 2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3 2018.3 2019.3 2020.3
Source: Shared Research based on Quarterly Data on Telecommunications Service Contract Numbers and Market Share from the Ministry of Internal Affairs and Communications
Increase in advertising spending and improvement in promotional techniques: Infocom and other companies have ◤ been putting a large portion of their advertising spending into commercials for their e-bookstores, and have been actively attracting new members to register using free content and banner ads. Infocom has been focusing on detailed analysis of the effects of advertising.
Sales by Infocom’s Digital Entertainment segment, YoY sales and ad expense growth
(JPYmn) Digital Entertainment sales Digital Entertainment sales YoY (right axis) Advertising expenses YoY (right axis)
50,000 40.0% 44,027 45,000 35.0% 33.5% 40,000 29.2% 30.0% 35,000 28.6% 32,983 30,000 27,492 25.0%
25,000 21,283 20.0% 20.0% 19,352 21.9% 20,000 16,579 16.7% 15,337 17.6% 15.0% 11.8% 15,000 15.1% 8.1% 10.0% 10.0% 10,000 11.7% 11.1% 5,000 5.0% 5.4% 0 0.0% FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 Source: Shared Research based on company data
The number of e-comics users has increased due to these factors ◤
Value chain for the e-book market The e-book value chain includes players such as the author or production company, publisher, e-book agency*, and e-bookstore. The flow of e-book sales and distribution is typically as follows. First, a work produced by a writer with the help of an editor at a publishing company is processed by a production company (contracted by the publisher) into digital content ready for distribution. The publisher concludes a sales agreement with an e-book agency and requests the securing of sales routes. The e-book agency then concludes sales agreements with multiple e-bookstores to secure sales routes. Afterward, the publisher sends the digital content and book data processed by the production company to the e-book agency, and the e-bookstores with which the agency has agreements sell and distribute the digital content to consumers.
The e-book agency not only collects and manages digital content, but also keeps track of e-bookstores’ sales and distribution performance for reporting to the publisher. However, in some cases the roles of each player are not distinct. For example, an e-book agency may conduct production and distribution functions in addition to the normal agency work, or a publisher may operate its own e-bookstore.
*The sale of published material (printed books) in Japan is covered by two legal systems: the resale price maintenance system (resale system) and the consignment sales system. Agency functions for e-books differ from printed material in that there is no delivery of physical product from the publisher or printer to bookstores and no collection of unsold products. With printed matter the agency also performs financial functions in the event of any hold-up in collections from bookstores or advance payments to the publisher, but such functions are not necessary in the case of e-books.
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Value chain for e-book market
General e-book business Infocom Amazon Rakuten
Kindle Kobo Users (devices) Smartphones Smartphones Smartphones Content Payment Mecha Comic Kindle Store Rakuten Kobo E-book store ekubostore Content Payment Infocom E-book wholesalers Media Do Content Payment Publishers Publishers Publishers
Content Payment Content Payment Authors and producers Authors and producers Authors and producers
Source: Shared Research based on Trends in the Electronic Book Market from Japan Fair Trade Commission’s Competition Policy Research Center, Beaglee Inc. Share Issue and Stock Reporting Prospectus, and Basic Textbook on E-Book Production and Circulation, edited by Yashio Uemura
Industry restructuring SoftBank consolidated subsidiary Z Holdings (TSE1: 4689, formerly Yahoo) made eBOOK Initiative Japan a subsidiary via a takeover bid in June 2016. It owns the Yahoo! Bookstore and eBOOK, and will acquire additional power through a planned merger with LINE in October 2020 that will give it control of LINE Manga. The company itself has been actively exploring takeovers of competitors for several years. The company thinks that moves to restructure the industry may step up moving forward.
Factors differentiating e-bookstores E-bookstores typically compete on and differentiate themselves through content, price, usability, marketing and promotion, and overseas development. In terms of content, they can differentiate by harnessing IT technologies such as AI, strengthening product lineup and conducting initial exclusive distribution (Infocom found success in FY03/17 with this tactic and plans to continue using this strategy). Usability includes ease of reading (Infocom has adopted vertical scrolling), faster download speeds, and enhanced search and e-bookshelf functions. In terms of marketing, Infocom has been spending on advertising and promotion to improve its brand power and using free content and banner ads to attract new members. The company has been using data analysis and AI in its marketing, which is leading to member growth and more efficient advertising spending.
E-bookstore fees: the rise of the subscription model E-bookstores use a range of fee systems, including monthly, per-book purchase, rentals, and subscription models (does not include distributing free content and generating revenue through advertising). With the monthly fee model, users pay a set amount each month and use points granted in line with this amount to purchase content. With the per-book model, users pay a designated amount each time they purchase content. The rental model includes both monthly and per-book fees, but content cannot be viewed after a certain period of time. The subscription model allows unlimited reading for a fixed monthly fee. Examples of this model are Amazon’s Kindle Unlimited (JPY980 monthly, tax included), the Book Pass (KDDI) monthly all-you-can-read plan (general plan including novels for JPY562; magazine-only plan for JPY380), and the COMIC C’moA (NTT Solmare Corporation) all-you-can-read light plan (JPY780) and full plan (JPY1,480). NTT Docomo’s fixed-price all-you-can-read service d-Magazine (JPY440), primarily for e-magazines, began in June 2014 and has steadily grown its user count, reaching 3.6mn by the end of March 2017. Kindle Unlimited, which expanded services to include Japan starting on August 3, 2016, enables unlimited reading of more than 2mn Japanese books for a fixed monthly fee of JPY980. The company said that the subscription model did not pose a threat.
Growth in e-comics app users Traditionally, e-comics were mainly distributed using web browsers, but apps are increasingly common as their popularity spreads among the younger generation. For example, LINE Manga distributes via app, and major publishing houses such as Shueisha are jumping on the app bandwagon. Furthermore, formats that allow free manga viewing and display still-picture or video ads on-screen afterward, or award free manga after the user watches video ads, are increasingly popular among teens. While continuing to deliver its Mecha Comic mainly via web browser, the company launched app distribution in July 2019. The
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strategy is to win over youthful teenage customers via apps before they hit their 20s and 30s, a key demographic, who read mainly on web browsers.
Information services industry Market scale According to the Survey of Selected Service Industries (statistics report) by the Ministry of Economy, Trade and Industry, Japan’s information services industry was worth JPY12.9tn (+7.0% YoY) in FY2020. This marked a record high following FY2017, when a new record was set for the first time in 10 years, since the record of JPY11.2tn set in FY2008. It represents stable expansion from the recent bottom of JPY9.9tn in FY2011. About 58% of industry sales come from custom software (including system integration), about 14% from software products, and the remainder includes outsourced system management and information processing services. About 72% of employees are system engineers (SE) involved in information systems and software development.
Scale of Japan’s information services industry
(JPYbn) Software development and programing Contract system management Data processing Other 14,000 12,910.2
12,000 11,203.8
9,880.7 10,000
8,000
6,000
4,000
2,000
0
Source: Shared Research based on data from Survey of Selected Service Industries (statistics report) by Ministry of Economy, Trade and Industry
Industry structure
There are some 3,100 companies involved in information services, broken down roughly into the following categories. There are companies like NTT Data (TSE1: 9613) and Nomura Research Institute (TSE1: 4307), in which a department of the parent company is spun off as a subsidiary that then provides information services to third parties. Then there are companies like Fujitsu and NEC, which started as computer (hardware) manufacturers but then became more involved in software and systems. Finally, there are independent companies like Otsuka Corporation (TSE1: 4768).
In the industry, system integrators like Nippon Telegraph and Telephone Corporation (NTT; TSE1: 9432), major domestic IT vendors (including Hitachi, NEC, Fujitsu), and foreign IT vendors (including IBM, HP, Oracle) take bulk orders from large corporations and government offices for infrastructure construction, installation, and maintenance of computers and devices. These major system integrators subcontract programming and testing processes to smaller system integrators. If this structure were to be compared to the construction industry, the major system integrators would be considered IT general contractors.
The industry’s major players (companies with sales of JPY300bn or more) include NTT DATA (TSE1: 9613) with sales of JPY2,318.7bn (FY03/21), Otsuka Corporation (TSE1: 4768) with JPY836.3bn (FY12/20), Nomura Research Institute (TSE1: 4307) with JPY550.5bn (FY03/21), ITOCHU Techno Solutions (TSE1: 4739) with JPY479.9bn (FY03/21), TIS (TSE1: 3626) with
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JPY448.4bn (FY03/21), and SCSK (TSE1: 9719) with JPY396.9bn (FY03/21). Infocom is a medium-sized company coming in at between No. 20 and No. 29 in sales.
Healthcare- and nursing care-related markets In its current medium-term management plan, Infocom designated the Health IT business as one of its priority businesses, and it is focusing on medical, nursing care, and healthcare IT. In medical IT, it has already established a foundation in a niche market (radiology departments), but plans to further focus on nursing care and healthcare IT (see the Medium-term outlook section). The following is a brief look at Japan’s national healthcare and nursing care expenditures.
Japan’s national healthcare expenditure The national healthcare expenditure was JPY34.8tn in FY2008, increasing to JPY43.4tn in FY2018, expanding about 2.2% per year for these ten years. During this same period, the ratio of healthcare expenditure to national income rose from 9.6% to 10.7%. This rose to JPY43.4tn in FY2018 (+0.8% YoY), but the ratio of healthcare expenditure to national income remained in the double digits at 10.7%. As the population ages, an increase in lifestyle diseases, chronic diseases, and complications is pushing up expenditures.
Japan’s national healthcare expenditure and ratio of expenditure to national income
(JPYtn) National healthcare expenditures % of national income (right axis) 43.4 45 42.4 42.1 43.1 14.0% 40.1 40.8 38.6 39.2 40 37.4 13.0% 36.0 34.1 34.8 35 32.1 33.1 33.1 12.0% 30.7 31.1 31.0 31.5 29.6 30.1 10.8%10.9% 10.9% 28.5 28.9 10.7%10.8% 10.7%10.7%10.7% 30 27.0 10.3% 11.0% 25.8 10.2% 24.4 23.5 9.6% 25 21.8 10.0% 19.7 20.6 18.1 18.8 8.6% 8.7% 20 17.1 8.3% 8.3% 8.4% 8.4% 8.4% 9.0% 16.0 8.1% 7.8% 7.8% 7.4% 15 7.3% 8.0% 7.0% 7.1% 6.7% 10 6.4% 6.4% 6.4% 7.0% 6.2% 6.2% 6.2% 5.9% 5.9% 5 6.0%
0 5.0%
Source: Shared Research based on data from Status of National Health Expenditure (FY2017) by Ministry of Health, Labour and Welfare
Aging population The proportion of Japan’s population 65 or older was 28.4% in 2019, up from only 6.3% in 1965 for an increase of more than 22pp over approximately 50 years. This figure is projected to rise another 10pp to 38.4% by 2065(source: Cabinet Office “White Paper on the Aging Society (2019 Edition)”). The proportion of Japan’s population 65 or older is also higher than other major countries. As of 2015, the proportion of the population 65 or older was 26.6% in Japan versus 14.6% in the US, 18.0% in the UK, 18.9% in France, 21.2% in Germany, 12.9% in South Korea, 9.3% in China, and 5.6% in India.
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Population aging trends and estimates (mn people)
75 and older 65-74 15-64 0-14 Aging rate (for 65 and older; right axis)
140 45.0% 126.9 127.8 128.1 127.1 126.2 110.9 123.6 125.6 125.3 122.5 121.1 119.1 106.4 37.7% 38.0% 38.1% 38.4% 117.1 115.2 35.3% 36.8% 40.0% 120 111.9 17.5 16.8 15.2 20.0 18.5 15.9 15.1 14.1 104.7 22.5 13.2 12.5 99.2 26.0 101.9 35.0% 27.5 11.9 97.4 100 94.3 74.1 11.4 92.8 90.1 27.2 75.1 10.8 88.1 84.1 25.2 76.3 32.8% 10.1 30.0% 25.5 31.2% 9.5 81.0 30.0% 9.0 80 28.4 28.9% 84.1 28.4% 25.0% 30.1 26.6% 71.7 29.8 68.8 64.9 59.8 86.2 55.8 52.8 87.2 50.3 20.0% 60 85.9 23.0% 47.9 82.5 20.2% 45.3 78.8 75.8 72.1 17.4% 15.0% 40 67.4 60.5 14.6% 55.2 14.2 50.2 12.1% 15.0 14.3 15.2 16.8 16.4 12.6 11.5 11.3 10.0% 17.3 17.4 17.5 10.3% 15.2 20 9.1% 14.1 7.9% 13.0 6.3% 7.1% 11.1 24.2 24.5 23.9 5.0% 4.9% 5.3% 5.7% 7.0 8.9 18.5 18.7 21.8 22.9 22.6 22.4 22.8 22.5 6.0 7.8 11.6 14.1 16.1 3.1 3.4 3.8 4.3 5.2 3.7 4.7 6.0 7.2 9.0 0 1.1 1.4 1.6 1.9 2.2 2.8 0.0% 50 55 60 65 70 75 80 85 90 95 00 05 10 15 19 20F 25F 30F 35F 40F 45F 50F 55F 60F 65F Source: Shared Research based on data from Cabinet Office’s White Paper on the Aging Society (FY2019 edition)
Japan’s total nursing care expenditure According to data from the Ministry of Health, Labour and Welfare, Japan’s total expenditure for nursing care insurance has nearly tripled from JPY3.6tn in FY2000, when the long-term care insurance system was launched, to JPY10.4tn in FY2018 as the elderly population grew in size (at an average pace of about 6.0% per year).
Japan’s total nursing care expenditure and ratio of expenditure to GDP
(JPYtn) Nursing care services % of GDP (right axis) 12 2.5% 10.4 10.0 10.2 9.6 9.8 10 9.2 8.8 8.2 2.0% 7.8 8 7.4 6.9 1.9% 6.7 1.9% 1.8% 1.9% 1.9% 6.2 6.4 6.4 1.8% 1.8% 5.7 6 5.2 1.7% 1.5% 1.6% 4.6 1.5% 3.6 1.4% 4 1.3% 1.2% 1.2% 1.2% 1.1% 1.0% 2 1.0% 0.9% 0.7% 0 0.5% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source: Shared Research based on Ministry of Health, Labour and Welfare material Note: Total nursing care expenditure is the total of nursing care expenses plus insurance premiums; FY00–FY16 amounts are actual figures and FY17–FY18 amounts are initial budget figures (proposed)
Nursing care service offices and facilities Since the Long-Term Care Insurance Act*1 was enacted in 2000, the number of companies entering the nursing care industry has been increasing, so the numbers of offices involved in home-visit*2 and outpatient nursing care*3 have been swelling. As of October 2019, the number of home-visit nursing care offices was 34,825 (+3.3% CAGR over the past 10 years), and the number of outpatient nursing care offices, including community-based outpatient nursing care, was 43,893 (+6.4%). At the same time, for nursing care facilities, the numbers of facilities covered by public aid providing long-term care to the elderly*4 and long-term healthcare facilities*5 increased, but the number of medical long-term care sanatoriums*6 decreased. The number of facilities covered by public aid providing long-term care to the elderly was 8,234 (+3.0%), the number of long-term care health facilities was 4,337 (+2.0%), and the number of medical long-term care sanatoriums was 833 (-9.3%)
*1 Long-Term Care Insurance Act: Establishes standards for determining nursing care need, standards for services, and details of public long-term care insurance. Enacted in 1997, enforced from 2000, revised in 2005, 2008, 2011, and 2014. *2 Home-visit nursing care: Service in which a helper visits the home of an individual requiring nursing care due to a disability affecting daily life. The helper provides physical care and lifestyle assistance based on a home-visit nursing care plan. *3 Outpatient nursing care: Also known as a day service, involves the patient commuting to a facility from home to receive assistance with meals, bathing, and other aspects of daily life, including functional training as needed. *4 Facility covered by public aid providing long-term care to the elderly: A facility providing resident patients assistance in bathing, waste elimination, meals, and other aspects of daily life, and with functional training, health management, and convalescent care, all according to a facility service plan. An
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intensive care home for the elderly (limited to those with a capacity of 30 or more residents) as stipulated by the Act on Social Welfare for the Elderly, which has been designated by the governor for the prefecture in which it is located in accordance with the Long-Term Care Insurance Act. *5 Long-term care health facility: A facility providing resident patients requiring nursing care with nursing care and medical management, functional training, and other assistance with medical-related issues and with aspects of daily life, all according to a facility service plan. The facility must have received approval for establishment from the governor in accordance with the Long-Term Care Insurance Act. *6 Medical long-term care sanatorium: A facility providing resident patients with nursing care, medical management, and convalescent care, and with functional training and other required medical treatment, all according to a facility service plan. A medical facility as stipulated by the Medical Care Act, which has been designated by the governor in accordance with the Long-Term Care Insurance Act.
Number of nursing care service offices and nursing care facilities
50,000 Home-visit nursing care offices 10,000 45,000 Day nursing care offices 9,000 Nursing care welfare facilities (right axis) 40,000 8,000 Nursing care health facilities (right axis) 35,000 Nursing care medical facilities (right axis) 7,000 30,000 6,000
25,000 5,000
20,000 4,000
15,000 3,000
10,000 2,000
5,000 1,000
0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Shared Research based on data from Monthly Report on Nursing Care Benefits Status Survey by Ministry of Health, Labour and Welfare Since small-scale outpatient nursing care (less than 300 users per month) was transferred to a community-based system in April 2016, figures from that year reflect the sum of large-scale and community-based outpatient nursing care.
Nursing care labor market Since the Long-Term Care Insurance Act came into force (April 1, 2000) the number of those certified as needing long-term care (support) has been increasing, from 2.18mn in fiscal 2000 to 6.22mn (an increase of 190%) in fiscal 2016 (MHLW data). In step with this change, the number of nursing care workers rose from 549,000 in fiscal 2000 to 1.83mn in fiscal 2016 (an increase of 290%). The job-to-applicant ratio in nursing care professions has been on an uptrend, and rose from 1.31 in 2010 to 4.20 in 2019 (figure below). It is tracking much higher than the all-industry figure (1.45 in 2019). The labor shortage for nursing care service providers is becoming particularly pronounced in home-visit nursing care. According to a survey by the Care Work Foundation, the proportion of respondents who said that there was a severe shortage of attendant nurses climbed from 9.8% in fiscal 2009 to 26.0% in fiscal 2017, and the proportion who answered that there was a shortage rose from 23.2% to 29.2%. A large percentage cited “difficulty of recruiting” as the reason for the labor shortage (88.5%, top answer, multiple answers permitted).
Job-to-applicant ratio and unemployment ratio in the nursing care industry
(x) Job-to-applicant ratio (all industries) Job-to-applicant ratio (long-term care-related) Unemployment ratio (right axis) （％）
4.50 4.20 6.0 3.90 4.00 5.1 5.1 4.7 4.6 3.50 5.0 3.50 4.4 4.3 4.1 3.02 3.9 4.0 4.0 3.00 4.0 3.6 2.59 2.31 3.1 2.50 2.22 2.00 3.4 2.8 3.0 1.82 2.00 1.68 1.74 2.4 2.4 1.48 1.58 1.38 1.31 1.50 1.10 2.0 1.35 1.45 1.45 1.00 1.22 1.02 1.00 0.97 1.08 1.0 0.92 0.84 0.50 0.80 0.72 0.83 0.59 0.44 0.48 0.00 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Historical performance and financial statements
Historical performance Cumulative Q3 FY03/21 results (out January 27, 2021) Earnings overview
For cumulative Q3 FY03/21, Infocom reported sales of JPY48.9bn (+18.7% YoY), operating profit of JPY7.1bn (+22.0% YoY), ▷ recurring profit of JPY7.2bn (+23.5% YoY), and net income attributable to owners of the parent of JPY4.9bn (+23.9% YoY). Versus plan: Against the full-year FY03/21 forecast* (announced October 28, 2020), cumulative Q3 sales reached 69.4% ▷ (70.6% of full-year FY03/20 results in cumulative Q3 FY03/20), operating profit 67.7% (71.0%), recurring profit 68.7% (70.7%), and net income attributable to owners of the parent 73.5% (71.7%). These figures indicate that cumulative Q3 results were essentially in line with the company forecast.
The company’s core Digital Entertainment business recorded a 6.5% QoQ dip in sales in Q3 (October–December 2020),
but this was due in part to seasonal factors. There was also some fallback after strong demand in 1H from people spending
more time at home because of the COVID-19 pandemic. In fact, the Go To Travel campaign (launched on July 22, 2020, but
then suspended from December 28, 2020, to March 7, 2021, because of an uptick in COVID-19 cases) boosted tourism in
Q3. In Q3 FY03/20 (October–December 2019), the Digital Entertainment business recorded a 1.3% QoQ decline in sales.
Sales up 18.7% YoY: Digital Entertainment sales rose 37.0% YoY while Business Solution sales fell 7.2% YoY. In the Digital ▷ Entertainment segment, the company successfully implemented various data analysis-driven measures on its Mecha Comic e-comics store such as the expansion of serial manga, initial exclusive distribution rights agreements, and original comics.
Voluntary restrictions on going out caused by the COVID-19 pandemic also boosted demand and contributed to sales growth. In the Business Solution segment, sales to hospitals under the Health IT subsegment were negatively impacted by a drop in one-time demand seen in Q3 FY03/20 (work related to era change and consumption tax rate hike) and the COVID-19 pandemic, but sales to corporate clients were in line with plan. Operating profit up 22.0% YoY: In Digital Entertainment, operating profit rose 47.9% YoY driven by higher sales. Meanwhile, ▷ Business Solution operating profit was affected by lower sales, falling 31.8% YoY. The GPM improved 0.1pp YoY to 49.0% while the SG&A to sales ratio fell by 0.3pp YoY to 34.4%. The OPM was up 0.4pp YoY to 14.5%. FY03/21 earnings forecast: No change has been made to the revised earnings forecast announced on October 28, 2020. ▷ FY03/21 dividend forecast: The company had previously planned to pay a year-end dividend of JPY21 per share for FY03/21, ▷ but in light of recent earnings trends, raised the dividend forecast by JPY6 to JPY27 per share. As a result, together with the interim dividend of JPY10 per share, the company plans to pay an annual dividend of JPY37 per share (+JPY6 YoY), for a consolidated payout ratio of 30.2%
By segment Digital Entertainment segment
Segment sales were JPY33.1bn (+37.0% YoY) and segment operating profit was JPY5.8bn (+47.9% YoY). ▷ In the e-comic distribution business, sales were JPY33.0bn (+38.1% YoY). Already in cumulative Q3, the business exceeded the ▷ sales of JPY32.6bn (+22.4% YoY) recorded for full-year FY03/20. Various data analysis-driven measures on its Mecha Comic e-comics store continued to prove successful. Specifically, users responded well to ongoing free daily serial manga, offerings based on initial exclusive distribution rights agreements, and original comics. In addition, particularly in 1H, sales and profit rose YoY due to voluntary restrictions on going out.
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The number of paying members at end-Q3 was up about 30% YoY but only about 1% QoQ. There was substantial growth
in the number of paying members in 1H due to demand from people spending more time at home in light of the pandemic. However, although the attrition rate remained low in Q3, demand triggered by the pandemic seems to have petered out. The company believes a major underlying factor in Q3 was the Go To Travel campaign (launched on July 22,
2020, but then suspended from December 28, 2020, to March 7, 2021, because of an uptick in COVID-19 cases), which
encouraged more people to leave their homes and engage in tourism.
Average revenue per user (ARPU) saw double-digit growth in 1H, but just single-digit growth in Q3. The company conducted the following new initiatives. ▷ In late 2020 and early 2021, the company broadcast a new Mecha Comic television commercial featuring comedian and
TV presenter Hiroiki Ariyoshi.
On December 15, 2020, a television drama series based on Atsuki Nakama’s Toshi no Sa Kon (May–December Marriage),
an original manga currently available on Mecha Comic, went on air in a late-night Tuesday time slot on Mainichi
Broadcasting System/TBS. This is the first time a Mecha Comic original has been turned into a television drama.
In February and March 2021, Infocom and TV Tokyo Corporation are jointly sponsoring a contest (slogan: “Please make
me the protagonist of a manga and turn it into a television drama too!!”) to select a work for simultaneous development as
a manga and TV drama. The lead actor, Keita Machida, will participate in the judging of the contest. TV Tokyo will also
broadcast a documentary showing the progress of the contest and the process of turning the winning selection into a
manga and drama.
One concern is the emergence of new manga piracy websites. Nearly three years have passed since the largest such site was ▷ closed in April 2018, but the current pandemic is driving the rise of new piracy sites. While this remains a concern, the company believes it will suffer minimal impact because it is able to differentiate itself from other comic websites with original comics and offerings based on initial exclusive distribution rights agreements. In regard to expansion in South Korea, Infocom says it is once again able to advertise comics and analyze data on the ▷ effectiveness of such advertising now that the anti-Japan sentiment that arose a year or two ago has cooled down. Based on the results of that analysis, it has worked out a strategy and begun introducing initiatives for an expansion phase.
Business Solution segment
Segment sales were JPY15.8bn (-7.2% YoY) and segment operating profit was JPY1.3bn (-31.8% YoY). ▷ Sales to hospitals under the Health IT subsegment were negatively impacted by a drop in one-time demand seen in Q3 ▷ FY03/20 (work related to era change and consumption tax rate hike) and the COVID-19 pandemic, but sales to corporate clients were in line with plan.
The pandemic did not have as much of an impact in 1H as the company initially projected. However, although its revised
forecast announced on October 28, 2020, still took that impact into account, the company says the negative impact on
Q3 sales to hospitals was actually slightly greater than anticipated.
Sales of systems for radiology departments progressed according to plan, since radiology departments have independent
budgets, but the pandemic had a negative impact on sales of other systems, such as those related to electronic medical
records. Infocom believes there is a risk of some sales to hospitals being pushed back to FY03/22.
Sales to corporate clients declined YoY, but progress was still in line with the company forecast. Few clients are in
industries that have been severely affected by the pandemic, such as the travel industry.
Infocom expects robust sales to corporate clients in Q4, but for sales to hospitals to be flat YoY.
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1H FY03/ 21 results (out October 28, 2020) Earnings overview
For 1H FY03/21, Infocom reported sales of JPY33.2bn (+20.0% YoY), operating profit of JPY4.9bn (+27.4% YoY), recurring ▷ profit of JPY5.0bn (+27.7% YoY), and net income attributable to owners of the parent of JPY3.4bn (+31.1% YoY). Versus plan: Against upwardly revised 1H FY03/21 forecast (announced July 31, 2020), 1H sales reached 103.8%, operating ▷ profit 117.1%, recurring profit 117.9%, and net income attributable to owners of the parent 125.1%, and the company revised upward its full-year FY03/21 earnings forecast once again. Against full-year FY03/21 forecasts* (announced October 28, 2020), 1H sales reached 47.1% (47.4% of full-year FY03/20 results in 1H FY03/20), operating profit 46.9% (47.0%), recurring profit 47.1% (46.9%), and net income attributable to owners of the parent 50.4% (46.5%). Sales up 20.0% YoY: Digital Entertainment sales rose 38.6% YoY, and Business Solution sales fell 5.6% YoY. ▷ In the Digital Entertainment segment, in addition to the success of various data analysis-driven measures on its Mecha Comic e-comics store such as the expansion of serial manga, initial exclusive distribution rights agreements, and original comics, the rise in demand spurred by voluntary restrictions on going out caused by the COVID-19 pandemic led to higher sales.
In the Business Solution segment, sales to hospitals under the Health IT subsegment were negatively impacted by a drop in one-time demand from 1H FY03/20 (work related to era change and consumption tax rate hike) and the COVID-19 pandemic, but sales to corporate clients were solid owing to creative sales efforts. While sales were down YoY, they were still 9.8% above the 1H FY03/21 forecast of JPY10.0bn at nearly JPY11.0bn. Operating profit up 27.4% YoY: In Digital Entertainment, operating profit rose 50.9% YoY driven by higher sales and the ▷ success of high-margin original comics. Meanwhile, Business Solution was affected by lower sales YoY mainly due to a drop in one-time demand from 1H FY03/20, but operating profit declined by just 17.6% YoY (operating profit of JPY1.1bn versus 1H FY03/21 forecast of JPY300mn) owing to sales efforts and SG&A expense controls. The GPM improved 1.0pp YoY to 49.5% while the SG&A to sales ratio rose by 0.2pp YoY to 34.7%. The OPM was up 0.8pp YoY to 14.8%. FY03/21 earnings forecast: Revised upward as shown below. ▷
*Revision of full-year FY03/21 earnings forecast (announced October 28, 2020) Sales: JPY70.5bn (previous forecast: JPY69.0bn) Operating profit: JPY10.5bn (JPY10.1bn) Recurring profit: JPY10.5bn (JPY10.1bn) Net income attributable to owners of the parent: JPY6.7bn (JPY6.6bn)
Reasons for revision The e-comics distribution in the Digital Entertainment segment performed well in 1H FY03/21, and the company expects continued strong performance through 2H. In the Business Solution segment, the company expects its business targeting hospitals to see longer project lead times and a stronger-than-usual Q4 weighting of results. At the same time, the company expects steady growth in its business for corporate clients as it leverages web meetings and online seminars to tap into IT demand. Due to these factors, the company made upward revisions to its full-year sales and profit forecasts.
By segment Digital Entertainment segment Segment sales were JPY22.2bn (+38.6% YoY) and segment operating profit was JPY3.8bn (+50.9% YoY). ▷ In the e-comic distribution business, various data analysis-driven measures on its Mecha Comic e-comics store such as the ▷ expansion of serial manga, initial exclusive distribution rights agreements, and original comics, proved successful. In
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addition, demand rose due to voluntary restrictions on going out, and 1H sales surpassed the JPY20.0bn mark for the first time, rising 39.8% YoY to JPY22.2bn.
By quarter, sales were up 36.9% YoY in Q1 (April June 2020) and up 42.9% YoY in Q2 (July September 2020), with – – increases in both subscribers and paying users in Q1 driving earnings in Q2.
Shared Research understands that the number of paying users rose about 10% YoY in Q1, while ARPU grew by
nearly 30% YoY.
We also understand that the number of paying users rose by more than 10% YoY in Q2, while ARPU was up more
than 30% YoY.
Whereas sales in each quarter reached about JPY5.0bn in FY03/18, they have been topping JPY10.0bn per quarter so
far in FY03/21, meaning sales have more than doubled in three years.
On top of higher sales, operating profit rose 50.9% YoY driven by the success of high-margin original comics. ▷ Key initiatives during 1H were as follows. ▷ Free daily serial manga: With respect to enhancing its customer-attraction with free daily serial manga (started in Q3
FY03/20), Infocom increased both the number of works and the number of individual stories it distributes, including
via the app. It is collaborating with publishers for the purpose of increasing the number of works and therefore the
number of appealing free stories. The benefit to the publishers is that exposure to readers can lead to increased sales of
works in the future. The app’s free daily serial manga has increased traffic to Mecha Comic and contributed to sales by
increasing the number of paying members, since users want to read the continuations of the works they started
reading as free offerings.
Original comic: Sales of Aoshima Kun wa Ijiwaru have topped a million volumes (calculated as a conversion to copies in
book form). Infocom says it uses AI analysis to determine rules for developing hit titles and selecting authors for its
original comics. It says that, based on its marketing strategy, its targeted works have achieved better results than
expected. The company has established an environment for the production of original comics that includes the
creation of original websites for authors and production partners. It is also enhancing efforts to turn novels into comics.
Initial exclusive distribution: Infocom has increased the number of titles it handles to about 1,900. It has entered deals
with new publishers (giving access to new publishing labels).
Full app update: In cooperation with and factory (TSE1: 7035), Infocom fully updated the Mecha Comic app. Key
features of the Mecha Comic website were incorporated into the app, and the company enhanced its promotion to a
younger user base than the Mecha Comic website has. Cumulative app installations at end-Q2 were about 1.65x what
they were at end-Q1. As of October 8, 2020, the App Store ranked the app third in the book category.
South Korea business (Peanutoon): Issues between Japan and South Korea had previously made it impossible to place
ads, but active placement during 1H helped it win users. Infocom’s subsidiary in South Korea had suspended or
limited distribution of Japanese works out of concern over antipathy toward Japan. However, this impact has
evaporated in recent months, and competitors resumed distribution of Japanese content, so Infocom has also resumed
distribution of Mecha Comic titles, accompanied by active advertising. The company says Japanese-South Korean
friction is currently not much of an issue. It has established a system in which South Korean personnel are in charge of
operations there, and collaboration with the Japanese team is conducted online. Security, license management, and
authority controls all comply with Infocom’s governance policies.
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Business Solution segment Segment sales were JPY11.0bn (-5.6% YoY) and segment operating profit was JPY1.1bn (-17.6% YoY). The 1H declines in ▷ both sales and operating profit were anticipated by the company’s forecast, but the percentage by which they fell was actually smaller than expected (sales were 9.8% above plan and operating profit was JPY1.1bn versus a target of JPY300mn). Sales to hospitals under the Health IT subsegment were negatively impacted by a drop in one-time demand from 1H ▷ FY03/20 (work related to era change and consumption tax rate hike) and the COVID-19 pandemic, but sales to corporate clients were solid owing to creative sales efforts.
While sales were down 5.6% YoY, they still came in 9.8% above the 1H FY03/21 forecast of JPY10.0bn.
Business Solution was affected by lower sales YoY mainly due to a drop in one-time demand from 1H FY03/20, but
operating profit declined by just 17.6% YoY (operating profit of JPY1.1bn versus 1H FY03/21 forecast of JPY300mn)
owing to sales efforts and SG&A expense controls.
Although the COVID-19 pandemic mainly affected the Health IT business, the company devised various sales methods
to reach corporate clients, including online conferences and webinars, and this appears to be the reason results were
above plan.
Key initiatives during 1H were as follows. ▷ Infocom is pursuing a growth strategy that, in addition to the medical field (hospitals and pharmaceutical companies),
targets the following four areas.
(1) Health field: The company focused on establishing health services targeting both companies and individuals.
(2) Overseas development: In August 2020, Infocom entered a business alliance with Terakorp (which has a track record
of installing more than 100 hospital data systems in Indonesia) and began selling medical image management
systems (picture archiving and communication system: PACS) to medical institutions in that country (for detail,
please refer to the News and topics section under Other information). It plans to develop a smartphone version in
response to local need, to be released in FY03/22. In September 2020, the company invested in Singapore-based
company Homage, which provides a matching service specializing in nursing care professionals (see the Recent
updates section for detail). In partnership with Homage, Infocom aims to enter the rapidly growing Asian nursing
care human resources market. It will also consider expanding into the Japanese market.
(3) Expansion of business in the nursing care field: The company focused on expanding the CWS staff management
service. It has already installed the system at more than 200 hospitals and is currently expanding to nursing care
providers (companies). Infocom thinks there is significant potential demand, since there are some 300,000 nursing
care offices nationwide. It intends to sell CWS as a subscription service and plans to install the system at 600 major
nursing care facilities during FY03/22, even as it accelerates sales efforts targeting other major nursing care providers.
Hospitals tend to be resistant to subscription models, but many nursing care providers are fairly small companies,
and offering the system as a subscription service is more likely to suit their needs. Although many individual nursing
care providers are small, Infocom thinks it can benefit from economies of scale by winning a large number of
contracts.
(4) Development of online services: The company is focusing on remote consultations and online marketing support for
medical representatives.
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Investments
Investments in 1H came to JPY860mn (-66.1% YoY). This YoY decline was mainly due to a fallback from substantial capital ▷ investment in 1H FY03/20 (JPY1.8bn) related to the acquisition of a nursing care staff recruitment agency (Staff Plus) and a South Korean e-comics distribution company (Peanutoon). Infocom views its business development, capex, and R&D
spending as being at levels it sees in a typical year. The following is a breakdown.
Business development (including planning, research, and proof-of-concept tests of new businesses): JPY210mn
(+31.3% YoY)
Capital investment (including business alliance with a Singapore-based company developing a matching business for
nursing care professionals): JPY150mn (-91.7% YoY; decline due to abovementioned fallback after substantial
investment in 1H FY03/20)
Capex (1. E-comics: server enhancement and app development, 2. Health IT: pharmaceutical data, services targeting
pharmaceutical companies, and community-based comprehensive care, 3. GRANDIT development, 4. Other capex):
JPY380mn (-20.8% YoY)
R&D spending (including development of AI and new technology and promotion of digital transformation): JPY110mn
(+37.5% YoY) Q1 FY03/21 (out July 31, 2020)
Earnings overview
For Q1 FY03/21, Infocom reported sales of JPY15.6bn (+22.9% YoY), operating profit of JPY2.1bn (+68.6% YoY), recurring ▷ profit of JPY2.1bn (+67.7% YoY), and net income attributable to owners of the parent of JPY1.4bn (+67.8% YoY). Versus plan: Both sales and profit for Q1 FY03/21 were ahead of plan for 1H FY03/21, so the company revised its 1H and ▷ full-year FY03/21 forecasts (see box below) upward as the e-comics distribution business performed above expectations.
Against the revised 1H FY03/21 forecast, Q1 sales reached 48.7% (45.8% of 1H FY03/20 results in Q1 FY03/20), operating profit 49.8% (32.1%), recurring profit 50.6% (32.7%), and net income attributable to owners of the parent 53.4% (33.4%). Against full-year FY03/21 forecasts (unchanged), Q1 sales reached 22.6% (21.7% of full-year FY03/20 results in Q1 FY03/20), operating profit 20.7% (15.1%), recurring profit 21.0% (15.3%), and net income attributable to owners of the parent 21.8% (15.5%). Sales up 22.9% YoY: Digital Entertainment sales rose 35.5% YoY, and Business Solution sales rose 2.5% YoY. ▷ Operating profit up 68.6% YoY: Digital Entertainment saw operating profits increase 80.7% YoY on growth in serial manga, ▷ initial exclusive distribution rights agreements, and original comics on its Mecha Comic e-comics store; improved marketing using data analysis and AI; and higher product demand from the voluntary restrictions on going out. In Business Solution, the decline in operating profits was limited to 6.6% YoY as while the novel coronavirus pandemic negatively impacted sales operations, it was less than initially expected with existing solutions to hospitals and corporations progressing on target. The GPM improved 1.2pp YoY to 49.3% while the SG&A to sales ratio decreased by 2.4pp YoY to 35.9%. The OPM was up 3.6pp YoY to 13.4%.
*Revision of 1H FY03/21 earnings forecast Sales: JPY32.0bn (previous forecast: JPY30.5bn) Operating profit: JPY4.2bn (JPY3.4bn) Recurring profit: JPY4.2bn (JPY3.4bn) Net income attributable to owners of the parent: JPY2.7bn (JPY2.2bn)
*Revision of full-year FY03/21 earnings forecast
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Sales: JPY69.0bn (previous forecast: JPY67.0bn) Operating profit: JPY10.1bn (JPY8.7bn) Recurring profit: JPY10.1bn (JPY8.7bn) Net income attributable to owners of the parent: JPY6.6bn (JPY5.7bn)
Reasons for revision The company projects strong performance of e-comics distribution in the Digital Entertainment segment, in addition to lighter-than-initially-expected impact of the novel coronavirus pandemic on the Business Solution segment in 1H. Therefore, based on Q1 results and outlooks on priority businesses, it made upward revisions to the 1H and full-year sales and profit forecasts. Digital Entertainment segment: Sales and operating profit revised higher due to forecast strong e-comic performance. Business Solution segment: While novel coronavirus uncertainty remains, IT investment is projected to gradually recover. Further, as new styles of working that include web meetings and online seminars are promoted, the company expects initial forecasts to be achieved and there are no forecast revisions.
By segment While the novel coronavirus pandemic caused some business disruptions, the impact was lighter than initially envisioned and existing hospital and corporate sales proceeded as plan.
Digital Entertainment segment Segment sales were JPY10.6bn (+35.5% YoY) and segment operating profit was JPY1.9bn (+80.7% YoY).
In the e-comic distribution business, quarterly sales surpassed JPY10bn for the first time in Q1 FY03/21 (growing by 36.9% YoY, to JPY10.6bn), spurred on by the expansion of serial manga, initial exclusive distribution rights agreements, and original comics on its Mecha Comic e-comics store, along with improved marketing using data analysis and AI, and the increase in demand from voluntary restrictions on going out.
The company said that customer count grew more than expected, and paying members spent more (the number of paying members [raw figures undisclosed] was up by more than 20% YoY, and ARPU more than 10% YoY). People staying at home due to COVID-19 underpinned demand growth. The company continued to expand its lineup of exclusive initial distribution deals and original comics, while the use of data analysis and AI enhanced the company’s online advertising, driving member growth and lowering the advertising expense to sales ratio.
The company said that it reduced the advertising expense to sales ratio (normally about one third of sales) by 2–3pp by continuing to air TV commercials while running more efficient online campaigns. The company has deployed data analysis and AI to reach potential users online more efficiently.
Other leisure activities such as games and videos compete for the free time of users, which is increasing as people stay at home, but the company will continue to implement its key strategies of free comics, exclusive initial distribution, and original comics with the aim of making further inroads among consumers in the home.
The company said that in apps, a focus area, user count was showing solid growth due to the redesign of the app and free serial manga.
The company revised its full-year FY03/21 segment sales and profit forecasts upward (see “Full-year company forecast” section for details).
Business Solution segment Segment sales were JPY5.0bn (+2.5% YoY) and segment operating profit was JPY157mn (-6.6% YoY). Sales and profits grew as the consumption tax rate hike and work related to the era change resulted in strong sales to hospitals. The pandemic hindered marketing somewhat, but less than initially expected. Sales for ongoing projects for hospital and corporate customers proceeded as forecast.
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The company projected that the pandemic would have a negative impact on activities aimed at closing contracts on projects carried over from Q4 FY03/20, but it said that it was able to continue closing deals, including some from Q4 FY03/20.
Still, it was somewhat difficult to win new customers, and the company expects the impact from this to emerge starting in Q2. The company said it hoped to offset any shortfalls through additional projects from existing customers.
The company maintained its full-year FY03/21 segment sales and profit forecasts, but adjusted its 1H forecasts up slightly and 2H forecasts down slightly (see “Full-year company forecast” section for details).
Full-year consolidated results for FY03/20 (out April 27, 2020)
Results overview
For FY03/20, Infocom reported full-year consolidated sales of JPY58.4bn (+12.8% YoY), operating profit of JPY8.2bn (+19.2% ▷ YoY), recurring profit of JPY8.3bn (+20.3% YoY), and net income of JPY5.5bn (+15.9% YoY). Results were in line with plan, with consolidated sales coming in 0.2% below plan, operating profit 0.1% above plan, recurring ▷ profit 0.8% above plan, and net income 0.8% above plan. Sales up 12.8% YoY: Business Solution sales rose 4.8% YoY, and Digital Entertainment sales rose 20.0% YoY. ▷ Operating profit up 19.2% YoY: In Business Solution, operating profit was up 30.7% YoY on strong sales to hospitals due to the ▷ consumption tax rate hike and work related to the era change. In Digital Entertainment, operating profit was up 12.8% YoY due to advertisement optimization through data analysis and favorable performance of serial manga and original comics in the e-comics distribution service. The gross profit margin rose 0.8pp YoY to 48.4% while the SG&A expense ratio rose 0.1pp YoY to 34.4%, leaving the operating profit margin at 14.1% (+0.8pp). The company paid an annual dividend of JPY31.0 per share, up JPY9.0 YoY. ▷
Review of previous medium-term business plan (covering FY03/18–FY03/20)
Under its previous medium-term business plan, covering the three-year period from FY03/18 through FY03/20, the company ▷ set a final-year target for consolidated sales of JPY60.0bn–80.0bn and EBITDA of JPY7.0bn 10.0bn (see table below). Results for – FY03/20, the final year of the plan, were generally in line with the targets set under the medium-term plan, with most of the growth coming from E-comics, one of the company’s two core businesses.
FY03/20 results versus final-year targets set under previous medium-term business plan (FY03/18–FY03/20)
(JPYmn) KPI FY03/20 Targets FY03/20 Act. Versus targets Sales 60,000–80,000 58,375 97.3% Growth potential EBITDA 7,000–10,000 9,391 134.2% Core business ratio * 70% 74.4% 106.3% Profitability ROE 10% or higher 16.2% 162.0% Shareholder Payout ratio 30% 30.6% 102.0% returns Source: Shared Research, based on company data Note: Percent of consolidated sales generated by core businesses (Health IT and E-comics)
The two main strategies under the previous medium-term plan were “pursue growth” and “continue to build a strong ▷ foundation to support growth,” as detailed below: Under the “pursue growth” strategy, the company delivered the following results: ▷ Growth was driven by the company’s E-comics and Health IT businesses
E-comics reported FY03/20 sales of JPY32.6bn, topping the medium-term plan target of JPY30.0bn and well above
FY03/17 sales of JPY18.0bn
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Health IT reported FY03/20 sales of JPY10.8bn, short of the medium-term plan target of JPY14.0bn but above the
JPY10.0bn benchmark and well ahead of FY03/17 sales of JPY7.8bn Pursue M&A opportunities In May 2019, Infocom acquired Peanutoon Inc., an e-comics distributor in South Korea, and also acquired Staff Plus, a
recruitment agency specializing in the nursing field, adding both companies to the group as consolidated subsidiaries
Continued looking for large-scale M&A targets
Conducted business development using AI and IoT technology
At E-comics, used AI to enhance e-comic recommendation engine
At Health IT, used IoT technology to develop nursing care support business; under business IT services, used IoT
technology to develop food temperature management service business
Under the “continue to build a strong foundation to support growth” strategy, the company delivered the following results: ▷ Continuous improvement in quality control; also used IT to improve service quality
Realized additional efficiency gains through business process reforms; encouraged cooperative social ventures
Offered more robust telework environment; used robotic process automation (RPA) to increase efficiency by eliminating
unnecessary manual processing
Worked together with IT startup companies to co-create new apps through Digital Health Connect and GnB Accelerator
(supports startup companies in Indonesia)
Fostered employee development in technology and business promotion fields
Implement training programs to enhance employee skills in data analytics and application of AI technology
By segment Business Solution segment For FY03/20, the Business Solution segment reported sales of JPY25.4bn (+4.8% YoY) and an operating profit of JPY3.3bn (+30.7% YoY). The gains reflected additional demand stemming from the hike in the consumption tax rate and demand from hospitals related to the change in era name (under Japan’s imperial year system).
The Health IT subsegment saw growth in sales of employment management systems that are effective in handling complex work schedules of hospital employees in response to working style reforms. At a trade fair, the company announced a dashboard function for surgery department systems enabling information sharing during emergencies. In addition, with an eye to Asian expansion of its hospital-related business, Infocom concluded a contract with Singapore-based venture capital firm HealthXCapital, which specializes in the area of healthcare. The company also started offering WELSA, a service that centrally manages employee health status, and analyzes and predicts health risks and lifestyle-related diseases.
In comprehensive regional care, Infocom made recruitment agency Staff Plus a subsidiary to improve the matching accuracy of Carestyle, a service that supports care workers looking for work.
On the business service front, the company unveiled the ability to connect with electronic contract services and support for automatic input using AI in the MyQuick document management system to streamline contract management workflows. The company also started offering services that incorporate its GRANDIT ERP software package on a cloud platform*.
*Cloud platform: IT infrastructure provisioning service using virtual technology (Microsoft Azure, Amazon Web services etc.)
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Digital Entertainment segment For FY03/20, the Digital Entertainment segment reported sales of JPY33.0bn (+20.0% YoY) and an operating profit of JPY5.0bn (+12.8% YoY). The gains were underpinned by the e-comics distribution business, which benefited from data analytics-driven ad optimization and strong sales of serial manga and original comics.
To expand advertising, the company increased its TV commercial broadcast time, sponsored Mecha Comic Day themed Tokyo Yakult Swallows baseball games, and signed a club sponsorship agreement with FC Tokyo. It also held Mecha Honya promotional events in May and November 2019 for popular Mecha Comic titles in bookstores. As part of its initiatives to grow users, the company started providing an app version of Mecha Comic targeting the youth demographic. In addition, it updated its website and launched a free daily serial manga. As a result, sales exceeded JPY30.0bn for the first time since the service was launched. Overseas, the company acquired Peanutoon, an e-comics company in South Korea, making it a consolidated subsidiary. Also, subsidiary Amutus and Papyless Co., Ltd. (JASDAQ: 3641) formed a joint venture to run an overseas business.
Capital spending Infocom invested a total of JPY3.7bn in FY03/20 (versus JPY1.8bn in FY03/19), as detailed below:
Business development (planning, surveying, running POCs): JPY390mn (versus JPY390mn in FY03/19) ▷ Equity investments (South Korean e-comic distributor, nurse recruiting agency, venture capital investments in ▷ healthcare-related companies in Asia): JPY2.0bn (versus JPY490mn in FY03/19) Capital spending: JPY1.1bn (versus JPY770mn in FY03/19) ▷ R&D (AI, community-based comprehensive care, cutting-edge technology): JPY190mn (versus JPY190mn) ▷
Income statement
Income statement FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales 34,610 36,497 37,381 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 YoY 1.3% 5.5% 2.4% 4.7% 3.0% 0.0% 3.6% 9.6% 13.0% 12.8% 16.6% Cost of sales 19,959 20,519 21,258 21,885 22,279 22,026 22,152 24,169 27,122 30,104 34,347 Cost ratio 57.7% 56.2% 56.9% 55.9% 55.3% 54.6% 53.0% 52.8% 52.4% 51.6% 50.5% Gross profit 14,652 15,978 16,122 17,254 18,030 18,290 19,616 21,605 24,606 28,271 33,708 GPM 42.3% 43.8% 43.1% 44.1% 44.7% 45.4% 47.0% 47.2% 47.6% 48.4% 49.5% SG&A expenses 11,610 12,576 12,620 13,577 14,424 13,863 14,840 15,776 17,717 20,060 22,896 YoY 5.4% 8.3% 0.4% 7.6% 6.2% -3.9% 7.0% 6.3% 12.3% 13.2% 14.1% SG&A ratio 33.5% 34.5% 33.8% 34.7% 35.8% 34.4% 35.5% 34.5% 34.3% 34.4% 33.6% Operating profit 3,042 3,402 3,502 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 YoY 27.3% 11.8% 2.9% 5.0% -1.9% 22.8% 7.9% 22.0% 18.2% 19.2% 31.7% OPM 8.8% 9.3% 9.4% 9.4% 8.9% 11.0% 11.4% 12.7% 13.3% 14.1% 15.9% Non-operating income 9 -11 -13 9 87 131 77 154 -13 57 125 Financial income -2 6 8 3 6 52 68 112 84 78 101 Equit y in earnings of affiliat es - - - 0 1 - 6 10 2 -1 8 Others 12 -17 -21 7 80 79 3 32 -99 -20 16 Recurring profit 3,051 3,391 3,489 3,687 3,692 4,558 4,854 5,982 6,875 8,268 10,936 YoY 25.8% 11.1% 2.9% 5.7% 0.1% 23.5% 6.5% 23.2% 14.9% 20.3% 32.3% RPM 8.8% 9.3% 9.3% 9.4% 9.2% 11.3% 11.6% 13.1% 13.3% 14.2% 16.1% Extraordinary gains (losses) -21 -162 -114 -15 -546 -3,107 -94 998 -76 -228 -1,215 Income taxes 1,271 1,358 1,321 1,626 988 718 1,497 2,341 2,016 2,516 3,533 Implied tax rate 41.9% 42.1% 39.1% 44.3% 31.4% 49.5% 31.4% 33.5% 29.7% 31.3% 36.3% Net income attributable to non-controlling interests 36 19 -26 4 -13 3 2 -1 - -20 -88 Net income attrib. to owners of the parent 1,723 1,852 2,080 2,042 2,171 728 3,261 4,640 4,783 5,543 6,276 YoY 41.9% 7.5% 12.3% -1.8% 6.3% -66.5% 347.9% 42.3% 3.1% 15.9% 13.2% Ne t ma rgin 5.0% 5.1% 5.6% 5.2% 5.4% 1.8% 7.8% 10.1% 9.2% 9.5% 9.2% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
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SG&A expense breakdown FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales 34,610 36,497 37,381 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 Cost of sales 19,959 20,519 21,258 21,885 22,279 22,026 22,152 24,169 27,122 30,104 34,347 Gross profit 14,652 15,978 16,122 17,254 18,030 18,290 19,616 21,605 24,606 28,271 33,708 SG&A expenses (cons.) 11,610 12,576 12,620 13,577 14,424 13,863 14,840 15,776 17,717 20,060 22,896 Salaries and allowances 3,007 3,204 3,204 3,171 3,255 2,988 2,928 2,857 2,922 3,006 3,297 Provision for bonuses 549 536 555 463 437 634 714 721 734 920 911 Retirement benefit expenses 121 131 - 119 115 104 104 104 108 113 118 Advertising expenses 2,964 3,449 3,618 4,569 5,103 5,378 6,189 6,877 8,841 10,398 12,677 Other 4,970 5,256 5,244 5,255 5,514 4,759 4,905 5,217 5,112 5,623 5,893 Sales Cost of sales 57.7% 56.2% 56.9% 55.9% 55.3% 54.6% 53.0% 52.8% 52.4% 51.6% 50.5% Gross profit 42.3% 43.8% 43.1% 44.1% 44.7% 45.4% 47.0% 47.2% 47.6% 48.4% 49.5% SG&A expenses (cons.) 33.5% 34.5% 33.8% 34.7% 35.8% 34.4% 35.5% 34.5% 34.3% 34.4% 33.6% Salaries and allowances 8.7% 8.8% 8.6% 8.1% 8.1% 7.4% 7.0% 6.2% 5.6% 5.1% 4.8% Provision for bonuses 1.6% 1.5% 1.5% 1.2% 1.1% 1.6% 1.7% 1.6% 1.4% 1.6% 1.3% Retirement benefit expenses 0.4% 0.4% - 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% Advertisement expenses 8.6% 9.5% 9.7% 11.7% 12.7% 13.3% 14.8% 15.0% 17.1% 17.8% 18.6% Other 14.4% 14.4% 14.0% 13.4% 13.7% 11.8% 11.7% 11.4% 9.9% 9.6% 8.7% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Sales and operating profit Over the ten-year period through FY03/21, consolidated sales grew at an average annual rate of 7.0%. The Business Solution segment provides steady sales, and the e-book (comics) distribution service serves as a growth driver. With the proportion of sales derived from the more profitable Digital Entertainment segment rising (from 33.3% in FY03/13 to 64.7% in FY03/21) and the company withdrawing from a number of unprofitable businesses, its consolidated gross profit margin rose from 42.3% in FY03/11 to 49.5% in FY03/21, an increase of 7.2pp over ten years. In contrast, over the same ten-year period the SG&A expense ratio rose by only 0.1pp, from 33.5% in FY03/11 to 33.6% in FY03/21. The reason for this increase was higher advertising expenses to propel the e-book (comics) distribution service (other SG&A expenses were down in FY03/21 due to the impact of COVID-19).
Profitability and financial indicators
Profit margins FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Gross profit 14,652 15,978 16,122 17,254 18,030 18,290 19,616 21,605 24,606 28,271 33,708 GPM 42.3% 43.8% 43.1% 44.1% 44.7% 45.4% 47.0% 47.2% 47.6% 48.4% 49.5% Operating profit 3,042 3,402 3,502 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 OPM 8.8% 9.3% 9.4% 9.4% 8.9% 11.0% 11.4% 12.7% 13.3% 14.1% 15.9% EBITDA 4,347 4,648 4,814 5,121 5,052 5,554 5,861 6,991 8,007 9,391 11,992 EBITDA margin 12.6% 12.7% 12.9% 13.1% 12.5% 13.8% 14.0% 15.3% 15.5% 16.1% 17.6% Net margin 5.0% 5.1% 5.6% 5.2% 5.4% 1.8% 7.8% 10.1% 9.2% 9.5% 9.2% Financial indicat ors ROA (RP-based) 14.0% 14.3% 13.7% 13.6% 13.1% 15.2% 15.1% 16.9% 16.8% 18.0% 20.9% ROE 12.0% 11.8% 12.2% 11.1% 10.9% 3.5% 14.6% 17.9% 15.7% 16.2% 16.2% Total asset turnover 1.59 1.53 1.47 1.45 1.43 1.34 1.30 1.29 1.26 1.27 1.30 W orking capit al (JPY mn) 5,335 5,323 5,367 6,249 5,689 5,540 6,088 6,520 6,975 7,287 7,694 Current ratio 222.7% 238.5% 243.6% 259.8% 294.5% 229.2% 274.8% 285.9% 304.8% 308.7% 308.7% Quick rat io 87.7% 92.3% 92.1% 90.0% 90.6% 89.3% 89.3% 95.3% 94.8% 95.9% 96.6% OCF / Current liabilit ies 48.9% 52.1% 38.0% 28.9% 46.7% 42.0% 29.4% 58.8% 53.3% 62.3% 69.3% Net debt / Equity 44.8% 56.5% 55.5% 54.4% 56.4% 55.5% 51.4% 57.8% 61.1% 64.6% 71.4% OCF / T ot al liabilit ies 45.7% 48.5% 36.3% 27.9% 45.5% 39.8% 28.4% 57.5% 51.8% 61.7% 67.6% Cash conversion cycle (days) 43.4 40.1 35.7 43.0 35.9 28.9 32.3 29.3 26.2 21.1 16.0 Change in working capital -58 -12 44 881 -560 -149 548 432 455 312 407 Source: Shared Research based on company data
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Company forecasts versus actual performance
Results vs. Initial Est. FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales (Init ial Est .) 34,000 36,000 38,000 40,000 43,000 43,000 45,000 46,000 50,000 57,000 67,000 Sales (Results) 34,610 36,497 37,381 39,139 40,309 40,316 41,768 45,774 51,728 58,375 68,055 Results vs. Initial Est. 1.8% 1.4% -1.6% -2.2% -6.3% -6.2% -7.2% -0.5% 3.5% 2.4% 1.6% Operat ing profit (Init ial Est .) 2,200 2,900 3,300 3,600 4,000 4,200 5,000 5,300 6,500 7,800 8,700 Operat ing profit (Result s) 3,042 3,402 3,502 3,678 3,606 4,427 4,776 5,829 6,889 8,211 10,812 Results vs. Initial Est. 38.3% 17.3% 6.1% 2.2% -9.9% 5.4% -4.5% 10.0% 6.0% 5.3% 24.3% Recurring profit (Init ial Est .) 2,200 2,900 3,300 3,600 4,000 4,200 5,000 5,300 6,550 7,800 8,700 Recurring profit (Result s) 3,051 3,391 3,489 3,687 3,692 4,558 4,854 5,982 6,875 8,268 10,936 Results vs. Initial Est. 38.7% 16.9% 5.7% 2.4% -7.7% 8.5% -2.9% 12.9% 5.0% 6.0% 25.7% Net income (Init ial Est .) 1,200 1,650 2,000 2,200 2,300 2,600 3,000 4,000 4,500 5,200 5,700 Net income (Results) 1,723 1,852 2,080 2,042 2,171 728 3,261 4,640 4,783 5,543 6,276 Results vs. Initial Est. 43.6% 12.2% 4.0% -7.2% -5.6% -72.0% 8.7% 16.0% 6.3% 6.6% 10.1% Source: Shared Research based on company data
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Balance sheet
Balance sheet FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Current assets 16,192 18,187 19,437 21,185 21,814 22,750 23,731 27,636 32,445 36,436 43,964 Cash and cash equivalents 7,206 9,773 10,285 10,749 11,945 11,940 12,403 16,625 20,173 23,491 29,956 Accounts receivable 6,994 7,008 7,618 8,320 7,819 8,373 8,784 9,707 10,576 11,459 12,502 Inventories 519 365 316 438 323 274 366 270 558 392 167 Others 1,473 1,041 1,219 1,678 1,727 2,163 2,178 1,034 1,138 1,094 1,339 Fixed assets 6,751 6,454 6,780 6,617 6,713 8,868 8,889 10,601 11,204 11,651 12,471 T angible fixed asset s 3,590 3,543 3,251 2,936 2,713 2,493 2,575 1,004 892 965 1,054 Int angible asset s 1,913 1,708 2,164 2,182 2,223 2,369 2,099 2,010 1,738 2,818 1,639 Investments and other assets 1,248 1,203 1,364 1,500 1,777 4,006 4,214 7,586 8,573 7,867 9,776 Total assets 22,942 24,641 26,217 27,802 28,528 31,619 32,620 38,237 43,649 48,087 56,435 Current liabilit ies 7,272 7,627 7,978 8,155 7,408 9,924 8,636 9,667 10,645 11,804 14,241 Accounts payable 2,178 2,050 2,566 2,509 2,453 3,107 3,062 3,457 4,159 4,564 4,975 Short-term debt 128 173 180 101 67 63 61 64 66 59 48 Ot her current liabilit ies 4,966 5,404 5,232 5,545 4,888 6,754 5,513 6,146 6,420 7,181 9,218 Fixed liabilit ies 518 564 365 284 203 546 318 209 296 123 355 Long-term debt 295 313 189 107 81 143 184 182 135 81 32 Others 223 251 176 177 122 403 134 27 161 42 323 Tot al liabilit ies 7,790 8,191 8,343 8,438 7,611 10,470 8,954 9,876 10,941 11,927 14,596 Net assets 15,153 16,450 17,874 19,364 20,916 21,148 23,665 28,360 32,707 36,159 41,839 Capit al st ock 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 1,590 Capit al surplus 1,442 1,442 1,442 1,449 1,448 1,448 1,448 1,449 1,447 1,456 1,556 Retained earnings 12,023 13,587 15,244 16,831 18,523 18,746 21,132 25,089 28,833 32,900 37,479 Treasury stock 0 -275 -563 -821 -820 -820 -819 -816 -816 -805 -795 Accum. other comprehensive income -44 -51 2 46 95 71 204 915 1,492 646 1,673 Share subscription rights 142 157 159 243 36 39 11 4 2 194 107 Tot al liabilit ies and equit y 22,942 24,641 26,217 27,802 28,528 31,619 32,620 38,237 43,649 48,087 56,435 W orking capit al 5,335 5,323 5,367 6,249 5,689 5,540 6,088 6,520 6,975 7,287 7,694 Total interest -bearing debt 423 486 369 208 148 206 245 246 201 140 80 Net cash 6,783 9,287 9,916 10,541 11,797 11,734 12,158 16,379 19,972 23,351 29,876 Current ratio 222.7% 238.5% 243.6% 259.8% 294.5% 229.2% 274.8% 285.9% 304.8% 308.7% 308.7% Fixed ratio 44.6% 39.2% 37.9% 34.2% 32.1% 41.9% 37.6% 37.4% 34.3% 32.2% 29.8% Equity ratio 65.4% 66.1% 67.6% 68.7% 73.0% 66.5% 72.2% 73.8% 74.6% 74.4% 73.5% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Cash conversion cycle (days) FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Accounts receivable turnover 4.9 5.2 4.9 4.7 5.2 4.8 4.8 4.7 4.9 5.1 5.4 Days in accounts receivable 73.8 70.1 74.4 77.6 70.8 75.8 76.8 77.4 74.6 71.6 67.1 Inventory turnover 38.5 56.2 67.3 50.0 69.0 80.4 60.5 89.5 48.6 76.8 205.7 Days in inventory 9.5 6.5 5.4 7.3 5.3 4.5 6.0 4.1 7.5 4.8 1.8 Accounts payable turnover 9.2 10.0 8.3 8.7 9.1 7.1 7.2 7.0 6.5 6.6 6.9 Days in accounts payable 39.8 36.5 44.1 41.8 40.2 51.5 50.5 52.2 56.0 55.3 52.9 Cash conversion cycle (days) 43.4 40.1 35.7 43.0 35.9 28.9 32.3 29.3 26.2 21.1 16.0 Source: Shared Research based on company data
Assets More than 70% of Infocom’s total assets are current assets, and the ratio of cash and deposits is high at about 53%. Accounts receivable represent 22% of total assets. Fixed assets also account for 22% of total assets.
Liabilities Liabilities account for 26% of total of liabilities and net assets, with a large liability being account payables at about 9% of the total.
Net assets Reflecting growth in retained earnings, Infocom’s net assets rose from JPY15.2bn in FY03/11 to JPY41.8bn in FY03/21, or roughly a 2.8-fold increase over ten years. This pushed its shareholders equity ratio up from 65.4% in FY03/11 to 73.5% in FY03/21.
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Cash flow statement
Cash flow statement FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cash flows from operat ing act ivit ies 3,556 3,972 3,032 2,353 3,462 4,169 2,540 5,680 5,671 7,355 9,871 Cash flows from invest ing act ivit ies -1,574 -721 -1,638 -1,033 -1,830 -3,579 -1,110 -686 -1,024 -2,472 -1,643 Free cash flow 1,982 3,251 1,394 1,320 1,632 590 1,430 4,994 4,647 4,883 8,228 Cash flows from financing act ivit ies -403 -681 -938 -895 -574 -576 -969 -747 -1,105 -1,546 -1,761 Net income attrib. to parent company shareholders 1,723 1,852 2,080 2,042 2,171 728 3,261 4,640 4,783 5,543 6,276 Depreciat ion 1,243 1,236 1,259 1,351 1,348 1,112 1,070 1,154 1,118 1,023 1,023 Amortization of goodwill 62 10 53 93 98 15 15 8 0 157 157 Purchase of tangible fixed assets -138 -296 -242 -169 -208 -241 -297 -189 -252 -349 -349 Purchase of int angible fixed asset s -1,103 -511 -931 -1,022 -1,405 -1,145 -814 -806 -615 -691 -691 Change in working capital -58 -12 44 881 -560 -149 548 432 455 312 407 Free cash flow 1,845 2,303 2,175 1,413 2,564 618 2,687 4,375 4,579 5,371 6,009 Cash and cash equivalents (year-end) 7,206 9,773 10,285 10,749 11,945 11,940 12,403 16,625 20,173 23,491 29,956 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Cash flows from operating activities During the ten-year period through FY03/21, the company never experienced a net cash outflow from operating activities.
Cash flows from investing activities During the ten-year period through FY03/21, cash outflow from investing activities stayed within the scope of cash inflows from operating activities.
Cash flows from financing activities The main cash outflow from financing activities has been for dividend payments.
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Other information
News and topics January 2020 On January 27, 2021, the company announced an upward revision to its dividend forecast; see the results section for details.
Dividend forecast revision
The company had previously planned to pay a year-end dividend of JPY21 per share for FY03/21, but in light of recent earnings ▷ trends, raised the dividend forecast by JPY6 to JPY27 per share. As a result, together with the interim dividend of JPY10 per share, the company plans to pay an annual dividend of JPY37 per share (+JPY6 YoY), for a consolidated payout ratio of 30.2%
September 2020 On September 15, 2020, the company announced a capital and business alliance with a Singaporean company operating a matching business for nursing care professionals.
Infocom invested in and entered a business alliance with Homage (Singapore-based; CEO: Gillian Tee), a startup offering a ▷ matching platform for nursing care professionals in Singapore. Background: In October 2019, the company invested in Fund No. 1 formed by HealthXCapital, a venture capital company ▷ specializing in the healthcare field in emerging nations of Asia, to conduct market research and business exploration with a view to expanding its Health IT business in Asia. Homage, a fund investee, is based in Singapore, which, like Japan, has a rapidly aging population. Homage uses a proprietary matching engine leveraging its own technological capabilities to match
nursing care recipients and providers (companies) with nursing care professionals. In the fast-growing nursing care human resources field, Homage has been attracting attention as a standout in Asia. Infocom entered this capital and business alliance because it believes it can generate synergies with its own nursing care human resources businesses in the Japanese market, such as its Carestyle service. Homage: Established in 2016, Homage offers smartphone apps targeting nursing care recipients and their families (B2C) and ▷ nursing care providers (B2B). It is offering services in Singapore and Malaysia, matching the most suitable human resources from among 3,000 registered nursing care professionals to the needs of users based on their requirements in terms of type and degree of care. Homage has about 50 employees. Future developments: According to its medium-term business plan (April 2020–March 2023), Infocom is looking at the Health ▷ IT business as an area of focus alongside its e-comics business and is therefore promoting its Asia Healthcare Project to expand the Business Solution segment with a focus on Southeast Asia as a strategy to develop new markets. Through this capital and business alliance with Homage, Infocom aims to enter the rapidly growing Asian nursing care human resources market in partnership with Homage. It will also consider expanding into the Japanese market.
August 2020 On August 26, 2020, Infocom announced that it had entered a distributorship agreement with an Indonesian company and had begun selling medical imaging management systems.
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On August 24, 2020, the company entered a distributorship agreement with Terakorp (head office: Bandung, Indonesia; ▷ develops and markets hospital data systems in Indonesia) with the aim of rolling out its medical image management systems (PACS s), which were originally developed for domestic use, across Southeast Asia. It began selling the systems in Indonesia. Background: Infocom provides medical institutions in Japan with business solutions to support improvements in medical ▷ care quality and business efficiency. In order to expand its operations in the Health IT domain, as part of its three-year
management plan (FY03/21–93/23), the company is promoting its Asia Healthcare Project to invest in promising startups
and expand its Business Solution segment with a focus on Southeast Asia.
Overview: Among the data systems it provides to medical institutions, Infocom aims to sell its iRad-IA medical imaging ▷ management system (for managing medical images generated by CT scanners and other medical equipment) in Indonesia,
focusing first on medical facilities that are already customers of Terakorp. In addition, with the cooperation of Terakorp, it will
look at the possibility of developing enhanced functions to meet the needs of local medical institutions.
Future developments: Hereafter, not limiting itself to the iRad-IA system, Infocom aims to enter the Indonesian healthcare ▷ market by selling the pharmaceutical data management systems, radiology data systems, and other business solutions it
already provides domestically. It is also looking at expanding into other countries in Southeast Asia.
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History
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, current Sojitz Corporation), and Teijin Systems Technology Ltd., a wholly owned subsidiary of Teijin Limited. At the time of the 2001 merger, Infocom focused on mobile phone core systems, mobile internet integration, and content services. In contrast, Teijin Systems Technology was a system solutions provider, offering corporate solutions including ERP, healthcare IT, and bioinformatics software packages mainly developed in-house, along with data center services for its parent Teijin Limited.
After the merger Infocom polished the strengths of the two preceding companies, while also conducting M&A and spinning off strong departments into consolidated subsidiaries. These initiatives have resulted in the current Infocom group.
Infocom Corporation
Feb 1983 Information systems department of Nissho Iwai Corporation (current Sojitz Corporation) is spun off as Nissho Iwai Computer Systems, Inc.
Jun 1987 Merges with communications department of Nissho Iwai Corporation and changes name to Nissho Iwai Infocom Systems Co., Ltd.
Apr 1999 Changes name to Nissho Iwai Infocom Corporation Begins ringtone distribution service for mobile phones
Apr 2000 Changes name to Infocom Corporation
Teijin Systems Technology Ltd.
Sep 1983 System department of Teijin Limited is spun off as Teijin Systems Technology Ltd. (located at Teijin’s Osaka headquarters)
Mar 1986 Establishes TST Software Ltd.
Feb 1991 Receives certification as a system integrator from Ministry of International Trade and Industry (current Ministry of Economy, Trade and Industry)
Infocom Corporation (after merger with Teijin Systems Technology Ltd.)
Apr 2001 Merges with Teijin Systems Technology Ltd., a wholly owned subsidiary of Teijin Limited
Jun 2001 Establishes US company Infocom America, Inc. (current consolidated subsidiary) as a wholly owned subsidiary to serve as base for gathering information in the North American region
Mar 2002 Registers over-the-counter stocks with JSDA
Oct 2003 Establishes GRANDIT consortium to develop the complete Web-ERP GRANDIT business and Infovec Corporation (current consolidated subsidiary GRANDIT Corporation) to promote the business
Oct 2004 Begins sales of complete Web-ERP GRANDIT in earnest
Dec 2005 Makes LogIT Corporation, a company involved in sales and development of voice recording systems, a consolidated subsidiary (current consolidated subsidiary)
Nov 2006 Launches mobile e-book service Mecha Comic
Oct 2012 Infovec Corporation changes name to GRANDIT Corporation (current consolidated subsidiary)
Apr 2013 Takes over radiological systems business from AJS Inc. Establishes company (current consolidated subsidiary Amutus Corporation) to prepare for establishing Digital Entertainment segment
Sep 2013 Concludes strategic partnership agreement with US company Fenox Venture Capital
Oct 2013 Amutus Corporation, core company of the Digital Entertainment segment, begins conducting business
Mar 2014 Makes Demain Corporation a consolidated subsidiary (current consolidated subsidiary)
May 2014 Enters IoT and M2M (machine to machine) fields through joint financing of EverySense, Inc.
Aug 2014 Establishes corporate fund Fenox Infocom Venture Company V, L. P. (current consolidated subsidiary)
Nov 2015 Enters area of regional comprehensive care systems through business and capital alliance with Solasto Corporation
Jan 2016 Makes Bevy Inc. an equity-method affiliate
Nov 2018 Moves stock to First Section of Tokyo Stock Exchange
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May 2019 Makes Staff Plus (recruitment agency specializing in nursing care area) a consolidated subsidiary
May 2019 Makes Peanutoon Co., Ltd. (e-comics company in South Korea) a consolidated subsidiary July 2019 Consolidated subsidiary Amutus establishes Aldo Agency Global Co., Ltd. through joint investment with Papyless Co., Ltd. Source: Company materials
Group companies (as of March 31, 2021)
Company name Main business contents Business area Remarks
Infocom East Japan Corporation Information processing service, software development Solutions Consolidated subsidiary
Infocom West Japan Corporation Software development Solutions Consolidated subsidiary
GRANDIT Corporation Development and sales of complete Web-ERP Solutions Consolidated subsidiary
LogIT Corporation Development and sales of audio and image recording Solutions Consolidated systems subsidiary
Staff Plus Recruitment agency specializing in the nursing care Solutions Consolidated area subsidiary
Amutus Corporation Services including distribution of content, etc., for Services Consolidated mobile phones and smartphones subsidiary
Peanutoon Co., Ltd. E-comics distribution company in South Korea Services Consolidated subsidiary
Infocom America, Inc. Market research, and planning and development of Other Consolidated businesses subsidiary
Fenox Infocom Venture Company V, L.P. Investment in early-stage companies Investment Consolidated subsidiary
Bevy Inc. Planning, editing, publishing, and marketing of books Services Equity-method affiliate Source: Shared Research based on company materials Note: Infocom conducted an absorption-type merger of Infomythos Co., Ltd. on April 1, 2019.
Origin of company name
One of Infocom’s predecessors was founded in 1983, when most companies considered the information and communication fields two separate businesses. However, the company wanted to provide customers with new services integrating the two fields, so it took “info” from information and “com” from communication and combined them to create its name. It trademarked “Infocom” in 1987, when the word was included in the trade name Nissho Iwai Infocom Systems Inc.
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Corporate governance and top management
Form of organization and capital structure Cont rolling shareholder T eijin Limit ed Parent company ticker 3401 Directors Number of directors under Articles of Incorporation 9 Directors' terms under Articles of Incorporation 1 year Number of independent outside directors 3 Audit & Supervisory Board Number of members of Audit & Supervisory Board under Articles of Incorporation 5 Number of independent outside members of Audit & Supervisory Board 1 Other Number of independent outside officers (directors and members of Audit & Supervisory Board) 4 Part icipat ion in elect ronic vot ing plat form None Other initiatives to enhance voting rights of investors None Providing convocat ion not ice in English Yes Disclosure of directors' compensation None Disclosure of executive officers' compensation None Policy on determining amount of compensation and calculation methodology In place Takeover defenses None Source: Shared Research based on company materials
President and CEO: Norihiro Takehara (born September 24, 1957, in Miyagi Prefecture) From Chiba, Japan. After graduating in 1985 from the Computer Sciences Department at California State University, Chico, Mr. Takehara joined Nippon Electric Security Systems (current NEC Solution Innovators, Ltd.). In 1992, he joined Nissho Iwai Infocom Systems (current Infocom Corporation). He became the deputy general manager of the Mobile Internet Department in October 2003, the general manager of the Digital Entertainment segment in April 2007, an executive officer in June 2008, and a director in 2009. He assumed the office of President and CEO of Infocom in April 2012.
Shareholder returns
Dividends Infocom considers increasing shareholder value and maintaining stable shareholder returns to be important management issues. While considering capital requirements, the company aims to maintain sound financial status, prioritize investment necessary for long-term business growth, link dividends to performance, with a target dividend payout ratio of 30%.
Infocom conducted a two-for-one split of common shares on March 1, 2019. For FY03/19, the company initially planned to pay a dividend of JPY5 per share at the end of 1H and another dividend of JPY15.0 per share at the end of the financial year, for a total of JPY20 per share, but on January 21, 2019, it announced a JPY2 per share increase in the year-end dividend to commemorate the company’s shares moving to the First Section of the Tokyo Stock Exchange (on November 28, 2018), for a total of JPY22.0 per share for the year. For FY03/21, the company paid a dividend of JPY37 per share. The company plans to pay a dividend of JPY40 per share for FY03/22.
Per-share data (split-adjusted) FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 (JPY) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Shares issued (year-end; '000) 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 57,600 EPS 29.92 32.39 37.26 36.99 39.72 13.32 59.64 84.85 87.46 101.32 114.61 133.31 EPS (fully dilut ed) - - - 36.95 39.64 13.28 59.42 84.50 87.07 100.86 114.10 Dividend per share 5.00 7.50 8.25 8.75 9.25 11.00 12.50 19.00 22.00 31.00 37.00 40.00 Book value per share 260.60 288.89 320.92 349.21 381.08 384.71 430.75 516.08 595.05 653.82 757.76 Source: Shared Research based on company data On October 1, 2013, the company executed a 200-for-one split of common shares, and on March 1, 2019, it conducted a two-for-one split. The per-share data takes the impact of these splits into account.
Shareholder benefit program The company has in place a shareholder benefit program for shareholders holding 100 shares or more. See below for details of the program.
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Details of shareholder benefits (unit: point, 1 point=JPY1)
Number of years held Less than three Three years or Number of years more shares held 100–499 shares 1,000 2,000
500–999 shares 2,000 4,000
1,000 shares or more 3,000 6,000
The company conducted a 2-for-1 stock split on March 1, 2019. It made no changes to its shareholder benefit program as a result of the split, and details of the program for FY03/20 remain the same as before. Hence, shareholder benefits have essentially expanded as a result of the stock split compared with those up until FY03/19.
Major shareholders (as of March 31, 2021)
Top shareholders Shares held Shareholding rat io T eijin Limit ed 31,760,000 58.0% Custody Bank of Japan, Ltd. (Trust account) 2,845,600 5.2% The Master Trust Bank of Japan, Ltd. (Trust account) 2,143,100 3.9% Infocom Group Employees Shareholding Association 1,256,000 2.3% QUINTET PRIVATE BANK (EUROPE) S.A. 107704 1,055,200 1.9% THE BANK OF NEW YORK MELLON 140040 505,235 0.9% The Nomura Trust and Banking Co., Ltd. 486,500 0.9% Custody Bank of Japan, Ltd. (Trust account 9) 470,200 0.9% Japan Post Insurance Co., Ltd. 450,000 0.8% THE BANK OF NEW YORK MELLON 140044 434,400 0.8% Shares outstanding (excluding 2,829,423 shares of treasury stock) 54,770,577 100.0% Source: Shared Research based on company data
Employees
Consolidated employees FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 (people) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Digit al Ent ert ainment - - 172 168 105 68 68 67 72 101 115 Business Solution - - 938 963 909 892 862 846 847 902 905 Solutions 779 767 ------Services 268 295 ------Frontiers ------Company-wide 119 126 123 154 157 149 144 161 163 168 176 Total 1,166 1,188 1,233 1,285 1,171 1,109 1,074 1,074 1,082 1,171 1,196 Source: Shared Research based on company data
As of the end of FY03/21, the Infocom group’s employee headcount was 1,196, up by 25 YoY. Excluding head office staff, the Business Solution segment had roughly nine times more employees than the Digital Entertainment segment.
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Profile Company Name Head Office Infocom Corporation 2-34-17 Jingumae, Shibuya-ku, Tokyo Phone Listed On +81-3-6866-3000 First Section of the Tokyo Stock Exchange (November 28, 2018) Established Exchange Listing February 1983 March 19, 2002 Website Financial Year-End https://service.infocom.co.jp/english/index.html March IR Contact IR Web Public Relations and Investor Relations Office https://service.infocom.co.jp/english/ir/index.html [email protected]
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