IG Port FY2022 Performance Update: Strong Recovery for Wit Studio, its Highest Profit since FY2016, Signal.MD in Big Trouble

IG Port just released its latest securities report for the fiscal year 2022 (FY2022) that shed light on the performances of some of its subsidiaries. Before that, do note that FY2022 took place between June 1, 2021 to May 31, 2022. Also, be sure to read its full FY2022 performance here for additional context. Here are the breakdowns and analyses for each known entity.

Production IG

Sales for Production IG have recorded a 3.43% drop in sales from 5,504,118 thousand yen (≈39.72 million USD) to 5,315,234 thousand yen (≈38.36 million USD) with the studio slipping into a loss of 203,207 thousand yen (≈1.47 million USD). This would be a total reverse from the significant amount of profit it achieved for the previous fiscal year which was at 459,350 thousand yen (≈3.32 million USD), its strongest since FY2008. Note that during the fiscal year, the studio was involved in the production of Ginga Eiyuu Densetsu: Die Neue These – Gekitotsu, Ao Ashi, Ultraman Season 2 and Koukaku Kidoutai: SAC_2045 Season 2 (pictures below from left to right).

Mag Garden

Mag Garden sets another record in sales, up by 19.42%, its best performance so far since FY2008. Sales stood at 2,547,640 thousand yen (≈18.38 million USD) compared to the 2,133,327 thousand yen (≈15.39 million USD) it made for the prior fiscal year. Its net income is also at a record high of 359,647 thousand yen (≈2.59 million USD), a 15.76% y-o-y. The sales it made for the latest fiscal year would also mean that it accounts to 21.46% of the total sales the group made, relatively unchanged from the previous fiscal year.

The strong performance shown by Mag Garden does not come as a surprise since FY2019, it has been recording consistent improvement, particularly between FY2020 and FY2021 amid promising return from sales of its e-books. E-book sales has been a great boon for the publishing company from FY2019 where the segment accounted for 30% of its Publishing Business at the time. Then, that share improved to 42% in FY2020, and it further climbed to 54% and now (the latest full fiscal year) 67% of the total sales. This growth in demand for its e-books is in tandem with the emergence of the coronavirus pandemic that may have impacted sales positively as people had to be stuck at homes during lockdown periods. Not to mention, e-book sales tend to have a higher profit margin due to its lower production cost. All in all, the group recorded total sales for its physical Manga and Books at 764,511 thousand yen (≈5.52 million USD) whereas digital sales came in at a strong 1,697,099 thousand yen (≈12.24 million USD), nearly 2.22 times the sales of the other.

For the fiscal year, Mag Garden published 125 books including Manga, Novels and official guidebooks from titles such as Mahoutsukai no Yome, Tensei Kizoku no Isekai Boukenroku, Madougushi Dahlia wa Utsumukanai and many more.

Mahoutsukai no Yome Vol. 17
(Mar. 10, 2022)

Tensei Kizoku no Isekai Boukenroku Vol. 8
(May 13, 2022)

Madougushi Dahlia wa Utsumukanai Vol. 4
(Oct. 25, 2021)

Wit Studio

Wit Studio returned to profit after some very difficult years of constant losses (FY2019 to FY2021), however with some countermeasure that were set in place, the studio’s performance is back to black with a net income of 222,940 thousand yen (≈1.61 million USD). To compare, the studio was at a loss of 501,579 thousand yen (≈3.62 million USD). Sales also recovered for the studio to net 2,794,408 thousand yen (≈20.18 million USD), its highest so far since FY2016. Throughout the fiscal year, it was involved in the following projects: Spy x Family, Ousama Ranking and Bubble (pictures below from left to right).

During FY2021, IG Port had the company undergo a “Subsidiary Management Project” to get the company back on its feet. Interestingly, during a question and answer session with investors, most acknowledged the situation the studio was in, however were more worried about the group’s unsteady (Return on Equity) ROE which tends to be below the 8% minimum. IG Port at the time insisted that the often low ROE was a result of its subsidiaries, in this case for FY2021 mainly about Wit Studio, which was in a dire state and required immediate attention to bring it back to profitability which would eventually raise its ROE perhaps to a more sustainable level. Its ROE for the latest fiscal year now stood at 0.1% down from 11% the prior fiscal year, but the company has plans to bring that number up to 6.4% the next fiscal year and further up that percentage to 11.7% and 11.6% for FY2024 and FY2025.

As for Wit Studio, it does look doable (it generating a more consistent net income in this coming medium term) with the group banking on the Spy x Family series that is looking really good so far with an average audience rating of 9.5% during its broadcast at TV Tokyo. IG Port has also thrust itself into the production committee of the show through Wit Studio in hopes of generating a source of medium to long-term cash flow.

Apart from that, the group has made several changes to the studio. As for now, George Wada will be maintained as the president and chief executive officer​, however, his task will now be concentrated on the creative side of the studio. Mikio Gunji was brought in to assist George Wada and was elected as executive vice-president to improve management efficiency. To level up its animators, the studio is also undergoing a cram-like art school to prepare for more in-house production. Finally, the focus has been shifted to more long-term series works for the studio, though it was not indicated as to what sort of projects it plans to undertake.

Signal. MD

The situation with Signal.MD is not looking so well at all. Its financial performances were omitted for FY2018 to FY2020 and were only disclosed for FY2017, FY2021 and FY2022. The studio was a little profitable in FY2021 with sales for the fiscal year at 1,522,145 thousand yen (≈10.99 million USD) and a net income of 9,508 thousand yen (≈68.66 thousand USD). For FY2022, it recorded only 922,843 thousand yen (≈6.66 million USD) in sales and slumped into the red zone with a net loss of 400,812 thousand yen (≈2.89 million USD). For the fiscal year, it was involved in the production of Platinum End (picture). The studio is owned by IG Port by 100%.

During a question and answer session when FY2021 performance was presented, an investor actually questioned IG Port’s decision to animate the series which may have hinted as to some concern regarding the show. IG Port in return answered that they were contracted by the production committee to produce the show and is unaware of any circumstances that led the production committee to want to produce the show in the first place. It could be surmised that Platinum End did not perform well throughout the fiscal year. The production committee for the show is made up of: Pierrot, Dentsu, Pony Canyon, TBS, Magic Capsule, Medicos Entertainment, BS11. Note that Dentsu is a major shareholder of IG Port.

IG Port has made a change to the representative director of the studio in order to improve its business performance in FY2021 and hopes to see the studio return to profitability within three years.

To close, FY2022 ended on quite the positive note for IG Port as a whole thanks to several reforms that it made with a strong publishing company in its back to balance out its overall financial situation in the case an invested project makes a negative return. Its Video Production Business is mired in the constantly ever-increasing production costs that will be a challenge for the company to fix in the long run which it claims has been impacting its sales; plus, during the COVID-19 crisis, in FY2021, it saw 1 billion yen (≈7.22 million USD) worth of projects delayed. Nevertheless, sales of e-books are growing at a steady rate, and the group plans to take advantage of its growth to strengthen its crossborder e-commerce activities and digital products to further solidify its financial situation in the next coming fiscal years. It is also in the process of developing a mobile game for Ginga Eiyuu Densetsu: Die Neue These at Aiming Inc. and will collaborate with Animoca Brands to develop NFT-related products.

IG Port’s Group of Companies

IG Port is a group of companies whose main business is the production of animation works in the form of films, televisions, video, and game for either domestic or international orders. It also operates other businesses such as its Manga Publishing Business through its wholly owned subsidiary Mag Garden. Currently, these are the companies that belong to the group:

IG Port, Inc. is incorporated in Japan with its head office in Musashino​-shi. It is listed on the Tokyo Stock Exchange under ticket symbol: 3791.

Note: All currency conversion were done at the time of writing.

Question and Answer (FY2021)
Securities Report (FY2022)
Presentation Material (FY2022)

Part 1
Part 2
IG Port’s Ownership Structure

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2 thoughts on “IG Port FY2022 Performance Update: Strong Recovery for Wit Studio, its Highest Profit since FY2016, Signal.MD in Big Trouble

  1. Yeah… Signal MD is not doing all that well…
    Do you believe that if the studio’s financial situation doesn’t dramatically change within the next couple fiscal years, could we see SMD’s position as a member of IG Port be at risk (either the studio could go independent or IGP’s board of directors could just flat out dissolve the studio all together)?

    1. Hey! Yes, it will be in jeopardy if its financial situation does not improved. Let’s say the worse comes, I don’t think they would dissolve the studio completely, at least immediately. They would try to sell off the studio or its assets or parts of it like they did with Xebec. Being independent is very unlikely though since the debts would not go away.

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