UnUsUaL - RHB Invest 2020-04-06: Long-Term Prospects Still Intact; Stay BUY

UNUSUAL LIMITED (SGX:1D1)

UnUsUaL - Long-Term Prospects Still Intact; Stay BUY

Previously, we mentioned that UnUsUaL's management aimed to focus more on western continents as the spread of COVID-19 was mainly in Asia. However, COVID-19 has been declared a pandemic by the World Health Organization, and the US and Europe have been hit hard with casualties surging daily. Therefore, we think that mass events can only be resumed earliest by October, and downgrade our FY20F-FY21F NPAT by 35% and 55%.

With the spread of COVID-19 impacting UnUsUaL (SGX:1D1) greatly as mass events globally have come to a halt, management has implemented several cost-cutting measures to conserve cash reserves and profitability. They have reduced staff costs by implementing a 10-20% pay cut across the group, as well as a cut in all discretionary expenses, and negotiated revised payment terms on all existing commitments.
The latest COVID-19 relief stimulus will also help it to cover 25% of labour expenses, which will help in these drastic times.

UnUsUaL has longstanding relationships with their partners, the artistes and their management companies. It aims to restart its existing pipeline of Singapore and international concerts and events when COVID-19 has been effectively contained.
We expect UnUsUaL to secure more new concerts with renowned Cantopop artistes, as well as more well-known family entertainment shows in the near future, to further build on its 2020-21 pipeline.
Historically, on its family entertainment side, UnUsUaL has worked with Disney on multiple projects, and presented 48 Disney on Ice shows in South Korea and Taiwan. We believe the group will likely continue to expand their scope with Disney to promote more of their titles in Asia, especially in 2021.
We also expect it to continue to explore tie-ups and JVs to further expand their concert business globally, especially in western markets.

We think that these setbacks are just temporary, and the long-term demand for concerts will continue to rise after the coronavirus has been contained. This may represent an opportunity for investors to collect at more attractive price levels for longer-term holding, as most downsides have been priced in.
As UnUsUaL has historically traded above 17x P/E, coupled with the strong buybacks by its CEO and company share buyback recently executed, we maintain our BUY call.
See UnUsUaL Share Price; UnUsUaL Target Price; UnUsUaL Analyst Reports; UnUsUaL Dividend History; UnUsUaL Announcements; UnUsUaL Latest News.
Key risks include concert cancellations/postponements, event accidents, departure of key employees, and COVID-19 extending until after Oct 2020.

Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-04-06

SGX Stock Analyst Report BUY MAINTAIN BUY 0.16 DOWN 0.350