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


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%.
  • Keep BUY, with new SGD0.16 Target Price from SGD0.35, 23% upside.

Cost-cutting measures to ensure sustainability.

  • 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.

Pipeline to resume after COVID-19.

  • 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.

A temporary dip, but long-term business prospects remain intact.

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