UnUsUaL - RHB Invest 2020-06-11: Long Term Prospects Intact Despite Headwinds


UnUsUaL - Long Term Prospects Intact Despite Headwinds

  • Keep BUY with unchanged SGD0.16 Target Price , 23% upside.
  • UnUsUaL's management has highlighted it expects some concert activities to resume from 3QFY21 (Mar). However, social distancing measures will likely impact the capacity of these concerts but the loss could be made up by the artists, performing additional nights at a reduced fee. Majority of the concerts should likely be resumed in 2021 onwards.
  • Earnings ahead will likely continue to be ugly but we maintain BUY due to the long term prospects.

Pipeline slated to resume in 4QFY21.

  • UnUsUaL (SGX:1D1) has longstanding relationships with its partners, the artists and their management companies. It aims to restart its existing pipeline of Singapore and international concerts and events when COVID-19 is effectively contained.
  • We expect UnUsUaL to secure more new concerts with renowned cantopop artists, 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 its 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. Majority of their projects will likely resume in 4QFY21/1QFY22.

Cost-cutting measures to ensure sustainability.

  • With COVID-19 impacting UnUsUaL greatly as mass events globally have come to a halt, management has implemented several cost-cutting measures to conserve cash reserves and profitability: It 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 be used to cover 25% of labour expenses, which will help in these drastic times.

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

Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2020-06-11
SGX Stock Analyst Report BUY MAINTAIN BUY 0.160 SAME 0.160