RHB Investment Research Reports

Author: rhbinvest   |   Latest post: Thu, 18 Aug 2022, 10:03 AM


Unusual - Expecting a Return to Profitability; NEUTRAL

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  • Maintain NEUTRAL and a DCF-based TP of SGD0.14, 0% downside. With the return of mass events and concerts, Unusual’s core business is finally operational – with several concerts in the pipeline featuring artistes like Eric Chou and, potentially, JJ-Lin, following the A-Lin concert on 28 May. We expect the group to return to profitability in FY23F (Mar) and see stronger growth in the years ahead. However, as its valuation remains rich at this point, we maintain our call, for now.
  • Return of mass events. At end-Mar 2022, the Singapore Government eased COVID-19 measures – among these, it approved the return of live performances, while further lifting capacity limitations at end-Apr 2022. This resulted in a resumption of concerts featuring artistes like A-Lin and Jay Chou, as well as large events. This relaxation of measures will greatly benefit Unusual, since mass entertainment events comprises its core business, and Singapore remains one of its core markets. Our channel checks also revealed that large venues like the Singapore Indoor Stadium and Singapore National Stadium have been packed with bookings for the rest of the year, signalling a steady flow of upcoming events.
  • Strong line-up of concerts ahead. After the conclusion of A-Lin’s concert, Unusual announced the return of Eric Chou’s Odyssey Journey concert slated for 10-11 Sep 2022. Tickets for 10 Sep are sold out, and the uptake for 11 Sep is strong as well. We expect the group to organise more concerts in its pipeline including the possibility of securing JJ Lin, which will be a huge boost for its profitability due to the larger scale of his concerts which are likely to be held at the Singapore National Stadium. In addition, we expect Unusual to start hosting concerts overseas, in countries such as Malaysia and Australia.
  • Return to profitability expected. All in, we believe the worst is over for Unusual – which was badly affected by COVID-19, which in turn halted its core business. We expect the company to return to profitability in FY23, due to the concerts it has already announced and the potential pipeline of events ahead. However, we remain NEUTRAL on the stock, as its valuation remains expensive. However, this situation should improve in FY24-25 – provided it secures more concerts locally and overseas. As such, we prefer to wait for more significant catalysts before revisiting our valuation.
  • ESG. Using our in-house proprietary methodology, we derive an ESG score of 3.0, which is on par with the country median. As such, we apply a 0% discount/premium to our intrinsic value to derive our TP.

Source: RHB Research - 17 Jun 2022

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