• BUY this small-mid cap Top Pick, unchanged SGD0.42 Target Price implies 58% upside.
• UnUsUaL (SGX:1D1) should achieve high PATMI growth of 20-30% y-o-y in 2QFY20 (Mar). This is despite a weak 1QFY20, which stemmed from a dearth of concerts, as the majority of its events are concentrated in 2QFY20 and 3QFY20. As it organised a string of concerts in 2QFY20, and there is a strong pipeline of events in 3QFY20, we believe it is set to record healthy numbers in FY20.

Strong Quarters Ahead on a Robust Pipeline of Shows

• Despite the weak 1QFY20, UnUsUaL is likely to book robust results in 2QFY20 and an even stronger 3QFY20, due to the pipeline of concerts ahead. 2QFY20F will see the recognition of family entertainment shows like Disney on Ice Presents Frozen, Walking With Dinosaurs, partial recognition of its Apollo event (which retells the story of the Apollo 11’s moon landing) as well as Andy Lau’s sold-out four nights of indoor stadium concerts. Westlife and Gfriend concerts, as well as Kang Daniel’s meet-the-fan sessions, have already been executed.
• In 3Q20F, it is scheduled to organise two Eric Chou concerts at the Singapore Indoor Stadium, and two sold-out JJ Lin concerts in Singapore and Malaysia at much larger venues (four times the capacity of his 2018 concert), and the full-quarter recognition of Apollo.
• UnUsUaL still has upcoming concerts for JJ Lin in Macau, Hong Kong, Malaysia, Taiwan and Australia – and plans to add more nights in Sydney and Melbourne as well. Management is also in the midst of adding on concerts for other artistes, which should further boost its event pipeline.

Looking Into Potential M&As for Further Regional Synergies

• While UnUsUaL is the market leader in Singapore, it is looking to acquire similar businesses in Malaysia and Taiwan, ie similar companies with a good track record that will also be profitable and yield-accretive immediately.
• The stock is trading at a much lower multiple vs larger global peers, which makes it an attractive target for peers from Hong Kong and China that want to gain an immediate foothold in South-East Asia, as well as own a value-accretive asset.

Source: RHB Invest Research - 31 Oct 2019