• Sold-out shows from popular artistes such as JJ Lin, Eric Chou and Air Supply are expected to boost UnUsUaL’s profits for 3QFY20.
• Looking forward, we expect the family-friendly segment to contribute in 4QFY20 as more Disney On Ice shows are scheduled for Malaysia, Singapore and Indonesia.
• Maintain BUY and PE-based target price implying a 60.0% upside from current price levels.

What’s New

Revenue contribution from many successful sold-out concerts.

• UNUSUAL LIMITED (SGX:1D1) is expected to record a strong 3QFY20 due to substantial revenue contribution from its pipeline. In 3QFY20, sold-out shows from popular artistes such as Air Supply, four nights from Andy Lau, three nights of JJ Lin concerts and two nights from Eric Chou are set to boost UnUsUaL’s profit for 3QFY20.

Sensitivity analysis of number of concerts against net income.

• As promotion revenue contributes to a large part of UnUsUaL’s revenue (78% of FY19 revenue), we have done a sensitivity analysis on the number of concert nights against FY20F net income.
• We have estimated that UnUsUaL would have about 37 promotion shows in FY20. Any cancellation of concerts would reduce net income by S$200,000. However, if this scenario ever occurs, we have learnt that UnUsUaL has the expertise to postpone the concerts to a later date, thereby deferring revenue to a later quarter and removing the need to refund customers.

Stock Impact

Family segment set to expand further with partnerships from popular brands.

• Seven nights of the family-friendly Walking with Dinosaurs title in Taiwan will help boost profits for 4QFY20. On the other hand, upcoming Disney on Ice shows in Malaysia, Indonesia and Singapore would help boost profits for 4QFY20 as well. Due to the popularity and success of the Disney on Ice shows, we reckon that UnUsUaL may further collaborate with Disney to carry out more family-friendly entertainment events in 2020 and beyond.
• We also expect UnUsUaL to bring in more family-friendly titles in 2020 and 2021 through partnerships with other global brands.

Pipeline set to grow with additions from new artistes.

• UnUsUaL has a JJ Lin show set for 4QFY20 in Sydney, which is expected to be in good demand. Furthermore, backed by strong demand, we have learnt that management is focusing on bringing in popular artistes such as K-pop groups or Mandopop artistes.
• As UnUsUaL tends to be careful about choosing who to bring in, we reckon that UnUsUaL will bring in more popular artistes from 2020 onwards.

Earnings Revision / Risk

• We maintain our revenue and net profit estimates.

Valuation / Recommendation

• Maintain BUY and PE-based target price, based on 22.0x FY21F PE, pegged to regional peers’ 2020F PE average. UnUsUaL is currently trading at 14.0x FY21F PE, unjustified based on its strong revenue and EPS growth vs other regional peers, and well below its long-term PE mean of 36.2x.
• We believe UnUsUaL should be trading near or on a par with its competitors. Our target price represents an upside of 60.0% from current price levels.

Share Price Catalyst

Surge in utilisation rates.

• Earnings surprise from stronger-than-expected surge in ticket sales.

Potential big partnerships with brand names and artistes.

• As UnUsUaL continues building its reputation as a leading live-events player in the region, more reputable brand names and artistes may approach UnUsUaL for lucrative partnerships.

Potential takeover offer.

• The live events industry has attracted a slew of consolidations. Live Nation, the market leader, had taken stakes in four different companies with some being in the top 10 in terms of size. Being a leading player in the ASEAN region, UnUsUaL may prove to be a valuable acquisition target.

Source: UOB Kay Hian Research - 9 Jan 2020