• Challenging FY2021 with steep path to recovery ahead.
• Drawing down on cash.
• Hopes for live events dimmed for now.
• Online-streaming taking stage.

UnUsUaL Limited's Net Loss Widened in FY2021

• UnUsUaL (SGX:1D1) continues to see a steep path to recovery. In FY2021 (Apr 2020 to Mar 2021), UnUsUaL reported a 97.8% plunge in revenue, from S$61.9m to S$1.3m, as most concerts and events are still facing inevitable deferment due to the uncertain COVID trajectory.
• UnUsUaL recorded an impairment loss of S$3.8m mainly due to the acceleration of the allowance loss on accounts receivable. Despite lower cost of sales and receipt of S$0.8m government grants, the high fixed costs nature led to a net loss of S$9.0m, down from a net profit of S$6.1m a year ago. Excluding the impairment loss, net loss would have been S$5.9m.

Still in Net Cash Position

• With low revenue and profit, UnUsUaL had to further draw down on their cash position in order to repay bank borrowings and for working capital purposes. UnUsUaL saw an overall cash outflow of S$9.2m for the year.
• As at 31 March 2021, UnUsUaL had S$3.3m in cash and cash equivalents, down from S$5.6m as at 30 September 2020. At the existing cash burn rate, current cash of S$3.3m would be able to cover fixed expenses for ~10 months.
• UnUsUaL’s overall net debt position increased from S$8.0m in FY2020 to S$14.9m in FY2021. Short-term borrowings sit at S$11.9m. We see a cash call in the horizon, but the current net debt/equity of 30.3% (FY2020: 13.6%) is still manageable.

Hopes for Live Events Dimmed for Now

• In Singapore, live entertainment events that were previously relaxed to allow 250 attendees are now back to a reduced figure of up to 100 people with pre-event testing and up to 50 people without. UnUsUaL thus had to postpone both the Singapore La Clique cabaret circus entertainment show and JJ Lin’s virtual concert.
• Malaysia recently tightened nationwide movement control order restrictions in view of rising number of cases. Taiwan, likewise, is facing the worst outbreak with the slow vaccination progress.
• Highly anticipated air travel bubble between Singapore and Hong Kong had once again been deferred. These go to show how quickly the COVID situation can evolve, and that much uncertainty still lies for the resumption of live entertainment activities.However, Singapore’s provisional approval of the 60-second breathalyser test for COVID-19 may potentially open up these live events if it proves to be reliable and feasible for a large-scale rollout.

Online-streaming Taking Stage

• Online-streaming of concerts, such as the upcoming JJ Lin「Sanctuary Finale」Virtual Concert would likely remain as the status quo. Despite Singapore allowing up to 100 attendees for live concerts at present, the high fixed costs nature of live events may prove to be cost inefficient as it takes a significant number of participants to breakeven.
• Online streaming of concerts may be a more feasible revenue stream as it has a leaner cost structure, and can reach out to more attendees in many geographies.

Source: SAC Capital Research - 28 May 2021