SINGAPORE (June 11): Measures restricting the holding of concerts and large scale productions has not soured RHB Securities’ appetite for UnUsUaL.
“We think that these setbacks are just temporary, and the long-term demand for concerts will continue to rise after the coronavirus has been continued,” analysts Jarick Seet and Lee Cai Ling say in a June 11 note.
“This may represent an opportunity for investors to collect at more attractive price levels for longer-term holding, as most downsides have been priced in,” they elaborate.
As such, the brokerage is maintaining its “buy” call and target price of the concert promotion and events production company at 16 cents. This gives the counter a 23% upside from its 13-cent close on Wednesday.
Seet and Lee’s optimism stems from UnUsUaL’s longstanding relationship with its partners, artistes, and their management companies.
They expect the company to secure more concerts with renowned artistes and rake in more contracts for family-entertainment shows.
UnUsUaL has a track record of working with renowned cantopop and mandopop artistes, including Singapore’s own J J Lin. The company was also behind the concert of rock band Guns N’ Roses in Jakarta and the world tour of pop group Westlife in 2019.
For its family-entertainment shows, it has worked with the likes of Disney and BBC to re-create popular shows such as Frozen and Walking with Dinosaurs.
“We believe the group will likely continue to expand its scope with Disney to promote more of their titles in Asia, especially in 2021,” observe Seet and Lee.
The analysts also expect it to explore opportunities for tie-ups and joint ventures to deepen their concert business globally – especially in western markets.
As it looks towards better prospects, UnUsUaL must first confront the challenges from the health-turned-economic crisis that has turned its operations topsy-turvy.
To cope with this, the company has reduced staff costs through a 10-20% pay cut across the group. It has also cut all discretionary expenditure and negotiated revised payment terms on all existing commitments.
UnUsUaL’s management is looking forward to activities resuming from 2021, but say the social distancing measures put in place will erode the number of people who can be admitted per concert. They expect this fall in earnings to be mitigated by artistes’ willingness to perform for additional nights at a reduced fee.
Say Seet and Lee, “earnings ahead will likely continue to be ugly, but we maintain ‘buy’ due to the long-term prospects”.
As at 12.26pm, shares of UnUsUaL were up 0.6 cents or 4.51% to 13.9 cents.
