SINGAPORE (Aug 11): NRA Capital is casting the spotlight on UnUsUal Limited as a stock that offers a “powerful mix of high growth and high profitability”, with a fair value estimate of 62.5 cents.
The research house projects the event production and promotion company to grow its revenue at a CAGR of 37% over the next five years, with its valuation range of 38.3 cents to $1.017 indicating an upside of up to 114% versus a downside of 19.4%.
It is also in the view that the group’s existing financials have yet to reflect the growth to be generated by its enlarged financial resources.
In a Friday, analyst Liu Jinshu highlights that this view and valuation is conditional upon the achievement of these forecasts; as such, he refrains from providing a rating at this juncture.
According to him, the group’s vast technical inventory, combined with its wealth of experience in various technical solutions, provides it a strong competitive advantage in Singapore as the financial breakeven for each show will be comparatively lower than that of a less-integrated competitor.
In turn, UnUsUal can work with both new and established artists in technically complex shows to draw both small and large crowds, while risking less capital and cultivating relationships with artists, he adds.
“Since its founding in 1997, UnUsUal has produced the concerts of artists such as Jay Chou and JJ Lin. Due to its track record and relationships in the industry, Unusual can reassure artists of payment of fees, production quality and venue quality and thus convince them to go on tours promoted by it,” notes Liu.
The group’s financial war chest of $17.1 million net cash provides a further boost to UnUsUal’s capability to monetise its industry networks by engaging more artists and for more shows, both Singapore and regionally, says the analyst – with one such potential artist being Taiwan-based singer-songwriter, JJ Lin.
“Media reports indicate that JJ Lin will have a new concert tour in 2017. It will be a scoop for UnUsUal if it can secure the regional concert rights to such an artist,” he adds.
Liu nonetheless cautions that a key risk to his projections include slower growth due to two show cancellations that occurred this year, the uncertainty of demand for each new show, as well as limited overseas resources.
As at 12:06pm, shares of UnUsUal are trading flat at 48 cents.
