SINGAPORE (Jan 9): UOB Kay Hian is reiterating its “buy” recommendation on UnUsUaL with a target price of 44 cents – implying a potential upside of 60% – as the concert production company looks poised to turn in a set of solid results for 3QFY2020 ended Dec 31, 2019.
“Sold-out shows from popular artistes such as JJ Lin, Eric Chou and Air Supply are expected to boost UnUsUaL’s profits for 3QFY2020,” says lead analyst Llelleythan Tan in a Jan 9 report.
UnUsUaL is expected to release its 3QFY2020 results next month.
Tan notes that promotion revenue contributes to a “large part” of the group’s total revenue. In FY2019, promotion revenue accounted for 78% of group revenue.
And this looks set to grow even further, with the expansion of its family-friendly segment and the addition of new artistes.
In 4QFY2020, UnUsUaL is scheduled to run the “Walking with Dinosaurs” show in Taiwan, the “Disney on Ice” shows in Malaysia, Indonesia and Singapore, as well as a JJ Lin show in Sydney.
“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,” Tan says. “We also expect UnUsUaL to bring in more family-friendly titles in 2020 and 2021 through partnerships with other global brands.”
Tan also reveals that the group’s management intends to focus on bringing in popular artistes such as K-pop groups or Mandopop 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,” he adds.
The analyst notes that the counter is currently trading at a price-to-earnings (PE) ratio of 14.0 times for FY2021F – “well below” its long-term PE mean of 36.2 times.
Tan believes this current valuation is “unjustified”, based on UnUsUaL’s strong revenue and earnings per share growth compared to its peers.
“We believe UnUsUaL should be trading near or on a par with its competitors,” he says, adding that the group may prove to be a valuable acquisition target on the back of a slew of consolidations in the live events industry.
As at 4.56pm, shares in UnUsUaL are trading half a cent lower, or down 1.8%, at 27 cents.
