SINGAPORE (Nov 21): RHB Group Research is keeping its “buy” call on UnUsUaL with a target price of 42 cents, as analysts remain bullish on their top pick for the small-mid cap sector.
For 2Q20 ended September, the Catalist-listed subsidiary of media entertainment company mm2 Asia saw its earnings surge 54.8% to $5.0 million from $3.2 million in the preceding year, spearheaded by a 57.5% jump in revenue to $29.6 million.
Segmentally, the group reported better revenue contributions from the promotion and production revenue segments, which saw increases of 56.6% and 105% respectively.
Although cost of sales saw a hike of 67.3% to $20.9 million, the group’s gross profit still came in at $8.7 million, a marked 38.1% higher than the corresponding quarter in the previous year.
In a Tuesday report, RHB analyst Jarick Seet attests that 2Q20 was nothing short of a “solid quarter” for UnUsUaL.
“Despite the weak 1Q20 [ended March], the company enjoyed strong 2Q20 and we expect an even stronger 3Q20F due to the [stronger] pipeline ahead,” says Seet, noting that 2Q20 saw the recognition of family entertainment shows such as Disney On Ice and Walking With Dinosaurs.
In addition, the group also benefitted from the recognition of revenue from fully sold-out indoor stadium concerts of a 4-night Andy Lau concert, as well as concerts from Westlife and GFriend.
In particular, Seet highlights how the upcoming quarter should see the group benefit from added revenue from a fully sold out 2-night concert of homegrown mandopop singer JJ Lin at a venue four times the capacity of his 2018 concert.
“UnUsUaL also has upcoming concerts for JJ Lin in Macau/Hong Kong, Malaysia/Taiwan, and Australia, of which the company plans to host at a larger venue in Sydney in March 2020,” says Seet.
“Management is also in the midst of adding on concerts for other artistes, which should further boost its pipeline,” he adds.
Looking ahead, Seet expects the group to secure new contracts with other artistes, as well as more well-known family entertainment shows for 2020.
In addition, UnUsUaL is looking to further cement its position as a market leader in Singapore through acquiring similar businesses in Malaysia and Taiwan - ones which have good track records, and are profitable and immediately accretive to the company.
“The company is also trading at a much lower multiple compared to larger global peers, which makes it an attractive target – especially to peers in Hong Kong and China that want an immediate foothold into Southeast Asia and still be accretive to their valuations,” says Seet.
Shares in UnUsUaL closed 1 cent lower, or 3.4% down, at 28.5 cents on Thursday. This translates into a price-to-earnings (P/E) ratio of 17.3 times for FY20F according to RHB valuations.
