SINGAPORE (June 12): 1. What is UnUsUaL’s business model?
UnUsUaL specialises in the production and promotion of large-scale live events and concerts by international artistes in Singapore and the region.
As a promoter, UnUsUaL will liaise with artiste managers to bid for the right to host various concerts or shows in each relevant city. After a successful bid, the group will take charge of planning, managing and marketing of the event.
As a production company, UnUsUaL will provide overall support to concert or event organisers in their set-up and installation, including stage creation and design. With one of the largest technical equipment inventories in Singapore, UnUsUaL is frequently involved in large scale events such as the 28th SEA Games Carnival and the Singapore Grand Prix
2. Describe UnUsUaL’s revenue mix. Does the group intend to maintain or change this mix?
UnUsUaL’s revenue source comes from three main business segments.
Promotion revenue is derived from total sales generated from a concert/show less the cost of hosting the concert/show. This segment is the largest contributor to our revenue base.
Production revenue is derived from provision of technical and creative expertise to large-scale live events/concerts.
Other revenue is derived from rental of exhibition/concert halls and related equipment and co-management of exhibition/concert.
While promotion and production segments will continue to be major contributors to the group’s profitability, we may explore other businesses opportunities such as e-sports or sales of event tickets.
3. Can you briefly describe the outlook of the live events industry? How does UnUsUaL intend to leverage on these trends?
With emerging consumer demand for live experiences, we believe that UnUsUaL stands to benefit as one of the leading promoters in the region. According to Livenation in 2018, more than two-thirds of the age group between 13- to 49-year olds have been to a live music event in the previous year.
Nevertheless, several of our concerts and events have been deferred due to global border control and social distancing measures in place to contain the Covid-19 outbreak.
During this time, we have also noticed a rising demand for virtual concerts. The group is therefore working on digital distribution and live streaming of these shows. We are looking to gradually roll out concerts in 3QFY2021 in markets which have resumed economic activities.
4. What are your competitive strengths and how do you differentiate yourself from peers in the industry?
UnUsUaL has over 20 years of operational track record and established trusted relationships with artistes, who derive an increasing amount of income from global concert tours. Our decades of experience have taught us to identify events and concerts with high potential of profitability.
We believe that our experience will give us an edge over competitors in the region.
As UnUsUaL’s operations grow over the years, the higher number of shows on tighter schedules have provided us with improved margins and competitive edge against smaller peers, as we can re-use production sets while enjoying savings on manpower and travelling expenses.
5. Why is your operating cash flow negative and how do you intend to turn this around?
This is largely due to our business model, which requires prepayment of expenses like venue and artiste fees for every concert we promote. Sales proceeds are only collected from our ticker vendors a few weeks after the event.
As UnUsUaL promotes more concerts, more working capital will be required. Therefore, we will continue to closely monitor our cash flows and manage our capital efficiently as we embark on our growth plans.
6. Which countries or markets are you focused on?
We have recently expanded our geographical focus beyond Singapore. While it varies each year depending on type of projects, geographical revenue contribution by Singapore have been trending down from 73% in FY2015 to as low as 49% in FY2019.
We are highly selective of the markets we venture into and will consciously leverage on our strength in the Mandopop genre. UnUsUaL has expanded into selected Western markets with sizeable Chinese-speaking population. Examples in 2019 include JJ Lin’s concerts in Melbourne and Sydney, as well as GEM Tang’s concert in San Francisco. We believe that this provides UnUsUaL with a competitive edge against local organisers in these markets, who may not have the expertise to identify profitable Mandopop concerts.
7. What are some notable developments that UnUsUaL’s shareholders can look forward to?
The group has not only diversified geographically, but also our product offerings. In recent years, on top of concerts and large-scale events, we have also introduced family entertainment shows. The group is currently working on an e-ticketing platform for the sales of tickets, as well as live streaming of concerts which will potentially roll out within this fiscal year.
Examples of such family entertainment shows include Walking With Dinosaurs — The Live Experience, Disney On Ice and Apollo 11 — The Immersive Live Show Rights.
8. How does UnUsUaL plan to successfully ride out the current pandemic?
A few of our concerts and events have been postponed, and therefore impacting our 4Q financial performance. To navigate these unprecedented times, the group has taken steps to strengthen our balance sheet including implementing cost-cutting measures such as reduction in payroll; immediate cuts in discretionary expenses; and negotiating for revised payment terms on our existing commitments.
Our strong relationships with established artistes have allowed us to maintain our existing pipeline of events. We remain cautiously optimistic of the Group’s long-term business prospects.
9. What are some key risks or challenges in this business and how does UnUsUal manage them?
To secure the rights to promote and produce live events and concerts, our projects are often dependent on the founders’ or owners’ relationships with artistes or artiste managers. To mitigate such risk, UnUsUaL has been actively grooming the next generation of management, who have been able to successfully secure new contracts by cultivating new relationships with key stakeholders.
As half of our revenue is derived from Singapore, we have actively taken steps to mitigate potential concentration risk by venturing overseas, into countries such as the US, Australia and progressively to other new markets.
In view of the Covid-19 pandemic, we are working to strengthen our digital distribution capabilities too.
10. Do you have a dividend payout policy for shareholders?
UnUsUaL does not have a dividend payout policy currently. We aim to channel profits back into our capital-intensive events and concerts to capitalise on the strong growth prospects ahead.
Candace Li is a research analyst with Singapore Exchange.
