Target Price Set at S$0.192 as Company Poised for Growth in Live Entertainment
KGI Securities has initiated coverage on Unusual Limited, giving it an “outperform” rating with a target price of S$0.192. The firm believes the concert promoter is well-positioned to benefit from the growing demand for live entertainment services.
The target price suggests a price-to-earnings (P/E) ratio of 38.1 for FY2023, which KGI analyst Simeon Ang acknowledges may seem high. However, Ang believes it is justified given Unusual’s expected return to profitability. For FY2024, the target price implies a P/E of 18.4, which Ang considers “affordable” based on the recovering fundamentals of the events production arm of mm2 Asia.
Ang projects Unusual to return to profitability by FY2023, forecasting a profit after tax and minority interests (PATMI) of S$5.2 million, marking a strong recovery from a loss of S$4.2 million in FY2022. Revenue is expected to surge to S$45.6 million in FY2023, up from S$3.6 million in FY2022.
Ang notes the resurgence of interest in live concerts across key Asian markets like Singapore, Malaysia, and Hong Kong in the second quarter of 2022, as pandemic restrictions eased. He remains optimistic about the Asian live entertainment scene and believes that Unusual is well-positioned to thrive in this recovering environment.
He further adds, “Unusual is waking up to an environment where fan demand for live entertainment is picking up, and artists are eager to capitalise on the resurgence in discretionary spending.” Ang sees Unusual as the leading player in live entertainment on the Singapore Exchange, with the company set to produce and promote at least 12 live music events in FY2023, with growth expected to return to pre-pandemic levels by FY2024.
Moreover, Unusual has already achieved 27.3% of its FY2023 ticket sales target, putting the company in a strong position to exceed its estimates.
Looking ahead, Ang forecasts a 127.3% compound annual growth rate (CAGR) in revenue from FY2022 to FY2026, reaching S$95.9 million. Total ticket sales are expected to grow at a 23.3% CAGR, increasing from 260,500 in FY2023 to 488,750 by FY2026.
Regarding operational performance, Ang anticipates a turnaround in core earnings before interest and tax (EBIT) margins, which he expects to improve to 14.9% in FY2023 and reach pre-pandemic levels of 21.7% by FY2024.
Unusual’s shares closed Monday’s trading session up S$0.019 or 14% at S$0.154.
