UnUsUaL keeps faith in live events

FOR a chief executive officer of an event producer, Leslie Ong is unusually positive. By a stroke of good fortune, Mr Ong's firm UnUsUaL Ltd was entering a lull period just as the Covid-19 outbreak turned into a pandemic and only a few events had to be postponed.

"Most of our big gigs and plans and tours were done by then," Mr Ong said. Although UnUsUaL's revenue stream has faltered, its costs are also down and the company has not had to worry about layoffs or cash concerns so far. In fact, Mr Ong is already making post-Covid plans.

For the financial year ended March 31, 2020, UnUsUaL's revenue was up 8.8 per cent to S$61.9 million on the back of higher promotion revenue, even though this segment was affected by Covid-19 beginning in the fourth quarter.

But net profit attributable to shareholders halved to S$6.3 million, from S$13.2 million previously, as cost of sales rose 43.7 per cent to S$48.8m.

UnUsUaL attributed the rise in costs to higher venue fees and full year depreciation charges on lighting and rental equipment.

More overseas shows meant greater travelling costs, according to Mr Ong, as well as the need to hire production teams there. These included events in first-time cities such as Melbourne, Sydney, Manila, Bangkok, and San Francisco.

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The company has since taken measures to conserve cash, including instituting payroll cuts of 10 to 20 per cent with the support of staff, cutting all discretionary expenses, and negotiating for revised payment terms on existing commitments.

Fortunately, the company does not have too many of these commitments. Venues are hired only for events and much of its event manpower is outsourced. UnUsUaL has a lean team of just 26 staff in Singapore and another 10 overseas.

Making it big

Set up as a stage, sound, and lighting equipment rental business in 1997, UnUsUaL has evolved into a producer and promoter of concerts and other live events. It was acquired by mainboard-listed mm2 Asia in 2016.

The acquisition gave the firm more than just financial backing; it also helped UnUsUaL to expand its reach. Before that, UnUsUaL had been producing concerts in Singapore and occasionally Kuala Lumpur. Tapping its parent mm2 Asia's network in China, Hong Kong, and Taiwan, UnUsUaL has since begun operations in various other markets.

It has also been able to find collaboration opportunities with mm2 Asia's film production business. UnUsUaL might recommend an artiste to be featured in a movie, say, and arrange a tie-in concert tour after the movie's release.

The 2018 film More than Blue, for instance, included Taiwanese singer A-Lin, whom UnUsUaL then brought on tour in China.

China had appeared to have the virus outbreak under control several weeks ago, but has since had to announce lockdowns in several cities due to a second wave of infections. Nevertheless, should the country manage to get Covid-19 under control, UnUsUaL plans to promote concerts there later this year.

Though now on hold, UnUsUaL's events pipeline has largely been preserved. "Generally, the artistes are willing to come back," said Mr Ong.

The firm's "longstanding relationships with its partners, the artistes and their management companies" were noted by RHB in a June 11 report in which the brokerage maintained a "buy" call for UnUsUaL with a target price of S$0.16, citing long-term prospects.

"We expect the company to secure more new concerts with renowned Cantopop artistes, as well as more well-known family entertainment shows in the near future, to further build on its 2020-21 pipeline," RHB added.

In RHB's opinion, Covid-19 has not killed the industry entirely. "We think that these setbacks are just temporary, and the long-term demand for concerts will continue to rise after the coronavirus has been contained. This may represent an opportunity for investors to collect at more attractive price levels for longer-term holding, as most downsides have been priced in," said RHB, though key risks include the possibility of the pandemic extending beyond October 2020.

Shares of UnUsUaL have declined 55.2 per cent this year to close at S$0.13 on Friday last week. At that level, the stock is valued at 2.3 times its book value and 21.6 times its earnings.

Earlier plans to enter new markets and areas such as family entertainment shows are on hold for at least two quarters, although Mr Ong said talks continue. Nor does UnUsUaL have plans to diversify away from events.

He said: "I don't think live entertainment will be replaced."

But in recognition of post-pandemic realities, UnUsUaL is looking at the idea of streaming live shows and is in talks with telcos on possible partnerships for this. Various models are possible, such as charging for streaming or getting sponsors.

In the past, UnUsUaL's concert tours would kick off in Singapore. With other markets relaxing Covid-19 measures ahead of Singapore, that may not be possible now. But gigs could be streamed to audiences here and in other cities that are not yet ready to hold events, Mr Ong said.

Revenue from streaming is one way to make up for capacity reductions due to safe-distancing requirements. Mr Ong noted that the industry players UnUsUaL works with have all been working together on other means to bring back live shows. UnUsUaL is talking to venues in Singapore and abroad about lower rental fees, or support with logistics such as seat plans, security, and temperature monitoring. "They're ready to do it," he added. "Because they know they can't be leaving an empty hall."

Artistes are willing to take lower fees, and ticketing companies are ready to reduce commissions.

UnUsUaL may enter the online ticketing business itself, allowing it to provide a single platform for tickets to different stops on the same tour. When UnUsUaL took K-pop star Kang Daniel on tour last year, Mr Ong said his fan club made a bulk purchase of 200 tickets for every city in the tour and fans flew from around the region to attend.

Partnering with an experienced player, perhaps in a 50-50 joint venture, would be a good way to enter the ticketing space without starting from scratch, noted Mr Ong.

Talent development

Another idea being explored for the longer term is artiste and talent development. "It's not that Singapore has no artistes," said Mr Ong, noting the global success of JJ Lin and Stefanie Sun. "We could explore and find a third superstar. Why not?"

New artistes could have chances to share the stage in concerts, or collaborate with established ones, he added. "We have the platform."

Even though artistes have experimented with free streamed concerts during the pandemic, Mr Ong doubts there will be a paradigm shift. The atmosphere in an arena is completely different, he pointed out.

Even if the audience is halved, it would still be in the thousands. With a live audience, a sea of light sticks, artistes simply perform differently. "It's the feel... When I talk to artistes, the artistes themselves are saying: 'We're waiting for the moment to get back on the stage'."