If you had recently been to Jacky Cheung’s concert in February or Air Supply’s concert just last month, then this name will not be unusual to you – UnUsUal Limited (SGX: 1D1).
It will be launching its IPO on the Catalist board of the Singapore Exchange. Unfortunately, there will be no retail tranches but shares of UnUsUaL will be available for trading starting 10 April 2017. Public shareholders will be able to hold 15.05% of its shares after the placement.
Here are 4 things you need to know about the IPO…
1. Company Profile & IPO Details
UnUsUaL Group of Companies consists of UnUsUaL Productions, UnUsUaL Entertainment and UnUsUaL Development.
- UnUsUaL Productions provides audio, staging, lighting and video design for events ranging from concerts to music festivals.
- UnUsUaL Entertainment serves as a promoter which markets and organises numerous concerts, autograph sessions and charity events.
- Lastly, UnUsUaL Development manages The MAX Pavilion at Singapore Expo, providing venue for many concerts and events in Singapore.
UnUsUal Limited will be placing out 96,990,000 shares at S$0.20 each in conjunction with its spin-off from mm2 Asia (SGX: 1B0). It aims to raise total net proceeds amounting to approximately S$17.4 million, after deducting its listing expenses. The market capitalisation of UnUsUaL will then be $128.6 million with mm2 Asia retaining an indirect shareholding interest of 41.91%.
You can find the IPO prospectus here.
2. Use of Proceeds
From the net proceeds, S$10 million (51.6%) will be earmarked for investment in promotion and production projects. S$4 million (20.6%) will be used for business expansion, by way of acquisition and joint ventures. The remaining S$3.4 million (17.5%) will be for general working capital.
The proportion is depicted below for your easy reference.
3. Financial Health
Its revenue has experienced a 28.1% drop from S$22.3 million in 9M2015 to S$16.0 million in 9M2016.
However, for the same period, it managed to increase its net profits by 38.1% due to an increase in gross profit margin by 10.1%. This was primarily because of more projects utilizing internal resources at lower costs rather than having to be outsourced.
In terms of its cashflow, its business has been bringing in cash consistently for the past 4 years. As of 9M2016, it is in a net cash position of S$6.8 million with its cash and cash equivalents pool standing at S$7.4 million while its borrowings at ‘only’ S$0.6 million.
According to the prospectus, its basic EPS is 0.75 cents and its P/E ratio at 26.57.
4. Dividend Policy & Future Plans
The company do not have a fixed dividend policy and will depend on factors such as future earnings, financial condition and plans for expansion.
In terms of growth prospects, the company aims to continue to expand their operations both locally and regionally. This can be done via acquisitions, joint ventures and investments. They also aim to seek more partnerships with venue owners to expand their access to concert venues.
From what i see, the ‘fate’ of the company hinges on whether there are enough artistes holding the music concerts or festivals. In the event of a downturn, this revenue stream will definitely dry up as concerts are sort of a luxury good (at least to me).
Furthermore, the IPO is launched at a rather high valuation of 26x P/E ratio. I have the feeling that mm2 Asia stands to gain the most from this deal and interested investors should look at mm2 Asia instead.
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