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Hi Speilgood, that's a mighty fine first contribution. I pretty much agree with what you say, though I don't know how much firepower management have to take any action at the moment.
CINE has fallen from around 3p to 2p, adjusted for dividends that's a 25% fall. To compare this to Cinemark, its SP has fallen from 42p to 34p. The dividend is smaller so the decline is only about 15-20%. Cine has lost market share recently in the US and has more debt which perhaps warrants a bigger decline in uncertain times. However as you say they didn't have an unlimited program so hopefully that helps.
Everyman is down about 10% but further from its peak. Cineplex in Canada is down but not so much.
https://ycharts.com/companies/CNK
https://ycharts.com/companies/CGX.TO
Indeed. Set in that context, it is extremely puzzling. With shorts to these levels, mortal threats to the company should be obvious. But they aren’t, IMHO. As devil’s advocate, yes, CINE has high debt, missed earnings targets, declining sector trends (very much debatable), declining sister companies (arguable), which make it a candidate for shorts. But to this level? As a long term cinephile, I’d very confidently argue the toss with a fund-manger about the future of the sector, which I see as assured. Streaming is a threat to free-to-air, not cinema. Post-modernist art forms (streaming) are, at best, cultural dominants, not hegemons. They sit very comfortably alongside high modernist forms (cinema). They need them. And this is a fact. Scorsese’s flirtation with streaming is petulant rather than significant. I could also make a good many arguments about the virtues of the purchase of Regal, the US introduction of Unlimited, which is a great service, and which will do very well in a US mature market. Then there is the recent Director’s buy, a big one. And beyond the message of the buy itself, it suggests that management are watching the SP decline, that they’re unhappy about it, that they’ll very likely do something about it. But then surely the shorts see all this, and so what are they seeing that I’m missing? Surely they know more than me? But for mine, CINE just ain’t Debenhams, Metro Bank or Thomas Cook. I just don’t get it and its bothering me because with shorts at these levels, it must be big?
If you look at some of the other companies that have 10% short (Debenhams, Carillion, Thomas Cook) it seems to imply there is a good chance the company will go bust.
As a percentage of free float its even higher, more like 20%, once you take out the sticky holders, which is huge.
Think that's fair on the dividends they have been very nice!
Still unsure on ticket sales yes not a disaster but its not growth so i would expect a bit of mixed bag update at the next one.
Its interesting the over 10% shorts and what they expect most times shorts that high the funds appear to be expecting something pretty bad rather than just running part of long/short portfolio.
There was a trading update on 15th November 2018. I don't know if we can expect something similar (tomorrow?)
https://www.investegate.co.uk/cineworld-group-plc--cine-/rns/trading-update/201811150700074067H/
The latest estimate for 2019 Cinema sales in the USA are $11.2billion compared to $11.9 billion in 2018 - hardly a disaster
https://www.the-numbers.com/market/
Given the $500m sale of cinemas of which $250m was used to reduce debt and the cost savings programme that management have instituted, I think the trading update expected in Jan 2020? will be good.