The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
They raised c. $1bn when shut down and have burnt through most or all of that hence latest company comms.
Strike,
No I have not missed other point, however I am maybe not clear enough in what I have said as you seem to have missed it.
It's not "just" this quarter that I am saying is the issue, but it's the straw breaking camel's back.
It's pre pandemic debt levels added to during pandemic. Closures through pandemic and subsequent cash burn. Plex court case costs, current award (under appeal), regal dissenting shareholders cost, low levels of cash on hand with too few (strongly) cashflow positive months since re opening a year past April.
Companies short, medium and potentially long term difficult cash position has been well documented including by themselves in RNS updates and published accounts.
So, no I haven't missed others points and it's not "just" current quarter that's issue.
Fun investor, you are missing the point that others like HNS are arguing. You are saying that current quarter is weak so CINE is stretched and need to raise money urgently? They didn't need to raise money when their whole estate was shutdown in pandemic? Also Q4 looks strong and the next several years, there will be billion dollar box office movies , which will help exhibitors like Cineworld. Also the conclusion of court case is not done yet so it is hard to see why this sudden announcement about balance sheet restructure? Also when you want to do D4E, one would announce the price at which they are going to raise money in the same RNS as otherwise like now, price tanks by 60% and company lost 60% of money already.
The only reason I see for such RNS is to portray CINE situation as precarious so that judges do not award big payout to Plex and put the court case to bed.
I'm pretty sure you will not see any further RNS until September 22nd when the results would be released.
Good to hear from you Blue Buxton - I had mixed feelings about it - The RNS painted a down beat picture but was pretty vague on the whole and in some respects similar statements can be found in the April Annual Report but more pronounced in a short press release
On the numbers I shared undoubtedly they have fallen short of the target they set but if I am anywhere near on these they will still have done over $1.1bn more in revenue compared to 2021 FY. it doesn’t signal the dooms day scenarios being discussed on here
Depending on the level of dilution of existing shareholders suffer in the short term but the business ploughs on an recovers to deliver revenues close to 2019 (with a decent volume of film releases I can’t see why not)
How do we define significant dilution? It’s a very subjective statement so I prefer to wait and see what they report in September but I am staying put to see how things pan out. Perhaps I will be wrong on this occasion and if so I will have learned a very expensive lesson!
Danosour, nobody is talking about there being nowhere for studios to show their movies though.
The locations (along with every other cinema operators) will most likely be there for years to come.
They just might not be run by Cineworld, or at least maybe not by Cineworld with us shareholders having anything like our current stake in business.
This is different to studios having nowhere to show movies .
The company as it is is financially stretched and seriously up against it given current position and known quarter of very weak box office.
No conspiracy theories required.
Cruis,
Mind back to the Plex case. Mooky clearly had a different view from Nisan and Israeli.
In evidence it noted a few times how the more financially astute guys wanted to pull plug on deal, but Mooky wanted to still make it happen.
I can see similarities in this position now.
Whether he is a dreamer, liar or genuinely believes in a more positive outlook in life it's not for me to judge.
If being kind he probably/possibly hoped pretty much everything would go as well as it possibly could with minimal room for anything slipping.
We also know Nisan and Israeli had plans to at least seriously consider taking the business back private back then (so they have little to no regard for the too and men's of this world).
Maybe this was a warning to the studios that haven't got any movies to show.
Get your movies out or you may not have anywhere to show them when you do.
For me it's hard to believe there is no blockbuster due until November. Studios need cinema as much as cinema needs studios.
I honestly believe if cineplex said we will settle for 100 mil, mooky would say no see you in court, & risk everything
@HNS_77 where are you on the share dilution threat from the RNS? I guess having topped up you aren't too concerned?
The only thing I've managed to top up on in the last few days massively is my filter list lol
Mooky & co new the line up months & months, so this doesn’t add up to me, they were obviously lying at The agm, & totally miss calculated months & months ago
Cruis, YES I agree on taking "recent" as current month and they state until November as you, I and some others have noted for some time.
While the last two/three months were pretty good that was just about it.
Far too many months falling well short. The stats there for all to see.
Bottom line no matter how any of us cut it here a few very wealthy individuals in some boardrooms now more than ever will decide if we come out other side with something or nothing.
Funvester on the RNS it says recent admissions, so i take that, as from beginning of august. Box office were over 1 billion for July, nearly 1 billion for June. I don’t understand how mooky didn’t see this coming months ago, we mentioned months ago about lack of films in august & September. I Also remember RS saying we got beast & fall to keep us going in august, that was a lazy ramp for him.
HNS,
Yes or has always been a risk I think most sensible people here saw that.
What changes now is the company have released an RNS to say it is a real possibility.
The business environment rapidly improving as you state may well be argued.
It is not/has not done so at the speed the company done previous calcutuons on and as a result liquidity/survival in current form is more uncertain now than ever.
We and the company had "hope" on re openings. We/they now know trading has not been as hoped and importantly they pretty much know they face 3 months of awful box office.
If we were sat with $1bn plus cash as AMC are for example and no appeal overhang on top of trading uncertainty then things may well be different.
I hope to hell this somehow swings round for us, but I currently believe in that less than I have at any point last couple years invested here.
"On that basis my guess is they will be $800m short of their target"
HNS - One point is that $800m short of revenue does not mean $800m short of cash - it will be less than that as costs will also be lower (most notably the share of BO takings that have to be paid to the studios).
Fun - that was always a risk here, one could argue even more so when the business was completely shuttered in 2020 and a good part of 2021 - why would this current turn of events change things particularly when the business environment is rapidly improving
HNS,
Is the key difference not that this business is not going under, but the current equity holders may or may not be!?
These are clear different scenarios.
Will stick in my throat if vultures do screw over small investors of a company I invested hard earned in again, but it's the system and pit choice to play in it or not.
It is sickening currently and I am not putting a large percentage on my/our chances of coming out smelling of roses.
There is still "a" chance though I guess.
HNS,
I guess much depends on any deal the board have been looking at.
They want the business to continue and thrive (they may or may not give a toss whether that is with us little shareholders or not).
If "a" Cineworld is operating for years to come then it's still good business to have ploughed on with improvements to sites, new sites etc.
Makes it more attractive to vultures that may well end up with "our" business.
quite right sammy and thanks for reminding me of the IMAX deal - with comparisons constantly being made to McColls & Thomas Cook - I don't recall them cutting ribbons on new shops or unveiling brand new planes in the end of days of either of those- I know every situation is different but generally when your business is going under the last thing you tend to do is splash the cash on new kit and premises
Excellent analysis thanks HNS_77 :-)
HNS,
Exactly, my thoughts too regarding the new cinema locations and investments.
Also the deal extension with Imax as well.
Thanks Stanley, I thought I would stand back while all the bile spitting "I told you so" crowd washed through
As it happens I topped up yesterday a few times as the RNS was very vague so nothing is as nailed on as other seem to be so sure about the level of dilution they think will likely take place. Certainly isn't reflected in the downgrade analysts have given which I believe is still sitting at 43p average.
Using 2019 figures as a proxy I calculated they have generated about 1.95bn revenue vs 2,73bn in 2019 around mid August so have done roughly 70% of 2019 levels year to date.
If this dips until November as they stated in the RNS due to lack of films then this will track even lower my guess is 2.18bn YTD vs 3.63bn (2019) i.e. drop to 60% .
They were forecast to achieve 3.68bn revenue over 12 months (85%) which would require them to achieve 750m revenue per month approx $318m of that from the US Box office which would require November and December total domestic to post $4bn domestic revenue combined which of course is impossible a more realistic end point is most likely half that (assume $1bn per month which is fair with Avatar and the rest coming along) so in total I see Cine ending up at about 2.9bn or 68% of 2019.
On that basis my guess is they will be $800m short of their target - I haven't bothered to get into all the details of how this chunks up with debt payments etc but that headline figure doesn't strike me as a reason to be raising $2bn people seem to be speculating on the most extreme figures to suit their narrative
This is quite a conservative as I didn't take account the higher spend per head that they reported and I am also assuming we dont see much more then $1bn domestic when perhaps it will be higher if the Avatar and Black Panther catch some good hype.
These are all my own calculations and could be off by some margins either way but certainly on face value I don't feel too troubled by it particularly as it is abundantly clear that big screen releases are going to pick up and are now favoured over streaming
Also minor point but if they are on the verge of closing down as the hordes would have you believe how are they still investing in new cinemas particularly those in insignificant territories like the UK - surely that pipeline would have been suspended as a first cost cutting measure rather then adding new liabilities to the balance sheet - I understand some of these were planned a while ago but seems unlikely there wasn't a way to get out of these given other cinemas were bidding for these locations and would have been happy to take them off Cine's hands for a deal
Shame they are 10 dollars and not cents like we are :-(
Hi HNS, good to see you back. I've been trying to work out how much do they absolutely need to raise in Q3 but couldn't justify such a downfall. Could things really be that bad? What are your thoughts?
Cineplex just hit a 52 week low at $10.24 per share so maybe Mooky's tactic is working!
It's similar to a 710 ...
Maybe there's a leak ?