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Lenders know which side their bread is buttered.
When you have a track record of paying your debt on time and SCORING 62% HIGHER than you need to, it inspires confidence.
Given Cineworld and the majority of leisure activities was closed during lockdown, lenders would have been immature to ask for the same conditions to be met. That said and further to my earlier point, Covid-19 is NOT an exclusively Cineworld problem. Covenant tests relaxed or deferred is something lenders have accommodated for thousands of companies across a number of industries.
Given Q1 was largely unaffected, Cineworld was generating sufficient income to cover 1/4 of their yearly take. Couple this with hard negotiations, see earlier post re: Runcorn, tells me and the informed investor that they have undertaken significant cost savings and a programme to firm up cash flow during this time.
September, next month shall reveal that.
What I’m comfortable with is remaining invested, whilst they prepared for reopening in the US, next week which in turn will generate both box office sales for the movie line up inc. Tenet and New Mutants as well as PASSIVE income aka Unlimited membership subscription fees.
You quote July 2020 where uncertainty is there.
I quote August 2020 where it suggests otherwise.
“With no big refinancing obligations looming, Cineworld has liquidity available to survive up to 18 months of lockdowns, estimates Bank of America. Yet the stock is down by more than 75 per cent in the year to date.”
Source: https://amp.ft.com/content/35d6231f-16c4-43ce-93ba-b63c8ba6186e
Then we have this little nugget.
Re Runcorn Cineworld remaining closed despite please to open.
Cineworld stood firm, inspiring confidence to many savvy investors, they know how to run a business, as you wold expect with one that turned over $4 Billion last year.
"We are in conversations with the landlord regarding our current terms, which we feel are unreasonable, and are hoping to re-open once the matter has been resolved.
"But for the time-being, especially during this pandemic, we are unable to open the cinema and operate it at a profitable level."
Source: https://www.runcornandwidnesworld.co.uk/news/18643442.petition-launched-stop-cineworld-runcorn-cinema-closure/
Hi Scmoky, yeah AMC was at 7.76 on 20th Feb, after hours price is at 5.6 therefore are at 5.6/7.76 = 72.16% of precovid, cineworld was at 189.5p at 20th Feb, so equivlent ratio to pre-covid as AMC would put it at 136.75p.
Cinemark sp is at a lower ratio to pre-covid however of 39%, with their ratio cineworld would be at 73.49p.
I did some calcs before and AMC had around 32% more debt pre-covid than cineworld and 25% more screens.
Cineworld had 59% more debt than cinemark pre covid, but also has 59% more screens than cinemark.
I do get annoyed by anybody who has an opposing view to ridiculously positive being shot down. Problem is 99% of all of these boards is just opinion. So take EVERYTHING as that!! The rises to over £1 and the rise this week was just part of wider cycles of funds moving to all epicentre stocks that have been massively oversold. You get the bounce and then then drop back to not as low as it was before the bounce. It will then gradually decline further until the next bounce. Simple. It will recover when normality can resume for its business, that could be travel, cinema or other leisure. Or even oil for example.
That is interesting, and I think it looks like amc is more like 70% of pre-covid? Either way that's a significant dislocation, the only major difference is the cineplex palaver but pffft that's 13 months away and may be nothing anyway. In already btw
*pre-Covid
Debt worries have been MITIGATED.
Debt may be Grade B on the Fitch scale but that is it - it's debt. Investors aren't trading debt securities so the grade B (like Rolls Royce btw) has a default risk of 4-6%, so 94-96% positive outlook for their debt, again from a private investor who is trading equities securities by way of stock purchase is not fazed by this.
Lenders are SO CONFIDENT in Cineworld they INCREASED their ND/EBITDA ratio from 5.5x to 9.0x.
Cineworld passed this test in 2019 at 3.4x SCORING 62% HIGHER than they needed to. No surprise that lenders were willing to relax this to 9.0x this year.
Cineworld will PASS their debt covenant test this December 2020 with ample room to spare.
The next test will be July 2021 at 5.5x and given the progress of a global vaccine and the V recovery that global markets are prediciting, Cineworld is projected to meet this covenant test and pass it too.
With regards to AMC Entertainment, good question on their Fitch score.
Cineworld is B.
AMC is ALSO B.
Now given AMC has recovered to about 50% of it’s pre-Covid price, Cineworld in comparison is at 25% of it’s pretty-Covid price.
This answers the question. Why is Cineworld priced at 50p given it has mitigated so much risk.
Answer: OVERSOLD.
If you want to sit on the sidelines you are free to do so, cheaper entry points are LONG GONE.
Investors are getting onboard to ride this back up to £1+ which can come within a matter of days given our proximity to the US cinemas re-opening in LESS THAN A WEEK.
Does anyone understand ratings properly and what amc rating is versus cine is. Assume amc must be better and reflected in SP?
My thoughts are to some extent it is but once cine is open and remains open figures of customers attending and demand will be known, should increase sp.
Results in sept will give clarity.
Could still be fear that USA might impose state by state lockdowns which will hold cine sp back.
Vaccine could be available by or before xmas.
Stop paying attention to the crap deramper and shorter people on this forum trying ever so desperately to get the share price down so that they or their bosses can profit.
Hold strong believers because everyone who is smart knows this baby is gonna skyrocket fast from this Monday onwards with all the tummy great share price boosting ticket fuel news that's lined up to blast this share price into the stratosphere
150 p , 200p incoming
You would be wrong with that assumption, not sure why you would come to that conclusion.
In many respects what any individuals position is or isn't in any stock is irrelevant.
We all make (or should) our own informed decisions and certainly shouldn't be swayed by a BB post
I think Funinvestor is also a shorter
Simple: Any takeover is unlikely until we are back to more "regular" times with China's and other businesses (fully) open and operating similar to pre covid.
Fear is another element as cinema and other business openings have previously been delayed. So until they are open and stay open for a period there will be fear and uncertainty.
Wait until these things happen and the share price won't be 50p.
Pays your money takes your chance at levels you are comfortable at.
I’m assuming you guys just don’t want to hear anything that goes against this doing well? Even tho I’m myself very optimistic, doesn’t hurt to ask questions
I am a genuine 1st time poster
I was wondering why on 2 occasions this spiked to £1 when good news come but now it’s seems we’ve had all the good news with regards to opening and it’s still 50p
I am very optimistic about this share and I’m hoping to at least double my investment over the next few weeks
I appreciate the posts all you guys have been putting up wasn’t expecting the only decent reply to be from the person that isn’t very optimistic lol
God help any genuine first time posters....
He does sound like indepths brother tho....lol
Covid has created opportunity. Many stocks are down. When were they down, when covid hit and the money stopped rolling in.
When will sp significantly rise. When we are out of covid and money rolls back in. Simples.
Who cares about small fluctuations. Key is normality brings this back to over £1 easy. Takeover is a bonus as that must be around £2 for shareholders to agree. Everything else is just noise.
And of course, his sidekick is hot on his heels....like a double act
Maybe change his name to beginningtoinfest
Why invest and ask silly questions lol. You might ask if the court case and Chinese holdings are factored in too lol
Jeez....another one .....
Hi all, I’m new to trading and have around 5k Cineworld shares at 56p. Thanks for the all the advice posted on this board over the last few weeks and months.
My question is why is the US opening (Friday 21st) not already priced in? I thought this was the case when the share had hit £1 twice already in the run up to openings - wondering why it’s different this time