Member Info for HNS_77

I read your message cruise - describing avatar as “way short” (your words) of maverick domestic despite it outperforming overall when it actually isn’t as if you are comparing like with like

unless avatar stops making money altogether it’s more then likely to outperform maverick

As it is there is no need to put out an RNS about avatar - the fact it has done so well has provided further evidence cinema is resilient even in the face of the rising costs of living everywhere people still find money to go

@Cruise

Maverick took 56 days to to make the same box office Avatar did in 46 days - I’m using domestic US figures - I don’t think that means we will get an update but your clearly wrong with your comparisons - the only reason top gun box office is higher at the moment is because it has been showing for longer

- using your block buster analogy Amazon earns revenue from allowing people to stream/rent content produced by others (not produced by their studios ) so isn’t such a cognitive leap to see why that’s essentially the same as people paying to see the same film in a cinema they own - whether they end up bidding or not is anyone’s guess right now

RI or 50% higher for this Jan vs Jan 2022 us domestic - if we see that pattern repeated then we can expect a very healthy 2023 - the target for Feb is $625m with existing and new releases coming up in Feb that looks like a target that could be hit

Prime or not prime not really relevant - they are streaming content from other studios then you theirs which is analogous to they (a studio who also owns MGM) exhibiting other product was the point we were discussing

I noticed Black Adam is on there too hot off the cinema screens - see it’s not too difficult to see how it could work

Hexam, I think the analogies with Amazon and Sainsbury’s hold up rather well but won’t lose any sleep if you won’t agree

Also just to note your comments about “old films” on prime took me a 30 seconds to find both Smile and Lyle Lyle Crocodile which are very recent releases in Sep/October so hardly classified as “very old” given the cinema window just recently finished

In fact an even more applicable example is Amazon prime - just because they produce film content doesn’t mean they won’t allow streaming of other studio content on their platform - they are not silly they understand people will consume other content then theirs

@Hexam why should it be a problem for Disney, Universal or any other to exhibit other studios films in cinemas owned by them? Just because Sainsbury’s sells its own brand of virtually every product in their shops doesn’t stop them from selling other competitors goods that someone might buy in favour of there’s, same goes for John Lewis, Tesco, I could go on but you get the idea

If the business makes money and it’s a business they understand then I don’t see why it wouldnt be attractive to them to own the sales channel for the product they produce

Of the 3 mentioned Amazon could quite easily buy Cine debt outright 3-4 times over and still have vast amounts of cash on balance sheet - info from simply Wall Street

Disney 11.8bn
Amazon 58.7bn
Netflix 6.1bn

@Wellington haha - £1? wouldn't that be lovely but I fear I only got one bite at that cherry back in the days when this hit 1.20ish but greed got the better of many of us and have since paid the price!

My broader point was that while Cine might not be sustainable by the current owners due to the debt they are servicing vs revenues that a cash rich buyer could be in a better position.

As a simple analogy someone who has a BTL property but can't service the mortgage debt with rent and is faced with repossession - that doesn't automatically make it a rubbish proposition for someone who can buy the property in cash and get a decent yield on the rent

Hexam i welcome the challenge but I rather say it’s you who is misleading rather then me using the figures to paint a picture without any possible upside -

You half conceded the G&A figured I quoted were correct but said you were referring to the accounts - the reported figures are the figures it doesn’t matter which document they are reported in

Then you use the loss of 700m to justify your outlook when again you half accept that depreciation sitting on the balance sheet doesn’t reflect the cash flows - whilst it is a factor it could also be argued since they took over many of the assets have been significantly upgraded (which we know many have) that’s why I didn’t want to muddy the waters and over complicate this

As I said I am exploring some possible options as to how this business could be valuable to a cash buyer using some broad calculations not granular breakdowns

Again the figure reported will take account debt interest and depreciation which I took out to get to the 400m surplus but I will concede it is a forecast I did based on applying the proportionate costs in previous years

Speculating on a recovery to 34-40p may be a lottery win to some - not me and it wouldn’t be to Mooky either given his average so I don’t think the figures are heroic but again appreciate the challenge

Hexam I don't see the "mixing and matching" - the G&A figures are straight from the reports by Cine you can find them on the presentations on their website so they are the correct ones as are the other figures used

I am exploring the idea of possible valuations rather then positing a conclusion or definitive sale price to see if a cash buyer could extract value out of the business at levels that clear the debt and give shareholders a degree of recovery - I don't think anything is nailed on certainty especially when it involves negotiations with a company like Cine in a week position but worthy of some speculation. Appreciate your input in any case

Hexam happy to clear up the confusions

G&A - for the last 3 years according to their reports was $88m $103m and $103 so not a massive variance over those 3 years including 2019 (non covid)

Correct I didn't included D&A to keep it simple looking at cash flows.

the finance figure which is a combination of rent and debt costs for 2019 was $523m - so I dont think the deferrals is a factor that will skew the number

The adjusted loss of$700m ( $656m to be precise) comes about when you include depreciation and the debt interest mentioned - I get that depreciation needs to be taken into account but looking at cash flow does seem to stack up more then you suggest

I wanted to explore whether Cine is a profitable entity to a buyer purchasing Cine outright and didn’t need to rely on taking debt and from this what a reasonable price could be for the business. I realise I am using very broad and speculative calculations but I am not looking to write an essay on here

The consensus is cine has about $6bn of debt and we know the equity is currently valued at $50m. To keep things simple I haven't added any stock or other tangible assets and assumed that would be added on top

Using 2021 full year The figures presented were

Revenue $1,805m
Cost of sales ($1,262m)
After General and Admin costs of £88m this generated a total profit of $455m less lease liabilities would be about $25m so a cash buyer Cine would be break even on 2021 revenues.

With the higher 2022 figures of 3bn revenue - I calculated it is making about $400m profit.

With this in mind assuming 2022 was the maximum - if a buyer paid $6.5bn they are making a 6% return and a likelihood this will further increase over time. At 6.5bn this would value the equity at 36c (30p) per share. If they paid $7bn then their return is 5.5% and equity is 50c (41p)

Some points I have noted

This assumes zero synergies gained by the purchase – i.e. consolidating costs
Doesn’t accrue any of the benefits from the C11 process – i.e. unloading unprofitable sites etc
Doesn’t carve out ROW from the offer – easy to do but I couldn’t be bothered at this time

What do people think? – constructive opinions and challenge always welcome.

They issued 682 billion new shares on top of the existing 682 million shares

That’s like adding one 250ml glass of ribena into a bathtub and filling it to the overflow to about 250 litres of water

Not going to taste very black-currenty after that level of dilution

Sadly it Looks like it was pretty brutal for existing shareholders

https://mexico-now.com/aeromexico-to-issue-new-shares/

No that was Hexam’s assumption I think - based on 2021 numbers I would put it around $650m eg 7.8-8bn domestic

The complication I found is that the gross profit ( cost of sales) is variable depending on the revenue generated - eg it’s was 30% in 2021 and 37% in 2019 in the latest release for November it was 16%! so that skews the monthly calculation - it’s too long and boring to share the full logic and if anyone cares to challenge my numbers I’m not going to bother explaining it as i don’t give as many sh11ts about this share as I used to!

Allkap - I did this work in the past on previous iterations - all the figures are out there to make calculations around what revenues they need to generate in order to break even or profit - this can be tweaked with basic assumptions to take about variables just takes time and effort

Just to add the slate for 2024 is already largely known lists are out there of planned releases - as much as movie journos hate sequels and existing ip spin offs they make it easier to forecast likely numbers

All kap as I understand it the movie slate is planned out quite a few years ahead with production picking up pace again from the covid stand still

As for Bloomberg predictions perhaps they are correct - for me the numbers speak for themselves when you look at box office vs number of films released - to achieve 7.3bn from 2bn in 2020 and forecast 8-9bn tells me it’s going in the right direction - hopefully Cine (with shareholders) can survive to the finish line