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Obvious question:
Do you invest in a company with recovery clearly demonstrated (cinema) or a fast fashion company facing an existential crisis as the business model appears broken?
Answers on a postcard…
Squib get back to Boohoo and start shilling. Your time is better invested there.
Boohoo - 56.49 GBX -61.86 (-52.27%)year to date
Cineworld - 20.92 GBX -11.76 (-35.98%)year to date
Boohoo is performing far worse (year to date) and with fierce competition from the likes of Shein, which faces none of the ethical scrutiny, high overheads and shipping costs because of high returns.
Cineworld on the other hand can patiently wait for the October appeal and continue to generate income. June has been a fantastic month (85% recovered) and July has started great with Minions and still has Thor, Nope and plenty of other movies to play.
We need to remind ourselves. Tiktok aside, who are the peak demographics? Oh yes. The very teenagers we talk about now. 15-24 year olds make up the biggest patrons and are well adjusted to etiquette within the cinema. Of course no social gathering is immune to some bad behaviour or groups, but this is something Cineworld is well accustom to.
Odeon have allegedly banned some customers for rowdy behaviour. I have not read of Cineworld doing this.
The movie itself has broken the previous 4th July box office takings Transformers previously held. It is doing incredibly well. Families are back and going to the cinema in big numbers.
Teenagers are comfortable visiting thanks to MCU
Older demographics thanks to Maverick
Families thanks to Universal and Sony, Sing, Sing 2 and Minions and of course Ghostbusters and Spider-Man.
Source: https://www.cnn.com/2022/07/04/media/minions-the-rise-of-gru-box-office/index.html
Indeed. The high number of returns they are witnessing, energy inflation and wider supply chain have hurt their business model.
Now, consider Cineworld. Movies are retrieved digitally, advertisement revenue is achieved irrespective of admissions, concessions rely on popcorn kernels which have a 1000% profit margin and you begin to realise, faced with geopolitics and wider macro market conditions, cinemas including Cineworld are now beginning to see a very lucrative period for trading. Their direct competitor, the direct to video, Mock-buster streaming spinner, Netflix has witness the biggest loss of the S&P500. This provides reassurance to investors that at the current SP, Cineworld presents remarkable value and significant upside, if their Cineplex appeal is successful outright or even reducing the confusing synergy losses the seller was awarded.
Source: https://www.nytimes.com/2022/04/29/business/netflix-stock-market-earnings.html
Tell me, Ocean. As a Boohoo holder, how do you feel about IG reporting that there are more SHORT positions open with them against Boohoo than Cineworld?
https://ibb.co/ZYvQVJn
https://ibb.co/XxMcRZ7
Ocean, global markets are beaten, this includes Boohoo holders like yourself, which has seen 86% of its market cap disappear (413p to 56p). Make no mistake the struggling share price Cineworld battles is by no means exclusive.
Debt for Equity is an often regurgitated FUD claim, but widely accepted as a defunct one. This is well established. It has been stated before. Current net debt (pre-IRFS 16) stands at $5bn (this excludes future lease liabilities) as opposed to the often $8bn (post-IRFS 16) that is usually touted by the press or Motley Fool article you see each week.
The current debt makeup has 68% of it formed from the acquisition from the 2018 Regal takeover ($3.4bn). This was pre Covid. Read that again. ~70% of the debt that hangs over Cineworld was there pre-Covid and pre-Cineplex arbitration.
Some will argue about a potential fire sale and the means of liquidating of assets like property - well the said property is in fact non-existent. Cineworld completed the sale of its 35 owned venues acquired through Regal back in 2019 and then leased it back “in line with our leasehold operating model” as Mooky was quoted. Mooky has a very good relationship with EPR Properties the principal landlord for Cineworld in the US btw.
With a current market cap of £280m, Cineworlds only tangible assets are popcorn machines, laser projectors and some signage. The rest of their value is derived from their business model which, pre covid was profitable every year. So in summary, let the threats of liquidation, debt for equity come. They won’t even touch the sides and as such are non viable avenues of raising capital. For Cineplex who currently have an unenforceable judgement which is due an appeal hearing in October, have nothing but a worthless piece of paper. This is why Cineplex share price doesn’t reflect a cash injection of $1bn CAD.
The current debt pile is saving Cineworld and will see that lenders with even the slightest sense of business acumen will support Cineworld and stick it through with them, else they get nothing and a large commercial property landlord is left with an empty estate and no rivals like AMC, Cinemark coming to take them any time soon.
Cineworld shareholders can sit back and continue to wait this recovery out. Shorters can continue worrying about getting sufficient stock to close their positions and covering the cost margins for loaning the stock they are dumping each day.
I’m also holding and have no intention of reducing my stake. I’m holding an average of 30p but as soon as funds permit, I shall be topping up. This current share price has all the bad news and risk factored in my opinion.
Theatrical is recovering and lenders will be well aware of this. Just recently, June 2022 having only 90 movie releases to that of 2019 which had a 192 movie count, has managed to generate a US domestic total of $968m in box office takings. That is an incredible feat of 84% recovery to June 2019 ($1.15bn). With less than half the movies to 2019, and to generate that much tells you the public are returning and Cruise’s Maverick has played a big part in normalising a wider demographic to that mindset. Studios have trialled streaming and day date strategies and all they have done is promoted piracy and weaker returns. Yes, Cineworld is not an incumbent exhibitioner but at second largest it is essential in the theatrical and movie eco system.
Genuine investors, institutional and retail will be accumulating and setting a 12-24 month timeframe. It is only the day traders on this board and every other who are stamping their feet with impatience. I do not believe many retail have short positions as they would rather talk the share down and acquire a cheap entry and then sell at the next 5-10% rise. That is their day trading strategy but their deramping should be ignored by genuine long term investors. Go by your own judgement and always respect your own risk vs reward reasoning.
I agree the share price is so overvalued.
Why is the share price not reflecting all this news?!
How can it still be 200p?! It should be 20p.
Oh. Wait.
Fantastic to see an almost 30% stake. Keep in mind, in 1997 Strukov headed Uzhuralzoloto, which was on the verge of bankruptcy. He restructured the debts and then bought up its key assets.
Now he has a 30% stake in POG, I don’t see any existential risk the trading crew have been banging on in this BB for weeks. We now patiently await the next 2 months (estimated) for negotiations to take place and expect significant upside.
With the Russia Ukraine conflict showing no signs of peace negotiations, JP Morgan remain cautious and bullish that oil will hit stratospheric highs.
Source: https://www.bloomberg.com/news/articles/2022-07-01/jpmorgan-sees-stratospheric-380-oil-on-worst-case-russian-cut
Insider, you will likely be facing prolonged cost to borrow charges for the short you hold (which you have openly advertised) for a few months.
Between now and then, you face the prospect of positive Q2 earnings, potential backers who may have taken increased positions whilst the share price has been beaten and contend with the fact that IG report 94% of their clients are holding LONG positions.
The BoD have made it clear, debt covenant tests are only applicable if certain conditions have been breached. If there is no news, can you not join the dots?
I guess you will have to wait until late September and until then cover the cost to borrow charges for the short that remains open.
The day traders feigning outrage and pearl clutching doesn’t take sets that the company issued an RNS 10 June.
“The Company confirms that its interim results for the six months ended 30 June 2022 will be announced on 22 September 2022.
The announcement of the Company's interim results will be accompanied by a results presentation details of which will be made available in due course. The presentation will be accessible via a listen-only dial-in facility and the presentation slides will be available to view online.”
Source: https://www.londonstockexchange.com/news-article/CINE/notice-of-interim-results/15491103
The details of the debt financing will be disclosed then including the position of the covenant test (if at all applicable).
Until then, we can expect the same tired posts but the only thing that will shift the share price are algo trades from market makers.
The performance of admissions and presumably ancillary spending like concessions and advertising should suggest Cineworld are making good progress.
With respect many here are not grasping that legally it has nothing to do with Cineworld Plc.
You would not receive an RNS or statement from Cineworld because Mooky is a director MULTIPLE companies. If you were to receive a notification, it would be from the Israel Theaters Group who manage Forum Film.
Mooky is a director of multiple companies involving theaters, distributors and even retail and leisure arms.
The recent article about the fine and suspended sentence is related to his movie distribution arm, Forum Film. Forum Film Ltd. This is owned by the Israel Theaters Group and is an official distributor of movies to theaters, DVD and television, and is the official distributor of Walt Disney, Sony and Fox 20th Century, as well as other independent company productions in Israel and other European countries.
I don’t believe you will get an RNS from Cineworld because this news concerns 8 movies and anti competitiveness. The article implies, Forum Film did not grant a rival cinema group permission to play 8 movies. I looked up rival, Lev cinema and see they have two cinemas in Israel. Source: http://cinematreasures.org/chains/491?status=all
So in short, whilst this is disappointing news if true, it does not implicate Cineworld as Forum Film is not owned by Cineworld Plc.
Happy to be corrected if this is not correct.
Pay no attention to the day traders who have taken over this BB? Stick with your investment strategy and appreciate macro market conditions have driven nearly all sectors down?
This comes as little surprise. I imagine the G7 leaders have told Zelensky:
1. India which was used a a buffer for wheat supplies has banned exports to sway off starvation within its own country but contributes now to the potential famine that awaits other impoverished regions around the world
2. As autumn and winter approaches, gas supply will be needed for Europe and those G7 members will find themselves voted out of office and administration if they fail their people access to energy for basic heating
“100% of client accounts are long on this market“
Source: https://www.ig.com/uk/shares/markets-shares/petropavlovsk-plc-POG-UK