Member Info for RS2002

As expected, the US was always going to be a few weeks behind the U.K.

Encouraging data that will mitigate any uneasiness with more mature crowds wanting to return to the cinema, within the US.

I am confident that mainstream news will be reporting on this more and tracking daily, to the point we emerge from winter into spring and see a very healthy return on recovery plays (Cineworld included).

Source: https://www.cnbc.com/2022/01/17/omicron-wave-shows-early-signs-of-easing-in-states-hit-early.html

Good comment, Latpulldown.

It is never pleasant to indulge in schadenfreude but Cineplex have brought this to themselves.

It is also worth mentioning that Ontario has BANNED the consumption of food and drink whilst watching a movie - it's no secret that cinema groups make their money from concessions so this has been a further blow along with the closures that were mandated.

Source: https://curiocity.com/ontarians-can-no-longer-eat-at-the-movies-even-cineplex-agrees-it-wont-be-the-same/

*encouraging

What an illogical comment "Total debt far outweighs total assets, so the stock is technically worthless."

This isn't a hydrocarbon/oil exploration outfit, we don't value the group according to NAV (Net Asset Value).

We care about Profit to Earnings and pre-covid, Cineworld was making profit every year up until March 2021, when it reported its FIRST loss beause of Covid.

Cineworld was satisfying its debt pre-covid at $3.5bn (pre-IRFS16) and whilst debt has increased to $4.5bn (pre-IRFS16) it is making encouragint steps, and the previous quarter, it reported a positive cash flow and Decemer 2021 demonstrated a 90% recovery to pre-pandemic revenue.

I was thinking, Latpulldown/others - why many advertisement agencies will be looking to use the cinema again and the answer is staring us at the face.

It's no secret that digital advertisement on streaming or even online can be by-passed with a forward button on the remote or an ad-block on the computer/tablet.

Ask yourself this, hundreds of millions have paid money to sit in a cinema screen, with their phones switched off and their attention on that large, double decker size screen in front of them. The advertiser has their full attention to get their product, service and brand recognition re-affirmed and applied to the audience. Better, by the genre of the movie, thriller, comic book action, romance, they can target an audience without the worry about online bots skewing Management Information (MI) or being bypassed all together.

In short, it's no surprise that Cineworld was able to make a very lucrative $600m revenue from advertisement in 2019 and if we can restore to that level, that is an awful lot of money as a secondary stream beyond tickets, subscriptions and concessions.

A big ouch for those desperately trying to push concurrent streaming.

"The Matrix franchise, was weighed down in China by RAMPANT PIRACY and a poor reception among local moviegoers. Resurrections has been WIDELY AVAILABLE on Chinese PIRACY NETWORKS since THE MOMENT it opened in the U.S. SIMULTANEOUSLY on HBO Max and in cinemas on Dec. 22."

I believe this is the final nail in the coffin for WarnerMedia chief Jason Kilar's day date streaming project, "Project Popcorn".

The Matrix Resurrections only managed $15m in China over the weekend, proof that cannibalising the box ofice for streaming is not cost effective and cuts the legs on secondary streams. i.e. You visit the cinema, you pay for your ticket, you then anticipation and wait for secondary television viewing and you either pay for this as a VOD rental and/or you pay a third time when you pay your subscription service to Sky Cinema etc.

I stand my belief that, Ed Young, analyst at Morgan Stanley factored too much into day date, the experiments has failed - Disney is investing $9b by 2024 to prop-up their failing Disney+ subscription service, even resorting to cutting the price in half for the first year. I don't see them profiteering from it and they will see for themselves when Pixar's Lightyear excels in the box office.

Source: https://www.hollywoodreporter.com/movies/movie-news/matrix-resurrections-china-box-office-flop-1235076108/

Ask yourselves this?

If intuitional investors were nervous about Cineworld - why have then not reduced their positions?

Where are the TR-1 with reductions?

There hasn't been a single one since 15/12/21 - why? They recognise that Cineworld is demonstrating a solid recovery, the business model remains valid. Warner Bros, Project Popcorn was a failure and streaming will revert back to being a secondary stream AFTER theatrical distribution.

I won't comment if the effect of a BB influences the share price, but I do believe it influences retail investor sentiment.

Morning Latpulldown, I totally agree.

The box office and in turn the fundamentals are doing the talking. Many would be forgiven for being pessimistic - perhaps Spider-man was an anomaly? Perhaps, only comic movies will generate sufficient income. Scream domestic sales approaching $40m have put that to bed.

It has always been about the content - if it is good, cinemagoers will return.

We still have Sing2 to come 28/01/22 which is one of the best family movies to play this year - in the US it has done very well and with families visiting together = more tickets per visit, it will also bring in much needed retail concessions to accompany more bums on seats (popcorn, nachos, drinks etc.)

Cineworld have posted a great blog outlining their movies for 2022 which illustrates some fantastic content which will surely attract more.

Source: https://www.cineworld.co.uk/static/en/uk/blog/2022-movie-releases-cineworld

Debt Covenants have been a long running conversation for Cineworld.

1. Pre-Covid, Cineworld net debt position was $3.5 Billion and it's EBITDA ratio was 3.4x - the threshold was 5.0x from lenders so it was comfortably managing the debt overhead and had a plan to reduce this, appreciating just a few years prior it had completed the Regal merger

2. Post-Covid, Cineworld reported March 2021, it's net debt position (Pre-IRFS 16) was $4.5 Billion so it had gone up $1 Billion which I mentioned wasn't too bad considering EVERY industry was hit hard by Covid.

3. Lenders were very generous to Cineworld for December 2020 -the EBITDA ratio covenant test was increased to 9.0x which was an incredible act and demonstrated that lenders understood that Covid had hurt Cineworld and leisure as a whole.

4. Lenders have since returned the covenant test to 5.0x for June 2022 but I believe Cineworld will be close to meeting them, the current Box office recovery - the fact that December 2021 saw a 90% recovery to pre-pandemic, a time when Cineworld was able to demonstrate a 3.4x covenants ratio test, well under the 5.0x to me suggests Lenders will be factoring this and we either meet the 5.0x or we are very close - but one thing I personally don't see - is Lenders defaulting on Cineworld when the recovery is as clear as day light. If 9.0x was afforded in December 2020, 90% box office recovery was witness in December 2021, lenders will put 2+2 together and an agreement will be established.

Apologies - typo it was meant to read 27p

27p -> 43p.

Thanks, Bonkers for spotting that.

Sadly, too many retail investors will chase their tail trying to get a lower entry completely unaware that the current SP is a fantastic price as well.

For those who bought on 15/12 (just 1 month ago) will already be 59% up
17p -> 43p.

Plenty more upside to come.

It's entirely possible.

I posted a thread last week about the factor a new environmental committee has been stood-up which is predominately comprised of female board members - new requirements for listing on NASDAQ or NYSE mandate that companies meet a specific criteria aligned to ESG and that also factors diversity at board level.

The process to list on the US upon submission (providing all pre-requisites are met like standing up an Environmental committee) takes about 4-6 weeks so entirely achievable.

Source: https://www.nyse.com/listings-process

@ Hussartbr it is just clickbait. Many don’t read too much into Motley Fool. They have a number of analysts and small time investors with differing opinion. It all boils down to risk appetite.

At this share price, with all the bad news factored and with encouraging box office performance and an appeal that will drag for years - look at Rockhopper, it has been engaged with the Republic of Italy concerning Ombrina Mare since 2017 / 5 years!

I see Rockhopper developing Sea Lion with Navitas but I won’t cross ramp.

I would say if you’re an investor you shouldn’t be concerned about small daily movements. Traders and shorters concern themselves with that. Think like an investor.

*saw many shift to IRFS16

It is just lazy reporting.

Pre-Covid, Cineworld reported March 2020 its net debt was $3.5bn

Post-Covid, Cineworld reported March 2021 its net debt was $4.5bn (Pre-IRFs 16)

You see, it’s all about the accounting standards which say may shift to IRFS-16 which factors FUTURE liabilities like operating rent to the debt burden.

The reality is considering the Covid backdrop, Cineworld did very well to reduce cash burn and yes the net debt increased to $1 billion but considering every industry was hit due to the pandemic it has done well to survive and pre-covid, its EBITDA ratio was 3.4x which was manageable and under 5 which was the covenant threshold.

Lenders and investors (institutional including) will be observing week on week box office performance and the declining covid cases in the UK which bodes well for the US which is about 2-3 weeks behind us - this suggests a recovery and instils confidence.

As the title states, the fundamentals - a cash positive quarter and with continued box office performance has Cineworld oversold in my opinion.

The appeal will drag on for some time, perhaps years - in which time the global box office will have recovered and Covid and emerging variants, weaker and akin to seasonal flu.

This is the quarter for recovery plays and in my opinion, Cineworld is THE recovery play to stick with.

Good luck, investors.

I hope these Cineplex investors set their expectations.

The appeal was submitted 12/01/22 - it will potentially take months to years to progress. By which time their cash flow will be depleated and Cineworld will be enjoying the fruits of a fully recovered box office.

This thread about advertisment revenues has aged very well.

I have just read a very good piece from Drum, a very reputable publication on news for the marketing and media industries, with stories, job search resources, events listing, and features.

They have a great piece about expected advertisement revenues for 2022.

I mentioned that 2019 had witness other income, of which advertisment was a heft porition of to the tune of $593m - well, the forecast for 2022 is very bullish. Market analysts are witnessing advertisement revnue to match 2019 levels.

"Cinema spend to near 2019 levels as ‘almost every advertiser’ returns"

"Karen Stacey, chief executive officer of Digital Cinema Media, says the cinema advertising firm is now on course to reach 95% of its 2019 revenues in Q1 alone. “Almost every advertiser has returned,” she says, and it has grown its client roster with new business from emerging D2C brands including Kazoo and Deliveroo."

Ka-ching moment for Cineworld!

Source: https://www.thedrum.com/news/2022/01/14/cinema-spend-near-2019-levels-almost-every-advertiser-returns

The dual listing could in fact be advantageous.

It could act as a defence against liability.

Perhaps I’m reaching, but consider this:

“ Carnival is the largest cruise ship company in the world. Its massive size is the result of a 2003 “merger,” accomplished through implementing a dual listed company structure. A dual listed company is one that is listed on two stock exchanges. While this “merger” gives Carnival the benefits of operating such a grandiose company, the dual listed corporate form leaves the merging companies as separate legal entities. The effects of this paradoxical merger can be seen in Sabo v. Carnival Corp. & PLC, where a group of employees attempted a class action lawsuit against the dual listed company. Because the dual listed company is not an entity, but only an agreement between companies, the employees’ case was dismissed.”

Source: Chad Pasternack, Attorney of Law, Cozen Law - https://www.cozen.com/people/bios/pasternack-chad

I don't believe he was shorting. I believe dreamer was looking for as cheap an entry as he could and to be honest, that is no bad thing. Many investors, myself included won't like people trying to talk a share down, we want growth.

Put this into perspective:

- Entry at 27p to 40p = 48% increase
- Entry at 32p to 40p = 25% increase

Those pennies are EVERYTHING.