Member Info for RS2002

A lot of investors are asking, when to sell?

As others are saying, each have their own target and appetite for risk and reward.

I see this share going to 150p in the not so distant future.

Don't forget, Peel & Hunt beleive the dividend will return and re-rate to 180p.

To give you some idea, in 2019, Cineworld paid out ~12p a share. To give you some kind of idea, if the dividend restored to this level over time, you could have a return on your investment within 3 years. There after its money paid each year with a current yield of ~20% is a fantastic return.

Yield = dividend paid per share / current share price (12/59) = 20%

Source: https://www.dividendmax.com/united-kingdom/london-stock-exchange/travel-and-leisure/cineworld/dividends

Good luck, all.

I suspect you're right, Moola.

I feel for a lot of investors who were led astray by the shorter crew to manipulate many private investors.

They likely work for capital funds, given there is now less than 15% of Cineworld shares avaiable for free trade, following the Chinese state backed Jangho purchasing 5%. It now places capital funds under tremendous pressure to accumulate shares to close their shorts.

Any more anecdotal posts? @ shadypants?

I'll go by the Box office data particularly the US, where 73% of Cineworld's estate operate.

They pain a picture that demand is there and growing.

Source: https://www.ft.com/content/1047a208-58af-4947-aff7-e38727e3f44a
Source: http://www.china.org.cn/arts/2020-08/25/content_76634471.htm
Source: https://variety.com/2020/film/news/box-office-unhinged-coronavirus-1234745624/

Good post @Moola.

I agree, the fundamentals are being recognised and the recent media pieces that are clearly demonstrating box office sales prove the neighsayers wrong, Cinema is very resillient. No surprise that it has survived recessions, world wars and the Spanish flu.

I aslo echo your point about Cali and NY, two HUGE states.

State Count Percentage
California 87 15.85%
New York 46 8.38%

Just imagine once they OPEN - they account for ~25% of Cineworld's US estate!

Are we going to witness a repeat of our previous rise?

"Previous movement in just FOUR (4) trading days

22 May 2020 = 58p
26 May 2020 = 69p
27 May 2020 = 77p
28 May 2020 = 102p intra-day high"

8. Box office demand in the US is showing wet POSITIVE footfall and sales. So much so, the FT are citing it’s a huge milestone for US domestic demand proving cinema and theatrical experiences are showing RESILIENCE.
Source: https://www.ft.com/content/1047a208-58af-4947-aff7-e38727e3f44a

We have witness this share price move back quickly - it was the increase in US virus numbers that caused it to go down. Now, the US is defeating the virus cases and controlling their numbers, value is being re-instated.

Previous movement in just FOUR (4) trading days

22 May 2020 = 58p
26 May 2020 = 69p
27 May 2020 = 77p
28 May 2020 = 102p intra-day high

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 summer blockbuster, Tenet being screened.

1. Cinemas operate a profit at as little as 10-20% capacity and are on course to open all their territories before the close of this month. Source: https://www.cnbc.com/amp/2020/04/15/cinemark-offers-a-look-at-movie-going-post-coronavirus.html

2. Face masks worn is encouraging as it promotes the government's message and mitigates the risk of further closure.
In line with government guidelines, all customers will be required to wear face coverings whilst visiting. They can however be REMOVED to consume food and drink (a great up sale for concession sales, you will agree). Source: https://www.cineworld.co.uk/static/en/uk/blog/cineworld-cinemas-reopening-FAQ-frequently-asked-questions-coronavirus-covid-19

3. Schools re-open next month September, millions of children sitting for 6 hours+, side by side, no social distance or masks and frequent touch points vs cinema viewing in staggered, static seating with frequent cleaning and controls is a lot safer. Source: https://www.theguardian.com/commentisfree/2020/aug/18/children-covid-19-english-schools-virus-safe-reopening

4. 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.

Bankruptcy risk of just 7% suggests a great entry or investment point in a diverse portfolio.

Source: https://www.macroaxis.com/invest/ratio/CINE.L/Probability-Of-Bankruptcy

Cineworld will PASS their debt covenant test this December 2020 with ample room to spare.

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, they quote.

5. Shorts are nothing new, in Jan 2020 this year shorts were 14% and share price was 164p.

6. Tenet the BIG Blockbuster of 2020 is demonstrating positive box office data. Source: 'Tenet' Fever Grips U.K., Claiming Over Half of Ticket Sales for Vue - Variety

7. Cineworld US (73% of their estate) is beginning to open in a phased approach and will ACTIVATE, soon 300,000+ subscriptions, each paying upwards of $23/month. That will join the U.K. and European Subscriptions,

I deliberately copy and paste my responses to Indepth because he does the same.

I have argued that I believe he is a BOT as his replies tend to be repetitive.

So like kind, I do the same.

Conveant tests in December 2020 should pass.

2019 = $1033m EBITDA
2020 = $388m EBITDA required

If I model on 2019 and use the $1033m EBITDA figure / 12 = $86.083m per month x 2.5 months = $215.20m (appreciating Jan, Feb and half of March was not affected)

Balance required = $388m ($3500 / 9.0) - $215m = $173m EBITDA required.
Remaining months to December = 4 months so $173m / 4 = $43.25m per month.

Easily achieveable given the DEMAND that Box Office sales are taking with JUST 26% of US screens open, further Regal cinemas to open this week and we await California and New York to open which represent 20% of Cineworld’s estate.

In short, don’t pay attention to his deramp.

He has lifted some text from a POSITIVE broker note from Peel and Hunt who have rated Cineworld at 180p. If the source of his quote was concerned of debt and breach, why didn’t they downgrade 180p? I’ll tell you why, because it was their analysis and they say Cineworld is OVERSOLD.

Big recovery is happening. Onwards and upwards.

@latpulldown
Lenders waived the June 2020 test and asked the December 2020 test by done at 9.0x ND/EBITDA ratio.
It will take place in December, but per my earlier comment, this will easily pass.

I always reply to derampers.

Conveant tests in December 2020 should pass.

2019 = $1033m EBITDA
2020 = $388m EBITDA required

If I model on 2019 and use the $1033m EBITDA figure / 12 = $86.083m per month x 2.5 months = $215.20m (appreciating Jan, Feb and half of March was not affected)

Balance required = $388m ($3500 / 9.0) - $215m = $173m EBITDA required.
Remaining months to December = 4 months so $173m / 4 = $43.25m per month.

Easily achieveable given the DEMAND that Box Office sales are taking with JUST 26% of US screens open.

Peel and Hunt gave an estimate of $318m, at a worst if it was $318m and a delta of $70m presented, no lender would default a $3500m loan over a 2% varience. ($70m/$3500m).

Agree, once the US reopens and the positive news on Covid treatments, positive market sentiment, we should see our next charge up.

Their analysis and re-rating is absolutely correct, in my opinion.

They have realised that:

1. ONLY 26% of movie screens in the US are open and to have generated $4m over a single weekend, when in comparison when the US had 100% of it's screen open, would see a Rusell Crowe movie turn around $6m-10m, suggests that despite a reduced number of screens open, reduced seats available, the DEMAND is STRONG.

2. California, New York are key states and have yet to open.

Cineworld's share price is rising on the fact that despsite 25% of screens open, the public are turning up in significant numbers and spending.

Don't forget that Cineworld have the UNLIMITED scheme, which means they are guarnateed PASSIVE income, irrespective of the numbers of seats booked as well.

I believe we will be saying goodbye to 50s shortly as we head into the 60s.

24th September 2020. One month from now which is great because we get to see CONTINUED Box Office success, Tenet play out in the cinemas and for Cineworld to issue a statement on their preliminary sales figures, post re-opening.

We can also expect to see just how well the BoD have negotiated leases and driven down costs to keep themselves sufficenetly liquid.

We already know there are no refinancing risks given they have enough funds to see them through to July 2021 with no income generated, some say even more to September 2021.

Exciting times ahead as we will see the share price recover.

Source: https://www.cineworldplc.com/en/investors/financial-calendar

When you consider that JUST 20% of Cineworld shares are available, given the rest are with Cineworld family trusts, institutional investors. Given the Chinese state backed Jangho have now REMOVED 5%, shorters will struggle to find the shares needed to close their shorts. I imagine the more they release to drive the price down, the more that will be hoovered up by China.

Mooky (Cineworld CEO) said on his most recent Bloomberg interview, that occupancy at just 20% was profitable and that statements around the sustainability of Cinema have been proven wrong time after time.

Television didn’t retire cinemas.
Cable didn’t retire cinemas.
VHS/DVD didn’t retire cinemas.
Streaming has been running since 2010 and hasn’t retired cinemas.

Cinema has survived world wars, recessions and the Spanish flu. It isn’t going anywhere and the market is going to embrace the news that box office figures are demonstrating demand.

Moola this reaffirms the sentiment from studios and exhibition outfits like Cineworld that theatrical release is not just important prior to other mediums, it generates INCOME and isn’t going anywhere.

This news will receive well to the market.

Great news and this is without the largest cinema viewing states, California and New York who should be opening very soon.

Movies will be out longer and Unhinged can expect some more encouraging data which will translate to Cineworld’s share price.

FT:

The Trump administration is considering bypassing normal US regulatory standards to fast-track an experimental coronavirus vaccine from the UK for use in America ahead of the presidential election, according to three people briefed on the plan.

One option being explored to speed up the availability of a vaccine would involve the US Food and Drug Administration awarding “emergency use authorisation” (EUA) in October to a vaccine being developed in a partnership between AstraZeneca and Oxford university, based on the results from a relatively small UK study if it is successful, the people said.

The market has known for a while Oxford have been leading this race for a vaccine. It was inevitable that a PTOS would push this to secure a second term in November.

Watch this space.

On the recent Bloomberg interview, Mooky (CEO, Cineworld) cited that break-even can happen with attendance as low as less than 20% but generally it is considered profitable at this point.

This was echoed by Cinemark CEO, Mark Zoradi who claimed:

“Even at peak periods of time in a normal environment, our occupancy levels range from 20% to 30% and we can operate profitably during those scenarios,” he said.

"He added that Cinemark has seen attendance as low as 10% and still was able to turn a profit."

Source: https://www.cnbc.com/2020/04/15/cinemark-offers-a-look-at-movie-going-post-coronavirus.html

Further more, the canary in the coal mine, Unhinged is doing remarkably well.

Box office sales are increasing week on week.

Solstice Studios posted:

“Based on performance and multiples we have seen in the international release of the film, we are confident that we will hit our goal of $30 million box office at a minimum by the end of the movie’s theatrical run in North America,” said Shari Hardison, head of distribution for Solstice Studios, the picture’s producer and distributor. “We have a lot of stairs to climb, but the first steps are encouraging.”

Source: https://deadline.com/2020/08/unhinged-slowly-fastening-domestic-b-o-back-together-with-1-4m-friday-in-marketplace-where-ca-ny-are-still-largely-closed-1203019191/

Source: https://www.bbc.com/news/entertainment-arts-53862695