Cineworld Group - CINE Stream Log

Management / owners have an excellent track record of delivering on M&A. They would not investing multi-millions of incremental family wealth if they did not feel very sure they could deliver. Negative share price reaction has been accentuated by the fact the share price was (wrongly) frothy with dreams of potential bid spec. I grant that this is not as satisfying as a quick exit. But long term I think this is a smart move in terms of economies of scale / diversification: negotiating power with the studios (you may have heard that Disney are squeezing operators on the margins they will earn from the new Star Wars), procurement, etc. Yes, US has been more impacted by Netflix, but frankly that risk is endemic to the industry. You either believe operators can overcome or not. Personally I see this as one of my core LT holdings. ROCE has consistently been in double digits. Not a Fevertree or an IQE but a lovely LT holding. Personally I am giving mgmt the benefits of the doubt and have topped on the dip. If the bid is abandoned the share price will rally. And if not it actually will make for a stronger business in the LT. all IMHO

I love this company. It may never blow the lights out a la a Fevertree given its asset heavy operating model. But it's a cash machine all the same. £71.5m of pre-tax operating cash flow in H1! ; comfortably covering the incremental capex needed for expansion and broadly covering an interim dividend that was hiked 15%. And if / when the physical roll-out eventually slows the scope to ramp up that dividend is just tremendous. Couple with a strong balance sheet and the Greidinger family holding a residual 25% i.e. no shenanigans likely on their watch. And whats not to like. Only question mark is long term impact of streaming on cinema attendance. So far there seems to be no evidence that audiences (including the all important next generation) are shunning a day out at the pictures. I guess one to monitor. But barring a depression I think Cine should easily be able to hit £8+ in next 12 months.

cannacord turn seller stock gets hit

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