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Cineworld looks ahead to blockbuster autumn

RESULTS: As Cineworld's customers embrace online bookings, the cinema operator should see its market share grow further as it puts customer relationships in focus.
August 17, 2012

A strong roster of films coming up this autumn means cinema operator Cineworld is confident in its outlook for the rest of the year, especially as the Olympics did not have the dreaded effect on audience figures. While admissions were down a touch, a 4.9 per cent rise in ticket prices to an average of £5.15 meant the cinema chain reported a 1.1 per cent increase in revenues for the first half. For the full year, broker Peel Hunt expects revenues to rise 3 per cent to £358m and underlying pre-tax profits to jump from £36.4m to £38.5m. On this basis, adjusted EPS rises 6 per cent to 19.6p and leaves scope for another hike to the well-covered dividend.

IC TIP: Buy at 226p

The online booking discount initiative, launched in March, has led to a 48 per cent increase in registrations at MyCineworld. Finance director Philip Bowcock said the company is focusing strongly on building customer relationships through the web, with the aim of upselling and generating repeat visits. This focus on establishing loyalty should further boost Cineworld's 25 per cent market share of the UK and Ireland cinema audience.

True, the summer's sporting events adversely affected advertising spending, but Mr Bowcock expects it to become more resilient again over the next four months. "Three of the five largest films of the year are still to come," said Mr Bowcock, referring to The Hobbit, the new Twilight film and the latest Bond.

CINEWORLD (CINE)
ORD PRICE:225pMARKET VALUE:£321m
TOUCH:224-225p12-MONTH HIGH:229pLOW: 172p
DIVIDEND YIELD:5.0%PE RATIO:11
NET ASSET VALUE:110pNET DEBT:62%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20111646.93.603.60
201216513.46.903.80
% change+1+94+92+6

Ex-div: 5 Sep

Payment: 5 Oct

*Includes intangible assets of £217m, or 152p a share