With highly anticipated releases being delayed until 2020, some revenue projections have had to be pushed back
Cineworld (CINE) rewrites script for remainder of 2019
- Lower full-year revenue expectations attributed to delayed release of highly anticipated films, such as Avatar 2
- Group also reports a 12% fall in box office revenue in the 11 months to the beginning of December on a constant currency basis, with overall revenue down 8.5%
- At the same time better than expected results have been seen from the revenue initiatives taken following the acquisition of Regal and has raised forecast for the savings to $190mn
- Shares responded positively to today’s news with a 5% rise in early trading
- Recommendation: As group makes positive steps to compete with streaming services and a good dividend yield in place, we maintain our ‘Buy’ recommendation
With shares responding positively to today’s results, it seems investors are able to look through the drama of a poor box office performance and focus on the ongoing story of the Regal transformation. While the company states some revenues have been delayed until next year, rather than lost altogether, it does raise expectations for the coming year and the company will need to deliver on those. Competition is increasing from streaming services such as Netflix but Cineworld is steadily introducing more high-tech screens and, with more potential benefits from Regal to come and a good dividend yield in place, we retain our ‘Buy’ recommendation for investors willing to accept a higher level of risk.
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