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Cineworld Posts Steady Growth Performance

Cineworld (LON: CINE) announced its financial results for the six months to December 31, 2021 on Friday.

Cineplex is the world’s second-largest cinema operator with operations in 10 countries, including the U.S. and U.K., and 751 locations and 9,188 screens globally. 

Spider-Man Drives Crowds 

Performance and attendance have steadily increased, resulting in strong revenue growth. The recovery was supported by an excellent list of movies, including Spider-Man: No Way Home, Shang-Chi and the Legend of the Ten Rings, Venom, Black Widow, Dune, Free Guy, Eternals and No Time to Die.  

Changes to the movie slate for November, primarily due to the move of Top Gun: Maverick to May 2022, have impacted the gradual recovery seen since reopening.

December was particularly buoyed by the success of Spider-Man: No Way Home in all territories, as box office sales picked up to almost 90% of pre-pandemic levels. The new Spider-Man movie is the first to gross over $1.5 billion at the box office since the start of the COVID-19 pandemic.  

Cineworld said its cash flow turned positive in the fourth quarter after sales improved.  

Although there are still challenges to overcome mainly regarding the COVID-19 situation, there is a solid slate of films for 2022, which could result in improving financials.

Cineplex 

Cineworld also confirms that it served notice of appeal of the Ontario Superior Court of Justice’s decision in the case of Cineplex (TSE: CGX) v. Cineworld on January 12, 2022. 

CEO Commentary 

Cineworld CEO Mooky Greidinger said, “We have seen recovery in theatre attendances across our geographies, which generated a positive cashflow performance for Q4. “Spider-Man: No Way Home” has shown the importance for studios of cinematic releases. Whilst there are challenges ahead, we are excited to welcome customers to our cinemas to enjoy the highly anticipated slate of movies throughout 2022.” 

Wall Street’s Take

On January 11, Morgan Stanley analyst Ed Young maintained a Sell rating on CINE and lowered its price target to 30p (from 50p). This implies 25.7% downside potential. 

Overall, CINE scores a Hold consensus rating among analysts based on three Holds and one Sell. The average Cineworld price target of 65.25p implies 63.7% upside potential to current levels. 

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