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The latest trading update shows a decent performance despite tough comparative figures
Thursday 24 May 2018 Author: Daniel Coatsworth

Cineworld (CINE) 267p

Gain to date: 1%

Original entry point: Buy at 264.4p, 3 May 2018

A decent trading update on 16 May helps to put our trade on Cineworld (CINE) in the right direction. It reported 6.7% rise in group revenue at constant currencies. The US was the best performer with a 10.2% rise, while the UK fell 2.1% and Central Eastern Europe/Israel slipped by 2.4%.

It is worth noting the reporting period (1 Jan to 13 May) had very tough comparative figures to beat on a year-on-year basis for Europe as last year’s period was boosted by the massive success of Beauty and the Beast and The Fate of the Furious.

‘The (latest) results largely reflect the volatility in the film slate, where a meaningful trend is difficult to establish at this point of the year,’ says UBS analyst Heidi Richardson.

We’re more interested in Cineworld’s performance over the next 12 months as successful integration of the newly-acquired US operations will be key in silencing the critics who say the business shouldn’t have bought Regal Entertainment and taken on so much debt.

The film slate for the rest of 2018 looks really good and we don’t believe the World Cup football will cause too much of a dip in earnings should consumers become distracted by the sporting event. Analysts should have already factored in some disruption in their forecasts.


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