US Edition Cineworld
200p +4¼
Questor says BUY
Of course, that depends on the success of the film on which the toy, a plastic car called Loaded McMissile, is based. The film is Cars 2, the second film in the Pixar franchise. It certainly has all the hallmarks of a blockbuster.
This should be positive from cinema operator Cineworld, which released a trading update yesterday.
In the 26 weeks to June 30, revenues are expected to be flat year-on-year, with a 1.1pc growth in box office revenues offset by declines in retail and other income. The decline in sales of popcorn and other sundries was down to the mix of films. The King's Speech, for example, was a massive hit – but it attracted older viewers who tend to spend less in the retail outlets.
This represents an impressive turnaround from the last time the group talked to the market a couple of months ago. In Cineworld's last trading update, the group said that revenues
were 8.9pc lower in the first 18 weeks of the year compared
with the equivalent period of last year.
They key driver of full-year performance will be the summer release schedule – and things are looking good on this front.
As well as Cars 2, there is the final instalment in the Harry Potter series – a film that is as near to a guaranteed blockbuster as there can be. Other notable releases include Captain America: First Avenger and Transformers: Dark Side of The Moon.
However, comparatives are tough in the second half following last year's bumper film schedule, which included films such as Toy Story 3 and Inception. One positive is that the films slated for release in the second half are likely to have a younger audience – so this should hopefully boost retail sales. The company's market share is now 24.9pc, compared with 24.2pc last year.
In the period, the company also opened a new premium cinema concept in Cheltenham called The Screening Rooms. This is a new three-screen deluxe cinema for over-18s with comfy chairs and "at seat" food and drink service. The unit opened on June 17, so it is early days, but hopefully an update will be given with the interim results on August 18.
Cineworld has continued to invest in digital and now has 60pc of its screens – 485 – with digital capability.
The shares are trading on a December 2011 earnings multiple of 10.5 times and yielding a very attractive 5.6pc, rising to 5.9pc.
The shares were first recommended at 120p on March 15 2009, and they are 67pc ahead, compared with a market up 55pc. They have, however, been tipped as high as 223p.
The shares offer that rare combination, the prospect of good growth while enjoying a very attractive income. Buy.