Cineworld (CINE) has revealed an impressive 57.5% jump in pre-tax profit in the first six months of 2017 thanks to blockbuster movies such as ‘Guardians of the Galaxy Volume 2’ and ‘Beauty and the Beast’.

Sales are up 12.4% to £420.2m at the cinema chain, while admissions have climbed 10% to 50.7 million.

Cineworld is optimistic about its outlook, flagging ‘significant’ releases still to come this year, including ‘Justice League’, ‘Star Wars: Episode VIII’ and ‘Kingsman: The Golden Circle.’

Cineworld graph

N+1 Singer’s Sahill Shan has upgraded the stock from ‘hold’ to ‘buy’ as the company has beat earnings before interest, tax, depreciation and amortisation expectations by 4% to 15.4p.

The analyst believes that good quality movies is a key driver in attracting more film lovers and is impressed by better than expected UK trading in July.

There is no change to current market expectations, which Shan says is understandable.

He argues the outcome for full year results will depend on success of ‘Star Wars VIII’ as the film slate in August and September is not that strong.

This is one of the key reasons that Nigel Parson from Canaccord Genuity remains cautious.

He also believes the currency benefit has been lapped, which helped boost Cineworld’s performance outside the UK.

Cineworld currently trades on 17.6 times earnings per share in the year to 31 December 2018 and the share price is up 2.3% to 722p.


Issue Date: 10 Aug 2017