Cin­ema / UK prop­erty out­look / Eco­nomic league ta­ble / Na­tional Grid / TUI / Bal­four Beatty

But have Cineworld and Every­man Me­dia man­aged to join the party?

Shares - - CONTENTS DISCLAIMER - By Daniel Coatsworth Ed­i­tor

Ablock­buster year for the cin­ema in­dus­try would sug­gest that com­pe­ti­tion from stream­ing ser­vices like Net­flix and pres­sure on con­sumer spend­ing haven’t neg­a­tively im­pacted the sil­ver screen.

An ar­ti­cle in The Guardian sug­gests that Bri­tish cin­ema­go­ers will have been to the movies 176m times this year, a num­ber not seen since 1971.

Stock­bro­ker Nu­mis says year-to-date the US box of­fice has in­creased by 10% and the UK box of­fice was broadly flat, show­ing the re­silience of cin­ema as a leisure ac­tiv­ity.

A more di­verse range of films and the rise of bou­tique the­atres is cred­ited with keep­ing cin­ema buoy­ant in 2018. For ex­am­ple, the biopic of the band Queen, called Bo­hemian Rhap­sody, has taken more than £43m at the UK box of­fice.

Other pop­u­lar films this year in­clude the lat­est in­stal­ments in the Avengers, Mamma Mia, In­cred­i­bles and Juras­sic World fran­chises, as well as fam­ily-friendly hits Peter Rab­bit and The Great­est Show­man.

De­spite this pos­i­tive back­drop, shares in the two UK-quoted cin­ema op­er­a­tors haven’t en­joyed much suc­cess year-to-date. Cineworld (CINE) has dropped by 0.3% and Every­man Me­dia (EMAN:AIM) has fallen by 2.6%, al­though both are bet­ter than the FTSE All-Share’s 12.7% de­cline.

Cineworld is cur­rently bur­dened with a large amount of debt af­ter buy­ing US ri­val Re­gal En­ter­tain­ment. Ris­ing in­ter­est rates in the US are a head­wind be­cause all of its $4.1bn debt is on float­ing rates.

The com­pany said at the time of buy­ing Re­gal that it was con­fi­dent of be­ing able to rapidly pay down the debt to more com­fort­able lev­els.

Nu­mis an­a­lyst Richard Stu­ber notes that Cineworld cur­rently trades on 11.2 times fore­cast earn­ings for 2019 ver­sus an av­er­age 20-times rat­ing for its global cin­ema peers. An­a­lysts at HSBC point out Cineworld’s cur­rent rat­ing is con­sid­er­ably below its c17-times av­er­age over the past decade.

Every­man Me­dia has been caught up in the broad mar­ket sell-off where highly-rated stocks have been pun­ished by the mar­ket. At the share price peak of 267p in May, the shares were trad­ing on 92 times fore­cast earn­ings for 2018. This rat­ing has since re­duced to 70-times, al­beit still a pre­mium level.

Both com­pa­nies are rolling out new sites and re­fur­bish­ing ex­ist­ing ones. HSBC an­a­lysts say some cin­ema op­er­a­tors have achieved more than 20% re­turn on in­vest­ment when re­fur­bish­ing sites and re­port at­ten­dance growth above tra­di­tional cin­e­mas.

A key rea­son be­hind Cineworld’s ac­qui­si­tion of Re­gal, which gave it a large foot­print in the US, is to smarten up the lat­ter’s cin­e­mas with the hope of driv­ing earn­ings growth even if the in­dus­try box of­fice didn’t grow.

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