Author Topic: AMC - AMC Entertainment Holdings  (Read 20167 times)

roark33

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Re: AMC - AMC Entertainment Holdings
« Reply #110 on: March 25, 2020, 07:26:29 AM »
The studios margins for theaters is usually 55/45 favoring the studios, Sony and Disney command up to 60%. 




dbuch

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Re: AMC - AMC Entertainment Holdings
« Reply #111 on: March 25, 2020, 12:47:28 PM »
They have 4 months of liquidity from cash and lines of liquidity. It is almost certain that the gov't will provide life lines in the form of loans to the theaters, restaurants, airlines, cruise ships, retailers etc. Those loans may come with strings attached like equity warrants, agreements for no stock repo or dividends but I think it will be enough to get them through this. Hard to ask for substantial strings when the government essentially mandated that all of these industries shut down. Either the govt provides liquidity or they have many millions of unemployed and thousands of companies in bankruptcy.

They generate $300-$400mm of free cash flow after maintenance capex. So assuming they spend the next 5 years paying down debt, you would have about $4B debt vs $1B EBITDA and assume the same free cash flow. You would have a business earning at least $2.50/share call it $25 fair value.

That's a 7 bagger or 48% annual return from here. But maybe i'm wrong and it's a zero. Still good upside/downside in my mind. 


Spekulatius

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Re: AMC - AMC Entertainment Holdings
« Reply #113 on: March 25, 2020, 05:36:30 PM »


https://variety.com/2020/film/box-office/amc-theatres-furloughs-employees-coronavirus-pandemic-1203545081/

Furlough without pay whatsoever? isn’t it better to get laid off and get some unemployment benefits, as long as you have a spouse covering health insurance?
« Last Edit: March 25, 2020, 06:46:03 PM by Spekulatius »
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roark33

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Re: AMC - AMC Entertainment Holdings
« Reply #114 on: March 25, 2020, 06:30:17 PM »
They have 4 months of liquidity from cash and lines of liquidity. It is almost certain that the gov't will provide life lines in the form of loans to the theaters, restaurants, airlines, cruise ships, retailers etc. Those loans may come with strings attached like equity warrants, agreements for no stock repo or dividends but I think it will be enough to get them through this. Hard to ask for substantial strings when the government essentially mandated that all of these industries shut down. Either the govt provides liquidity or they have many millions of unemployed and thousands of companies in bankruptcy.

They generate $300-$400mm of free cash flow after maintenance capex. So assuming they spend the next 5 years paying down debt, you would have about $4B debt vs $1B EBITDA and assume the same free cash flow. You would have a business earning at least $2.50/share call it $25 fair value.

That's a 7 bagger or 48% annual return from here. But maybe i'm wrong and it's a zero. Still good upside/downside in my mind.


I think the free cash flow here is just mythical. 

Also, you have to think about what happens over the next 6 months, how quickly do studios start to bring back their big movies and risk low attendance. Black Widow, Mulan, when do these return, 2021? 

hasilp89

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Re: AMC - AMC Entertainment Holdings
« Reply #115 on: March 26, 2020, 05:27:01 AM »
They have 4 months of liquidity from cash and lines of liquidity. It is almost certain that the gov't will provide life lines in the form of loans to the theaters, restaurants, airlines, cruise ships, retailers etc. Those loans may come with strings attached like equity warrants, agreements for no stock repo or dividends but I think it will be enough to get them through this. Hard to ask for substantial strings when the government essentially mandated that all of these industries shut down. Either the govt provides liquidity or they have many millions of unemployed and thousands of companies in bankruptcy.

They generate $300-$400mm of free cash flow after maintenance capex. So assuming they spend the next 5 years paying down debt, you would have about $4B debt vs $1B EBITDA and assume the same free cash flow. You would have a business earning at least $2.50/share call it $25 fair value.

That's a 7 bagger or 48% annual return from here. But maybe i'm wrong and it's a zero. Still good upside/downside in my mind.


I think the free cash flow here is just mythical. 

Also, you have to think about what happens over the next 6 months, how quickly do studios start to bring back their big movies and risk low attendance. Black Widow, Mulan, when do these return, 2021?

Important to look at that downside scenario but there are two sides to the story.

Maybe: When this thing is lifted people are going to be screaming to get back out to do things. $12 cinema ticket is about the cheapest thing you can do besides for the $ menu at MCDS. People will go back to the movies. Don’t tell me you don’t want to watch live action Mulan as soon as possible. Going back to comments about studios going direct, we don’t know the full economics of it - theater is 50-60% GM with no overhead and huge global reach, Disney+ seems like there’s no distribution cost and high margin but they’re carrying overhead on app, marketing etc, and it doesn’t have the same global reach yet (not arguing it won’t one day) - even if it has 50m subscribers, there’s probably 4bn people out there that can get to a movie theater in 30 mins, you’re just gonna throw that target market out?
Then you’ll argue that people have been laid off don’t have the money. If the stimulus gets out people are going to be richer than ever. $1200 cash check, state unemployment ranges anywhere from $300-$700 per week federal is providing $600 per week - people aren’t gonna wanna go back to work, heck I might lay myself off for that.

I know this is tongue in cheek but the reality is no one knows. We can all argue one side or the other. Make it a 5% position and forget about it. keep buying BRK and then go for a walk with your family.
« Last Edit: March 26, 2020, 12:54:13 PM by hasilp89 »