Author Topic: CGX - Cineplex  (Read 6623 times)

roark33

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Re: CGX - Cineplex
« Reply #10 on: July 14, 2020, 04:34:55 PM »
I used to be pretty negative on AMC because movies just kept getting pushed back and I wasn't sure if they would survive that long.  However, the flip side is, once this opens up, there are going to be a ton of great releases, just packed, each week.  Studios could even move movies up once things open back up. 


valueinvestor

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Re: CGX - Cineplex
« Reply #11 on: July 14, 2020, 07:58:13 PM »
What do you think about the esport opportunity with these businesses? I think that was Wanda’s angle when acquiring a chunk of AMC, IIRC?

Foreign Tuffett

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Re: CGX - Cineplex
« Reply #12 on: July 17, 2020, 02:15:40 PM »
At least one analyst thinks no new Disney film at box office before the end of September:

https://www.hollywoodreporter.com/news/disney-analyst-downgrade-longer-pandemic-impact-cinemas-closed-1303411
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valueinvestor

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Re: CGX - Cineplex
« Reply #13 on: July 17, 2020, 03:00:45 PM »
I appreciate the link Foreign Tuffett!

Any chance you looked at the debentures? They recently closed one for $275M

valueinvestor

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Re: CGX - Cineplex
« Reply #14 on: July 17, 2020, 03:45:12 PM »
Someone reached out said do the math, because my posts lack them.

Typically I don’t because, I find qualitative aspects are much more informative then the financials. However, here’s a simplistic one.

Zero out cash flows this year, keep the same level of maintenance capex, and half the cash flows for the subsequent years, and you’ll arrive at a valuation at least 20% higher than the share price or 50% less than TEV  with a discount rate of 10%. Personally I think it’s conservative, because with the Cineworld transaction, they applied an EBITDA multiple, and EBITDA paints a very different picture. Also $275M of the debt is convertible, which can paint another picture too.

In fact, here’s a link to Cineworld’s investor’s presentation on the matter when they were in the process of acquiring Cineplex. https://www.cineworldplc.com/sites/cineworld-plc/files/reports-presentation/2019/investor-presentation-acquisition-of-cineplex-16-12-2019.pdf

I think this is idea interesting, not sure it’s an investment. Sometimes your upside is capped because it’s easier to squeeze out minority shareholders in Canada, as opposed to the US. You can definitely buy more shares before disclosing.

samwise

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Re: CGX - Cineplex
« Reply #15 on: August 26, 2020, 08:42:35 PM »
This investor letter mentions CGX and thinks that the repeal of the Paramount decree (USA) will enable a studio to buy CGX (Canada).

https://seekingalpha.com/article/4370018-mittleman-brothers-q2-2020-investor-letter

1. Does that make sense? US decrees don’t apply in Canada, and I thought some studios did own theatres outside the US.

2. Why would studios be interested today in buying theatres?

https://en.m.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc.

valueinvestor

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Re: CGX - Cineplex
« Reply #16 on: August 26, 2020, 09:32:16 PM »
I realized this when looking through the web, I suspect mittleman saw the same source. My understanding was the US Decree applies to US companies - hence US studios could not own Canadian theatres as it violates the decree, but Canadian Studios can own Canadian theatres. Now with the repeal, there's a chance that it could allow US studios to own theatres, but again history wasn't really kind to studios (at least in the US) who owned theatres, if I remember correctly.

I haven't really looked at it, as mentioned the value is definitely there, but not sure if common investor can extract it.

samwise

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Re: CGX - Cineplex
« Reply #17 on: August 27, 2020, 09:46:46 AM »
Thanks. Which source are you talking about, that Mittleman may have seen. Any links?

valueinvestor

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Re: CGX - Cineplex
« Reply #18 on: August 27, 2020, 12:26:48 PM »
Tried finding it so I could link it but there was a page when searching the Cineworld/Cineplex deal and it mentioned why US studios could not own Canadian Theatre until recently.

Wish I had it but hopefully this helps, after the run up I sold and invested in other longer term investments. So not really looking at the name anymore.

Foreign Tuffett

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Re: CGX - Cineplex
« Reply #19 on: August 28, 2020, 06:37:05 AM »
Tried finding it so I could link it but there was a page when searching the Cineworld/Cineplex deal and it mentioned why US studios could not own Canadian Theatre until recently.

Wish I had it but hopefully this helps, after the run up I sold and invested in other longer term investments. So not really looking at the name anymore.

I think Tenet, even if successful, is likely to be a bit of a poisoned chalice for the cinema operators. We won't know for sure for some months

https://screenrant.com/tenet-movie-box-office-warner-bros-theater-split/

Besides The New Mutants and Tenet, there also don't look to be much of anything else on the release schedule before October. Can a C level superhero movie and Nolan blockbuster carry the industry for an entire month?
Former Teldar Paper Vice President