After a starter of European Small Caps. and a main course of The Restaurant Group earlier this week, today I finish the week with a write up on another of my holdings, Cineworld Group. They have today announced an 8 for 24 Rights Issue @ 230p and an intention to acquire Cinema City International. You can read more details at the link above.
My take on it is that it looks like a good deal which at a stroke gives them a new CEO to replace the existing founder who is retiring and gives them a new international dimension in Eastern Europe and Israel. They talk about it being earnings enhancing in the full year 2014 and substantially thereafter and it meeting their cost of capital by 2016. They also mention £2 million of synergies from cost savings in the first year.
This seems sensible to give them international diversification in line with their competitors and since they have nearly 30% of the UK market I guess growth opportunities in this country are now somewhat limited. The market seems to like it as the share are up around 8% at the time of writing. I am happy to stay in my seat for this one and hope it continues to be a long term thriller rather than a horror story. Only nagging doubt longer term is whether film streaming in the home might damage cinema attendance in the long run, but I presumably they said that when television was invented. I guess it remains a cheap (?) night out and a bit of an escape for people in these difficult times.
Finally, if you are looking for a night out and film to go and see I posted a suggestion at the end of the original of this message which was published on my web site. But I guess that's not appropriate in this forum. I have also got around to updating my reading list and useful websites & blogs page if that is of any interest to anyone.
About the Author
Jjis
Worked in the City of London for over 20 years as a Fund Manager for a number of top institutions. In my career I managed billions of £'s across a whole range of different funds from Distribution funds, Investment Trusts, OEIC's / Unit Trusts & Pension funds. I was also involved in the management of Income funds more generally. In March 2009, I quit the City and escaped the rat race to earn my living from my own investments. Since then I have been managing my own income funds. I focus on UK stocks with a value / yield / quality bias and select from the whole market down to about a £50 million market capitalisation, although on occasions I stray into micro cap if I feel the investment case is compelling. This is becasue I have VCT holdings which give me micro cap exposure. I also invest in Investment Trusts and ETF's for overseas markets or exposure to other asset classes, but again with the aim of achieving an income as well as diversification. I'm now trying to give something back by writing more regularly on my Blog / website - but can't make any promises about how regularly I will write here on Stockopedia, so check out my site and sign up for free e-mail updates if you want my latest posts in your in box. more »
0 comments
