4th Aug 2015 10:49
LONDON (Alliance News) - Numis forecasts strong interim results from Cineworld with the cinema chain reports on August 13, saying that trading was driven by double-digit growth in box office in both the UK and mainland Europe/Israel and says it expects to at least hold its forecasts for the year with a strong release schedule to look forward to in the second half.
The broker predicts a 24% rise in pretax profit to GBP30.5 million in the first half of Cineworld's financial year, despite unfavourable currency movements, as the box office saw growth of 10.5% and 11.7% in the UK and mainland Europe/Israel, respectively.
Numis adds that UK market admissions rose 10% in the period, with 'Jurassic World' helping it rise to 27.5% in June, while UK retail grew 10.8% boosted by the expansion of Starbucks outlets in its cinemas and a higher ratio of adult custom. Other income rose 16.3% largely due to the reintroduction of booking fees and rising advertising revenue.
"We expect to at least hold our 2015 [estimated pretax profit] forecasts (GBP90.0 million; consensus GBP90.7 million), which assume 10% box office growth for the UK and 11% for mainland Europe/Israel. Aided by GBP5 million of forecast acquisition synergies (of which GBP2 million was achieved in 2014), strong self-financed expansion and attractive [like-for-like] admission prospects, we forecast double-digit earnings growth in 2015E and 2016E," Numis says.
Numis has an Add recommendation on Cineworld and a target price of 550 pence.
Shares in Cineworld were trading down 0.5% at 512.50p Tuesday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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