Leading analyst Douglas Jack of Numis has reiterated his Add recommendation for Cineworld with a target price of 550p on the back of positive results from rival cinema operator Vue, which reported year-on-year admissions up 4.3% to 25m for Q1 2015 and an increase of 15.7% in the UK for March.
The company, which operates cinemas in UK, Ireland, Poland, Italy and Germany reported static turnover and consolidated EBITDA was up by 4% to 47.3 for the three months to 26 February 2015.
The average ticket price decreased by 24p to £5.61 while spending on concessions remained unchanged at £1.82 per person with a total average revenue of £8.42 per person – a year-on-year decrease of 4.1%.
Jack said: “We believe there is a positive read-through from Vue’s Q1 results (December-February) and strong UK cinema market update for March. Our belief that UK cinema market admissions could bounce by 8-10% in 2015 placed little reliance on calendar Q1 admissions, which were ahead of our expectations.”
The total turnover for Vue for Q1 2015 increased by £0.1m (0.0%) to £210.8m principally as a result of admissions up by 4.3% compared to Q1 2014.
The company cites currency conversion as the reason for a reduction in average ticket prices and said the concessionary spend is in line with Q1 2014.
It reported strong market performance with all major territories up year on year with the exception of Poland
In the UK & Ireland market admissions in March 2015 were up 15.7% on March 2014. Top grossing titles were The Second Best Exotic Marigold Hotel £14.2m, Home £12.2m and Cinderella £7.4m
Across the German and Italian markets, admissions in March 2015 were up 7.7% and 7.4% respectively on March 2014.
In Poland market admissions in March 2015 were down 1.9% on March 2014.
The company said this quarter is the first full period of ownership of The Space Entertainment following the acquisition, which was completed during November 2014.
“Significant profits have been delivered during this quarter and integration workstreams are now largely completed, with the focus now turning to making further progress on key development workstreams including pricing, screen advertising, procurement and other operational efficiencies.”
It added a deal with price comparison website omparethemarket.com provides an opportunity for customers to purchase two-for-one tickets on Tuesdays and Wednesdays.
