Cineplex (Symbol - CGX)

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Cineplex (Symbol - CGX)

Post by 2 yen »

(Moderator, had a look for a dedicated Cineplex thread with no luck. Forgive me if I've overlooked it. Thanks.)

These poor results from Cineplex perfectly illustrate why, while being a very good company, they are still very dependent on the 'quality' of films put out by Hollywood. The digital media division, however, is performing well and this is an avenue of some future growth. I sold half my Cineplex last year because of the vagaries of the business and am glad I did. I just don't see much regular dividend growth going forward.

https://ca.finance.yahoo.com/news/cinep ... 00463.html

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Re: Cineplex (Symbol - CGX)

Post by Thegipper »

I used to be a shareholder. I figure this medium is facing some of the same challenges as the newspapers.Another problem is a night at the movies is getting expensive. Good movies help and there hasn't been to many lately.
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Re: Cineplex (Symbol - CGX)

Post by SQRT »

My wife and I disagreed on Cineplex. She thought it was a dinosaur on the way out and I thought it was a nostalgic powerhouse. I also knew and respected the CEO. She won the "discussion" and we sold most of it at $52.
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Re: Cineplex (Symbol - CGX)

Post by kcowan »

As a consumer, I find their policies bizarre. Popular new releases are available online for purchase only then eventually shift to rental. This makes them the last stop for streaming movies. Why would I pay 3-4x as much to see it early?

I understand how this makes sense for them. But it dooms them to failure.
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Re: Cineplex (Symbol - CGX)

Post by Profit not Prophet »

I saw a story comparing this is a similar US stock cinemark CNK. CNK metrics were all more favourable. I guess in Canada we stretch for a dividend and tax credit. I think one of the Mawer funds had a decent amount of this.
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Re: Cineplex (Symbol - CGX)

Post by like_to_retire »

kcowan wrote: But it dooms them to failure.
Gee, I don't know if I agree with this.

I own this stock and is a part of my Canadian consumer discretionary sector. I know I'm talking my own book, but it's had consistent dividend increases for the last 5 years (that amount to 28% over that period) and pays a decent 3.2% that's distributed monthly. Thompson Reuters rates it as a buy, and so does that pesky S&P Capital Stock Report. There's not a lot to choose from in the Consumer Discretionary sector, but I think CGX is one of the better ones.

Motley Fool gives 3 good reasons why Cineplex belongs in every portfolio.

On a personal note, I love the fact that I can now go online and reserve my seat in a Cineplex theater so I can arrive just before the film starts and know that my seat will be there (and even get a nice seniors discount). People still like going to the movies - it ain't buggy whips. I also like the move toward premium seating for old guys like me. All this costs more, but many are willing to pay and that's good for the bottom line. Their SCENE system has worked out well for them too.

It certainly is one of the more well behaved 5 year charts you will see.
Capture.JPG
Doomed to failure may be off the mark a bit?

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Re: Cineplex (Symbol - CGX)

Post by kcowan »

kcowan wrote:I understand how this makes sense for them.
and apparently so do the stock analysts.

It is called pricing for profit. But as a consumer online, I don't like it much. I suppose if I lived near one of their theatres, I might like that other stuff. But driving for half hour each way is not my idea of a good viewing experience.
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Re: Cineplex (Symbol - CGX)

Post by AltaRed »

I can't see how they can continue to incrementalize to increase profits (concession prices can't seem to go any higher without having to have defibrillators handy) but I've said that for a number of years. DW and I still enjoy going to maybe 6 movies a year as some films are simply that much better on the big screen. But we buy and reserve at home, bypass the ticket counters and concession area, and enter the theatre a few moments before the presentation starts. They make no money off us with our seniors discounts and discount Tuesdays.

I believe there will always be moviegoers despite today's technology.
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Re: Cineplex (Symbol - CGX)

Post by FinEcon »

It seems people fall into two camps, those who don't think movies and/or theatres are a good experience and those who rave for it. Personally, I haven't set foot in a movie theatre for a decade but that's because the I wouldn't watch Hollywood content for free. In most cases, you'd have to pay me to spend my time on it. However, I work with an office full of people of all ages who rave about movies and go to them constantly. I think it's also about the highest bang for buck option there is for adults in the 'going out' bucket. In the beginning, I think digitization and affordable home theatre options hurt cinema somewhat but I think the economics have swung the other way and going forward, the gap between the experience you can get and home and at the cinema will widen dramatically in cinema's favour.

In my view their biggest competition is the continual advancement of video games.
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Re: Cineplex (Symbol - CGX)

Post by like_to_retire »

AltaRed wrote:I believe there will always be moviegoers despite today's technology.
Yeah, all good points. I remember when VCR's came out, it was predicted to be the end of movie theaters, but the fact is, people want to go out once in a while, so I don't see even todays streaming or whatever as the death of the theater. I am amazed at the "value added" spectacle that is todays Cineplex theaters. They always seem to have a lot of people there milling around buying food and playing video games when I arrive. It's just somewhere to go for people.

The concession prices are ridiculous, but this is standard fare at any venue that enjoys a captive audience. I go to about six NHL hockey games a year and the concession prices are also out of this world, but I still pay, and so do a lot of people at theaters, evidenced by the lineups to get popcorn and a drink.

I see Cineplex profit somewhat tied to film quality and as long as they make movies I think they'll be OK and if they watch their pennies I may be able to keep my capital and dividend moving along with inflation and perhaps a little more when the next vibrating theater chair or crazy idea comes along.

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Re: Cineplex (Symbol - CGX)

Post by JaydoubleU »

I am surprised that no one has commented on the utter collapse of CGX shares, down an eye-popping 17.89% YTD and a tear-jerking negative 43% one-year total return :cry:

(Congrats to 2 Yen for getting out with a 100% gain before the latest spiral!)

It's now yielding 5.48% and looks mighty tempting. Heck, with ad campaigns like this, I can see the crowds gathering at the gates already!

Cineplex Celebrates National Popcorn Day With...Wait For It... FREE Popcorn!

(Actually, $15 for a popcorn and drink is one of the reasons I don't go to the cinemas....)

https://www.theglobeandmail.com/globe-i ... slug=C1592
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Re: Cineplex (Symbol - CGX)

Post by 2 yen »

I still think the management is good. However, waiting for all the parts of the business to take effect is taking way too long. One thought I had was that they should sell the cinema part and just become a very small cap digital/entertainment company. That might take the millstone away from the neck.
Traders who are happy with 10% to 20% swings may still do well with this company.

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Re: Cineplex (Symbol - CGX)

Post by Taggart »

I don't own shares in CGX but it's definitely on my watch list under the consumer discretionary sector, and where it's been for the last few years. There it will remain until if and when there's any dividend cut. I always keep an eye on what any management does with it's dividend, because that always tells me how good or bad things are internally.

I occasionally patronize Cineplex on their cheaper Tuesday's.
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Re: Cineplex (Symbol - CGX)

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President and chief executive officer Ellis Jacob attributed the decreased profits to lower advertising revenue and some screens that were out of commission. However, he said he considered the quarter’s performance “an anomaly.”
“It was a tough quarter,” he said, referencing the advertising dollars the company attracted. “The large contracts in some of the automotive areas … pushed out or reduced, and then we also had the change in the (Ontario) government and there has been less spending in comparison to the prior year.”
Cineplex’s earnings were also hampered by higher share-based compensation and $1 million in restructuring costs.Jacob stressed that Cineplex is not expecting to see in the fourth quarter — typically Cineplex’s best quarter — the decline it saw in the third quarter.

“This is not a business where the floor is falling out from under it,” he said on a call with analysts.

“we would like to be up, but this quarter has been such a big miss that it’s drawn a lot of attention, but we think the fourth quarter will be back to normal.”


So he seems to be slipping the noose over his head for the four quarter results. I thought the new play room stuff was generating pretty good money pretty quickly too. Might nibble away with small money over the next few months. Seems to be the same company it was at north of $50. Seems it was expensive to it's USA peers because it was Canadian and our money often stays here.Thoughts :) ?
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Re: Cineplex (Symbol - CGX)

Post by Profit not Prophet »

Forgot to add I thought a provincial gov't change as an excuse was a bit of stretch for a movie chain don'tcha think....
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Re: Cineplex (Symbol - CGX)

Post by AltaRed »

I think anything in the entertainment field is a 'fickle' business. It is all discretionary and subject to the whims of consumers that can change quickly and often does. Not just picking on this stock. Corus is similar and a reason Shaw pushed all? its content into it ENB/ENF style. These stocks might be good 'trades' but they ain't buy and hold. Buy now and sell in May.
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Re: Cineplex (Symbol - CGX)

Post by Profit not Prophet »

I'll buy into that fickle quite easily, hits oriented. Just thinking of what's beyond the bank-phone-electric-pipe-rail div world. Or can your world be complete with that a never stay into bright ideas :)
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Re: Cineplex (Symbol - CGX)

Post by AltaRed »

There are lot worse things to do other than stay in the top ~20-30 blue chips. I have anecdotally probably had only a 50% success rate straying beyond the boring blue chips (both positive surprises and disappointments). I don't think it's been worth the extra effort. Investing can, and probably should, be boring with zero drama.
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Re: Cineplex (Symbol - CGX)

Post by scomac »

AltaRed wrote: 16 Nov 2018 12:43 There are lot worse things to do other than stay in the top ~20-30 blue chips. I have anecdotally probably had only a 50% success rate straying beyond the boring blue chips (both positive surprises and disappointments). I don't think it's been worth the extra effort. Investing can, and probably should, be boring with zero drama.
This is good advice. I would concur with AltaRed on successes when playing with small-mid cap names as that has been my experience too.
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Re: Cineplex (Symbol - CGX)

Post by JaydoubleU »

This is good advice. I would concur with AltaRed on successes when playing with small-mid cap names as that has been my experience too.
Ditto that.

I have moved recently to eliminate smaller cap stocks in favor of the boring large cap blue chips. (see the buy thread)

I seem to remember the winners perfectly: NFI, PBH: bought very early, and sold early. Forgotten are the numerous losers....I've even forgotten their names. Oh yeah, CPG, ALA, AD...
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Re: Cineplex (Symbol - CGX)

Post by Taggart »

Cineplex being acquired by U.K.-based Cineworld

Britain's Cineworld announced a $2.8-billion Cdn takeover of Canada's Cineplex Inc on Monday which would make it the largest cinema operator in North America.

Cineworld has offered to buy Toronto-based Cineplex for $34 per share, a premium of 42 per cent to its close on Friday.

https://www.cbc.ca/news/world/cineplex- ... -1.5397425
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Re: Cineplex (Symbol - CGX)

Post by Profit not Prophet »

A couple years of crap results. Leadership near retirement age, so punch the card and hit the links. At least those holding it get back to the price of a couple years ago. Choice and breath of the available pool is nice but the market place moves along.
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Re: Cineplex (Symbol - CGX)

Post by DavidR »

I had a feeling I should do something with my CGX shares (ie. sell) a few weeks ago, but I remembered George's advise to lie down till the feeling went away... But I have pulled the trigger now!
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Re: Cineplex (Symbol - CGX)

Post by Peculiar_Investor »

DavidR wrote: 16 Dec 2019 12:47 I had a feeling I should do something with my CGX shares (ie. sell) a few weeks ago, but I remembered George's advise to lie down till the feeling went away... But I have pulled the trigger now!
Good thing because the deal is now deal. Cineworld Scraps Deal to Create North America’s Top Cinema Chain | Financial Post
Financial Post wrote:(Bloomberg) — Britain’s Cineworld Group Plc backed out of a deal to acquire Canada’s Cineplex Inc. for C$2.15 billion ($1.6 billion), a transaction that would have made it the biggest operator of movie theaters in North America.

The company said in a statement Friday that Cineplex breached the terms of their merger agreement and was unwilling to correct the situation. Cineworld pointed to a deterioration in Cineplex’s business.

But Cineplex said that Cineworld had no legal basis to terminate their accord and “breached its contractual obligations.” The Canadian company said it would start legal proceedings and seek damages against its onetime suitor.

In December, the U.K. company had agreed to pay C$34 a share in cash for Cineplex, a 42% premium to its price around that time. The deal would have been funded by $2.3 billion of debt.
Given that Cineplex doesn't agree with the termination it will be the lawyers that make the money on this going forward.
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New Offering - Cineplex Inc. Convertible Debentures

Post by Hammerer »

TD Direct Investing would like to inform you that the following New Issue has just been announced.

Cineplex Inc. Convertible Debentures

Short Description: Treasury Offering of Convertible Unsecured Subordinated Debentures via Bought Deal
Price: $100.00 CDN per $100 par value.
Settlement: On or about July 15 2020.
Has TD gone insane? Their deals desk must be pretty desperate.
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