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Cineplex PT Lifted To $32 By CIBC On Stronger Slate And FCF Stability, 'Sector Performer' Maintained

 May 11, 2012 02:15 PM

(By Balaseshan) CIBC World Markets Inc. increased its price target on shares of Cineplex Inc. (TSE:CGX) to $32 from $30, while maintaining its "Sector Performer" rating.

After the company's first quarter results, the brokerage raised its 2012 EPS estimate to $1.60 from $1.42 while lowering its 2013 estimate to $1.61 from $1.66.

Cineplex put up another strong quarter in Q1, boosted by strong attendance figures. This trend should continue through 2012, as the movie slate is performing well, and with a handful of big proven franchise s anticipated. Of note, CGX also announced a 5% dividend hike in the quarter.

The company's Q1 takeaways are: box office and concession operating metrics strong; attendance up 12.1% year-over-year due to a strong film slate; media growth down year-over-year, given tough comparables, but segment remains growth focused; and 5% dividend hike announced, resulting in a pro-forma yield of 4.4%.

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Consolidated revenue of $248.2 million was a touch light of CIBC's $250.5 million estimate, given weaker-than-expected Media results. EBITDA of $41.1 million was just shy of CIBC's $42.6 million forecast, again given Media flow-through. Adjusted free cash flow (FCF) per share came in at $0.48 versus CIBC's $0.45 estimate.

The brokerage believes business drivers remain intact, as CGX continues to focus on execution, with the backdrop of a solid movie slate. Valuation remains its only obstacle. As such, the firm is maintaining its rating, but increasing its price target given a stronger slate and FCF stability.

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Cineplex directly and indirectly owns 100% of Cineplex Entertainment Limited Partnership. Cineplex's theatre circuit is concentrated in metropolitan and mid-sized markets, with geographic areas being Toronto, Montreal, Vancouver, Calgary, Edmonton, Ottawa and Quebec City.

CGX is trading down 1.30% at $30.38 on Friday.

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