Q: What’s the outlook for Cineplex?do you think it gets bought out?
5i Research Answer:
CGX of course had a buyout offer, which failed post-Covid, and then it won a big lawsuit because of the failed deal. But the buyer (Cineworld) went bankrupt and CGX never got its money. CGX has lost money for five years, and thus debt is huge now (more than 10X cash flow). It has some assets of course, and locations, and EPS is expected to grow next year with a good movie slate. However, it is hardly a growth business. The only reason we would be interested here is for a possible takeover. But we would not invest just on this possibility, and the debt adds too much risk for us to endorse it otherwise.