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Wunderlich Securities has published a positive report Tuesday on Cinemark
CNK that maintained its a Buy-rating and $34 PT.
Cinemark's sale of its 290 Mexican screens to Grupo Cinemex will not significantly hamper the company's Latin American presence, writes Wunderlich.
"The sale eliminates only $16.3mm of LTM 9.30.12 EBITDA, or sub 10% of CNK's Latin cash generation, and allows focus on higher growth markets with higher ROI capital redeployment. The sale price and multiple were not disclosed but we suspect a sub six exit multiple given the desire to avoid stranded capital on any Mexican screen reinvestments, especially with 100-150 anticipated new 2013 CNK Latin screens," Wunderlich says. "We estimate that Cinemark's stock price, among other possible combinations, now implicitly discounts flat annual LatAm attendance per screen growth with 1% annual U.S. declines."
Cinemark closed Friday at $29.42.
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