MARKET REPORT: Cineworld shares fall as secretive Chinese tycoon hikes his stake in the debt-laden cinema chain
The plot has thickened at Cineworld after a secretive Chinese millionaire hiked his stake in the cinema chain.
Liu Zaiwang made his fortune in construction business in the 1990s during the country’s building boom.
But his interest in Cineworld since the Covid crisis triggered a catastrophic drop in its share price and has stoked speculation he could bid for the beleaguered and debt-laden giant.
Liu Zaiwang’s interest in Cineworld since the Covid crisis triggered a catastrophic drop in its share price and has stoked speculation he could bid for the beleaguered and debt-laden giant
He built up a 5 per cent stake over the summer through his Jangho Group vehicle. This has now been beefed up to 8.6 per cent, according to a stock market filing yesterday.
This makes the enigmatic Zaiwang, whose wealth is said to top £610million, the company’s second-largest shareholder behind chief executive Mooky Greidinger.
Rapidly building up a large holding during a crisis often suggests a takeover could be on the table – but his intentions are still unknown.
What is clear is that he made the move on Monday, when Cineworld confirmed reports that it would need to shut more than 660 cinemas following the latest delay to the release of the James Bond film, No Time to Die.
Stock Watch – Hunting
Oilfield services provider Hunting surged after two bosses hoovered up stock and it received a double-upgrade from Barclays analysts.
Chief executive Jim Johnson bought 50,000 shares for 122p each – spending £61,000 – and finance head Bruce Ferguson snapped up 14,000 for 122.6p.
And Barclays brokers moved its rating from ‘underweight’ to ‘overweight’, arguing it is a cheap buy following a slump in the share price this year.
Shares in the group rose 10.9 per cent, or 14.7p, to 150p.
Shares fell 36 per cent on Monday, and shed another 2.9 per cent, or 0.8p, to end at 27p.
Diversity has been key for companies who are well-positioned to rebound from the Covid crisis.
Reliance on one group of services or customers carries higher risks – and none more so than for transport firms.
First Group and National Express will recover sooner than their rivals Go-Ahead and Stagecoach because of their business running school buses in North America, according to Citigroup analysts, who argue the yellow buses will be a saving grace for the FTSE 250 firms because anxious schools will be even keener to outsource services to save cash.
A sale of First’s school bus business, however, could also be a major boon. Despite Government funding, Citi said Go-Ahead and Stagecoach are too reliant on local bus services to bounce back quickly from the pandemic.
Citi concluded Stagecoach warranted a ‘sell’ rating, sending it up 0.2 per cent, or 0.06p, to 38.94p, and downgraded Go-Ahead from ‘buy’ to ‘neutral’, which fell 5 per cent, or 29.5p to 556p.
National Express rose 4.4 per cent, or 6.7p, to 158.7p and First climbed 10.8 per cent, or 4.5p, to 46p after both were upgraded from ‘neutral’ to ‘buy’.
The FTSE 250 rose by a miniscule 0.02 per cent, or 4.31 points, to 17,801.75 as the blue-chip FTSE 100 fell by 0.06 per cent, or 3.69 points, to 5946.25.
Shares in Mike Ashley’s retail conglomerate Frasers Group rose 0.2 per cent, or 0.8p, to 361.6p – after investors backed giving staff a possible £100million bonus.
Frasers, which owns House of Fraser and Sports Direct, has said the four-year scheme will be available to the ‘vast majority’ of its 30,000 staff. It requires the share price to top 1000p for 30 consecutive trading days in that time
Car dealer Vertu Motors benefited as customers who stayed at home, saving money on holidays, suddenly had more cash to spend on a vehicle.
Its half-year profits came in at £4.7million despite a £14.3million loss in the March to May quarter. Shares fell 1.3 per cent, or 0.4p, to 31.1p.
On AIM, video game developer Codemasters advanced 4.5 per cent, or 16p, to 375p after revenues virtually doubled to £80.5million in the six months to September 30.
And it was a mixed day for builders following Halifax figures that showed the average home costs almost £250,000 amid a ‘mini-boom’ a day after Prime Minister Boris Johnson unveiled sweeping housing plans.
Taylor Wimpey rose 2 per cent, or 2.3p, to 116.3p, while Barratt Developments fell 0.1 per cent, or 0.4p, to 525p and Persimmon slid 1.9 per cent, or 50p, to 2615p.