Analyst Chad Beynon of Macquarie Group Limited says one of his top picks in the movie theater group is Cinemark Holdings, Inc. (CNK), due to the company’s business in Latin America and exposure to the U.S. Hispanic market.
“[Cinemark] generates about 20% of their business from Latin America, which is experiencing a nice secular change right now, surrounding consumer discretionary spending. The attendance per screen in places like Brazil and Mexico is the highest in the world, yet they just don’t have any more screens. We are seeing new builds down there,” Beynon said.
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While in the U.S. Cinemark is operating in a mature market, Beynon likes the demographic exposure the company is getting thanks to its locations.
“We like Cinemark because they operate right on the outer edge of the bull’s eye in suburban markets. They don’t have super-expensive rental expenses, and they are in healthy markets with good demographic changes. In the U.S., the Hispanic population is roughly 15%, but at the movie theater, it’s about 30% of revenues, and they are exposed to those markets,” Beynon said.
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