Monday

Village Roadshow Limited (VRL)

Post a Comment May 18, 2009 – 10:17 pm |   | Permalink |  Print This Post |

We are tempted to load up more on Village (VRL.AX) shares, little did we expect a 10% rally defying the last 2 days decline (entry 80c, now 88c). A friend who follows our site also emailed to say that on top of the 10 FREE tickets every year, shareholders with at least 500 shares (500 x 0.90 = $450) will also get a single buy one free one voucher to ALL their themeparks ($60 per ticket x about 15 themeparks).

Hypothetically (note: this may be illegal so we are not suggesting you do this!), if you have access to 100 accounts, buying $50,000 worth of stocks in 100 accounts ($500 worth of shares each ie about 555 shares) will yield about $15000 worth of movie tickets and $90000 worth of theme park tickets. Selling them at HALF PRICE on Ebay will give you about $50000 worth of tickets a year! (We have since received a notice from VRL’s Investor Relations that this practice is against the terms and conditions of their shareholder free ticket voucher - am glad someone in Village is reading our posts - welcome onboard)

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The question is how much of their entertainment business is recession proof? Theme parks are unlikely, cinemas probably, whilst film distribution revenues will also be in line with how the movie industry goes during recessions. So are depressed poorer people more likely to come out to watch movies in the big screen or will they hide at home downloading illegal torrents and watching it on their home theatre system? We feel that there will probably be a down shift in the demographics of movie goers - the middle/upper class who used to take their family away on trips for the weekend (etc) will settle for a $70 family entertainment ($15 x 4 plus $10 for popcorn and drinks). The lower economic class who could not afford the home theatre systems who now get more government aid may not cut back on movies. So, at least for 25% of their cinema revenue we believe will be insulated. The themeparks, however, will be taking a hit in our view. At 18 year low, we are happy with a light holding of Village.