In a country with no public cinemas and where only a few films have been shown to the public in more than three decades, it is a radical step: a handful of film-makers in Saudi Arabia has launched a secret cinema group, showing their own films that explore social and political issues such as women's rights, the lives of migrant workers, urbanisation and the belief in black magic.

Last Thursday, after evening prayers, more than 60 people attended the first screening by the Red Wax secret cinema in a large warehouse in the south-western city of Abha. Directed to the clandestine event by text message, they crowded inside the hired space, which was then bolted shut.

Most sat on cheap red plastic chairs placed in rows before a makeshift screen made from a large white sheet, but as the audience was larger than the organisers had expected, some stood. As the lights dimmed, nervousness gave way to quiet anticipation and in silence they watched a film about the lives of migrant workers on one of the country's major building projects. After the screening the audience discussed the issues it raised and the ban on cinema in the kingdom.

"I was really nervous; everyone was nervous," said the film's director, one founder of Red Wax. "We didn't have a plan if [police came]. Everyone parked away from the place. We sent them directions by text message to their mobiles or rang them. Our fears are just to get caught or sent to jail."

Cinemas were shut in the 1970s down after the assassination of King Faisal, who was criticised for introducing television to Saudi Arabia. Religious conservatives consider cultural activities such as films and concerts to be immoral and against Islamic values.

There were signs of liberalisation with the launch in 2006 of the annual European film festival in Jeddah, which shows films to a select audience in embassies and consulates. The first official Saudi film festival followed in May 2008 in the eastern city of Dammam, although it has not been repeated. Later that year the comedy Menahi, financed and produced by King Abdullah's billionaire nephew Prince Waleed bin Talal's Rotana media, became the first film, apart from a few children's cartoons, to be shown publicly for 30 years when it ran for barely a week in Jeddah and nearby Taif.

But there was a backlash following its more limited screening in the capital Riyadh, with hardliners issuing a fatwa against cinemas in July 2009 that led the government to ban their construction.

The collective of five film-makers – four men and one woman – said Red Wax referred to the official stamps used to restrict freedoms in the kingdom, although one member added it is also a strong kind of local cannabis resin. The first event was only open to men, with the audience including students, writers and artists aged from 20 to 40. But women will be invited to future events, scheduled to take place in other cities and organised via social networking websites to attract a wider audience.

The director of the first film shown said: "Saudi people love cinema. People drive to Bahrain at the weekend just to see films or fly to Dubai. You can see thousands of films on pirate DVDs for $2 or $3. You can download on BitTorrent or see it on satellite TV. You cannot imagine how much filesharing there is.

"The problem is with some of the religious movements and extremists. They say its haram [sinful] because of the content of the films and people being there communally. But we say it's not haram because cinema is not mentioned in the Qur'an or the Hadith [the sayings and acts of Muhammad]."

The group said they decided to set up a secret cinema after the authorities cracked down on Saudi film-makers who posted work on YouTube which, according to Al-Arabiya, receives as many as 90m page views from the kingdom every day.

Feras Bugnah, a video blogger, was arrested and detained for two weeks last year after posting a film about poverty in Riyadh on the site, which attracted more than 800,000 views. "On YouTube they always watch you and restrict the page," said another Red Wax founder. "Secret cinema is Banksy style – no one knows who he is."

The film-maker denied their activities were un-Islamic. Their aim, they said, was both to stimulate grassroots film production and a critical audience. "The films should be made by people here [to give] more freedom of expression to our community. It's [about] our daily life, our struggle against all these banning forces, not to be free to say what we want. We need to reach average people so we can raise the level of awareness. It's not provocative, it's more real. If I make a film, I need an audience. It's not interesting if a film is not showing inside [the kingdom] because not all Saudis can travel abroad."

The next film to be screened explores women's rights and was shot with a camera hidden in a black abaya robe. Another looks at the belief in black magic. The director said: "It's restricted in Islam to go to a wizard but it's really common because a lot of people believe it is more than medicine.

"One of my friend's brothers was in hospital with a liver infection and people told him to buy a black rooster and pour its blood on his body."

Haifaa al-Mansour, whose first feature film Wadjda was shown in the 2012 London film festival, said the secret cinema showed there was a desire in the country for young people to come together and tell their stories and raise issues through film. When she shot her film in the kingdom, despite opposition from conservatives, "a lot of people wanted to be extras." But she added: "It might be more difficult and take more time but it's important to work within the system to see real change."

Mansour said the lack of a public audience made it difficult to produce films in the kingdom.

"The funding is very difficult because a lot of people don't know what to do with a film from Saudi Arabia. How politically will it be placed? Where's it going to show? So they'd rather give money to film-makers in Lebanon and Egypt. It's very frustrating."

Mona Deeley, a producer for Cinema Badila: Alternative Cinema on BBC Arabic TV, said: "The secret cinema is an interesting initiative for both subverting the ban on cinema and as a form of civil and cultural resistance."

Egyptian writer and curator Omar Kholeif, director of the UK's Arab Film Festival, also gave a cautious welcome to the secret cinema: "I would personally question what real impact a 'secret' cinema event could have – after all, it is secret. In spirit, and in ethos, I think it is to be applauded, but what I would really like to see is how this group could intervene publicly – to mount a true act of subversion."