IMAX China Rides on Record-Breaking Monthly Box Office

IMAX Corporation’s IMAX subsidiary IMAX China recently stated that the company collected box office gross of RMB250 million in August from IMAX theaters across Greater China.

IMAX noted that this is one of its best monthly performances, driven by blockbuster Hollywood and Chinese language titles including Ne Zha, Fast and Furious Presents: Hobbs and Shaw, The Bravest, Spider-man: Far from Home and The Lion King.

Notably, as of Aug 31, IMAX China grossed RMB 2.1 billion in box office, up 28% compared to the same period last year.

Hollywood & Chinese Content Strength Aids Growth

Apart from blockbuster Hollywood titles, IMAX is also benefiting from Chinese language releases. The release of Chinese content in smaller cities boosted its local box office revenues.

In August, per management, Ne Zha, became the first Chinese animated fantasy to be released in IMAX. It was released in China and select 3D IMAX theaters across North America and UK.

According to a Forbes report, Ne Zha became the second-biggest grosser in China after Wolf Warrior 2 ($854 million) as it outnumbered the box office figure of The Wandering Earth ($691 million) in China. The film is expected to earn around $1.43 million over the weekend, leading to per theater average of $20,399 over the first five days.

Other Chinese titles released on IMAX in 2019 so far include Looking Up, The Bravest and Shanghai Fortress.

For the rest of 2019, management anticipates box office to grow in low double digits internationally compared with the earlier guidance of mid-to-high single-digit range.

IMAX Corporation Price and EPS Surprise

IMAX Corporation Price and EPS Surprise

IMAX Corporation price-eps-surprise | IMAX Corporation Quote

IMAX Expanding Footprint in China

As on Jun 30, 2019, IMAX had 663 theaters operating in Greater China of which 648 were commercial multiplexes. Moreover, 301 theaters are scheduled to be installed by 2022.

The company’s focus on expanding footprint in its second-largest market is evident from its largest single international partnership with Wanda Film for 359 theater systems in Greater China.

Additionally, IMAX has also inked a deal with South Korean cinema chain CGV to add 40 new theaters in Greater China. This deal primarily focuses on Tier 1 and Tier 2 markets in China and is also expected to boost demand for IMAX with Laser.

Notably, CGV is IMAX’s third largest exhibitor partner globally by number of systems and is also the company’s second largest client in China.

Moreover, IMAX’s relationship with Maoyan, China's largest Internet-based entertainment platform, is a key catalyst. Management expects Maoyan’s partnership with Tencent to help IMAX expand its footprint in China’s entertainment industry.

Zacks Rank & Stocks to Consider

Currently, IMAX has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Consumer Discretionary sector are Lions Gate Entertainment LGF.A, BrightView Holdings BV and Callaway Golf Company ELY, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Lions Gate, BrightView and Callaway is pegged at 15%, 19% and 25%, respectively.

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