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IMAX's China Unit Debuts on Hong Kong Stock Exchange

Zacks Equity Research
Updated

IMAX Corp.’s IMAX Chinese unit – Imax China Holding – has commenced trading on the Hong Kong Stock exchange as part of the entertainment company’s efforts to expand in the lucrative Chinese movie market. We note that IMAX’s Chinese unit is a significant contributor to the company’s top line.

According to various media reports, approximately $248 million was raised by the company through an initial public offering (IPO). Imax China Holding, along with its four major shareholders, sold approximately 62 million shares or 17% of the outstanding shares at $4 per share. The fact that IMAX has gone forward with the IPO at a time when China is undergoing economic turmoil, hints at the fact that the company is eager to make the most of the lucrative Chinese movie market.

The tremendous potential of the movie market in the country is highlighted by China’s box-office revenues that surged approximately 36% year over year to $4.8 billion in 2014. Riding on the growth potential, the Chinese division of IMAX apparently generated profits of $22.8 million in 2014, up 31%. IMAX intends to make the Chinese market its largest, going forward. The tremendous potential of the Chinese movie market has prompted several analysts to believe that it will surpass the U.S. movie market by 2017. IMAX has a strong presence in China with over 230 screens and many more in the pipeline. Blockbuster Hollywood flicks like Furious 7 and Transformers: Age of Extinction garnered impressive revenues in the nation.

Zacks Rank

IMAX carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader consumer discretionary sector include Twenty-First Century Fox, Inc. FOX, Diamond Resorts International, Inc. DRII and Guess' Inc. GES. All three stocks carry a Zacks Rank #1 (Strong Buy).

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Zacks Investment Research