IMAX reverses fortunes in first half, after huge increase in screen numbers

IMAX China Holdings, the country’s largest widescreen film provider, delivered a profit of US$17.7 million for the first half, compared with a loss of US$67.9 million for the same period last year.

Revenue increased 25 per cent from the previous period to US$55.1 million, which it attributed to increasing its number of screens by 67 per cent compared with the same period.

The cinematic-technology provider, which now boasts 335 screens across the mainland, Hong Kong and Taiwan with 264 more in the pipeline, also raised its new theatre installation target to 115 from 100 for 2016, buoyed by a slew of new contracts.

The Shanghai-based subsidiary of IMAX Corp — which has its major operations in New York, Toronto and Los Angeles — is now considered very much on the front row of China’s flourishing movie market, which saw total box office surge by over 40 per cent in 2015.

“More signings lead to more installs, which then lead to more box office, and, ultimately, to greater revenue,” said Richard Gelfond, chairman of IMAX China.

“This increase throughout the year is unprecedented at IMAX.”

In the first six months of 2016, IMAX China signed up 79 new theatres, outpacing the 74 deals it inked over the full year 2015.

Gelfond, who is also the chief executive of the New York-listed parent company, said the China offshoot is creating close ties with industry conglomerate Dalian Wanda, a relationship he said “couldn’t be stronger”.

“We are hand in hand with them on the studio arm, which not only includes Chinese releases through

Wanda Media, but also a number of Hollywood titles through Legendary.

“We also work closely with Wanda’s real estate arm and have built up and launched new theatres in China as well as in new malls,” he said in a conference call Thursday morning.

Since breaking into China, IMAX and its biggest client Wanda Cinema Line, controlled by China’s richest man Wang Jianlin, have signed numerous revenue-sharing agreements in an efforts to expand, opening hundreds of IMAX theatres across China’s tier two and three cities, mostly in bustling shopping malls.

Wanda took over US film studio Legendary Entertainment in January, while US theatrical exhibitor AMC Entertainment, owned by Wanda, bought its rival Carmike in March in a deal to create the largest cinema chain in the US.

After listing in Hong Kong last October, IMAX China’s share price climbed more than 70 per cent before falling into a downward spiral from December.

The stock rose 4.5 per cent to close at HK$42.20 on Thursday.

Walter Woo, an analyst with Oriental Patron, said he expected IMAX China’s revenue to improve again in the second half as it generates more box office income, adding the movie market was “relatively lukewarm” in the first half.

While a potential exit of IMAX China’s pre-IPO investors after the expiry of the share sale lock-up period remained a possibility, Woo suggested it could still be a good time for investors to look at the company.

“The new installations will help its box office revenue to improve going forward,” he said.