IMAX China to reverse this year's decline?
Author | Stephen's old dream
source | Gelonghui APP
70 years of the founding of the Golden Week, a national celebration. Last night, in many places, the east wind put flowers and thousands of trees at night, blowing down the sky and stars like rain, and the whole country feasted on the prosperous scene of the great country.
Golden Week film market also swept away the previous haze. As of the latest, the main melody movie "My Motherland and Me" has been released for three days and has won a box office of 825 million yuan, accounting for 39% of the film. The film is composed of 7 units, each unit interprets a period of common people's (603883, stock bar) experience related to major events that have occurred since the founding of the People's Republic of China 70 years ago. With such an arrangement of
, the mood of the 70th anniversary of the birthday of the masses is very high, and with the current best directors and actors in China, the box office is not unexpected.
's next two films, "Captain China" and "The Climber", have accumulated 612 million yuan and 376 million yuan in box office, with an average daily revenue of more than 100 million.
(Source: Cat’s Eye Movie)
and because the three movies all have IMAX broadcast format, on the first day of the Golden Week, the mainland obtained a total of 18.5 million yuan in IMAX theater box office (including click-through), an increase of 238% over the same day in 2018. Set records for the best opening day of Golden Week and the highest single day in history.
The direct beneficiary of the IMAX box office explosion is undoubtedly IMAX China (IMAX China, 1970.HK). The company is the exclusive licensee of the IMAX brand in the Greater China network and theater business and the only commercial platform for IMAX movies.
Affected by the news, IMAX China's share price rose slightly by 0.22% after the opening yesterday. But for the whole year of statistics, the stock price still fell by 11% during the year. On April 24 this year, the company's share price once recorded its highest point of 23.8 Hong Kong dollars so far, but then maintained its downward trend. The latest cumulative decline has reached 19.22%.
(Source: Straight Flush (300033, stocks))
This round of IMAX has a big box office. Is it possible for IMAX China, which has a poor stock price during the year, to reverse this year's decline?
1
The paradox between performance growth and stock price decline
IMAX China is a holding subsidiary of IMAX Corporation and is mainly responsible for business in the Greater China region. The company was listed on the Hong Kong Stock Exchange in October 2015. Its holding company, IMAX Corporation, has an IMAX theater network all over the world, and has exclusive proprietary IMAX, IMAX3D and IMAX DMR technologies.
Thanks to this, IMAX China’s operating business is mainly divided into three main lines: network business, cinema business and new business and others (mostly the first two, the revenue generated by new business accounts for a relatively small proportion). The network business of
mainly consists of the revenue sharing from the IMAX movie box office, including part of the revenue from the IMAX box office sharing, sales and sales lease arrangements obtained by converting domestic films into IMAX format and issuing, leasing IMAX theater systems and providing related services.
Among them, the rental of the IMAX theater system is mainly divided into two modes: comprehensive revenue sharing and mixed revenue sharing. The former customers receive contingent rent in exchange for a certain percentage of the IMAX box office of the IMAX theater, but do not have to pay for the prepaid equipment related expenses. The latter will also charge customers a certain percentage of IMAX box office contingent rent, but also a certain fixed prepaid fee (this part of the cost that is not related to the movie box office is included in the theater business).
The theater business includes various sales and leasing, and fixed expenses incurred by revenue sharing arrangements, such as income from the one-time sale of IMAX theater systems and related services, and the aforementioned mixed revenue sharing arrangements that generate fixed expenses in advance.
In addition, the company provides IMAX theater system maintenance services, and the "dead" income generated from the sale of D glasses, screens, audio, components and other related equipment (included in the "other theaters" segment) is also included in the theater business.
Judging from the revenue distribution in the first half of this year, network business and cinema business accounted for 56.9% and 42.8% of the company's total revenue, respectively, and the proportion of network business revenue has increased. From the perspective of the proportion of income sources, IMAX China is gradually "turning out of reality".
(Source: Company Interim Report)
In the first half of the year, the company achieved revenue of US$59.256 million, a year-on-year increase of 15%; realized a profit of US$23.965 million for the period, a year-on-year increase of 17.1%. But at the same time, its debt-to-asset ratio also increased by 6.7 pct to 36.6% from 29.9% at the end of last year, mainly due to an increase in trade and other payables by US$8.5 million and an increase in accruals and other liabilities by US$7.8 million. In addition, the company also disclosed that it will incur capital expenditures of US$26.6 million for the entire year for expansion of the IMAX theater network under the comprehensive revenue share. As mentioned earlier, this part of the income does not charge equipment prepaid expenses (the company needs to pay in advance), only a part of the movie box office revenue. In the case of a significant increase in debt, if the company continues to expand its IMAX theater network under the full revenue share as planned, if the final box office results are not satisfactory, it will reduce the company's capital turnover ability.In the first half of this year, the company’s network business revenue increased rapidly because the number of IMAX theaters (26) increased by 3 compared to last year, including the two major box office titles of "Avengers 4" and "Wandering Earth" The explosive IMAX movie. The high ticket price of "Avengers 4" directly drove the box office revenue of each screen to increase by about 5% to 379,000 US dollars.
On the other hand, the number of theaters operated by the company under the revenue sharing arrangement also increased from 357 in the middle of last year to 428 theaters, an increase of 19.9%.
(Source: Company Interim Report)
However, it is clear that the method of generating revenue based on box office share is still full of uncertainty, especially when the company has confirmed that it will spend a large amount of capital expenditure to expand its IMAX theater network-and on Half a year, the film and television market encountered a cold winter. In fact, during the first half of the year, the only two movies with ideal box office were "Reunion" and "Wandering Earth". In terms of
cinema business, the company installed 30 systems in the first half of the year, including 24 IMAX systems and 6 IMAX laser upgrades, an increase of 5 year-on-year. The company expects to install 90 to 95 new cinema systems throughout the year, down from 101 systems last year. This also means that the number of installed and upgraded systems in the second half of this year may be slightly lower than that in the second half of the year, so the company's theater business revenue may decline year-on-year.
On the other hand, the number of IMAX theaters operating in Greater China in the first half of the year was 662, an increase of 16.3% year-on-year, but a decline from the year-on-year growth rate of 17.5% at the end of last year. In fact, in the first few months of the first half of this year, the number of movie viewers in the Mainland has been declining. The number of domestic movie viewers in the first four months was 591 million, a year-on-year decrease of 80 million.
Under such circumstances, cinema companies are naturally more cautious in opening IMAX theaters. And when the growth rate of IMAX theaters declines significantly, the life of IMAX China, which operates IMAX projection systems, will naturally be tight.
(Source: Company Interim Report) Can
2
dispel doubts during summer vacation?
reviews the company's performance in recent years, and its revenue growth rate has dropped significantly after 2016. Affected by the "big rectification" of the film and television industry last year, the company's revenue and profit have experienced negative growth in 2018.
(Source: Wind)
Guosen Securities (002736, shares) media chief analyst Zhang Heng said that the recent slowdown in IMAX total revenue and profit growth is mainly due to the downturn in the market, but the industry itself is still in an incremental market. After the theater network expands to a certain extent, the high cost of IMAX theater profitability will depend more on the quality of the film. At the same time, the domestic industry chain giants have also begun to deploy in this market, adding to the company's uncertainty.
Faced with many doubts from the outside world, IMAX has been good news recently. At the beginning of last month, the company announced that it won a box office of 250 million yuan in the Chinese mainland market in August, a record high in August's box office history. Among them, the summer box office and the number of movie viewers both broke historical records. The summer IMAX movies mainly include "Nezha: The Devil Boy", "Heroes of Fire", "Fast and Furious: Special Operations", "Spider-Man: Far From Home" and "The Lion King".
As of now, "Ne Zha" has a total box office of 4.952 billion yuan, which is the second-place box office of Chinese Film History. The opening of "Fast and Furious: Special Operations" also set a box office record for the first weekend of IMAX China’s best three days in August, and wonThe best opening day in August.
, of course, has a good start yesterday.
Later, according to the company's website, IMAX movies such as "Frozen 2" and "Star Wars 9" will be released this year.
(Source: IMAX China homepage)
Of course, there are also uncertainties. For example, it was originally scheduled to be released in the summer and the first domestic film "Yubai" filmed with IMAX cameras was withdrawn due to various reasons, and it is still unclear whether it is alive or dead.
But in general, there are summer vacations and this time (expected to be a big guarantee, and the company's network business revenue will be guaranteed at least this year.
According to this inference, the company's IMAX theater network expansion plan under the network business At least this year will not bear greater financial pressure. As for the full-year business performance, it will naturally be better than last year’s decline.
As for the longer term, will the growth of the number of IMAX theaters continue to slow down, or IMAX movies Whether it will continue to maintain high quality and attract more viewers to pay more to watch is more dependent on the content production companies in the film and television industry. Therefore, although the company's performance is currently showing clear signs of recovery, in the medium and long term, The uncertainty of its business model is still large. Since
reached its historical peak of HK$60 at the end of 2015, the company's stock price has fallen all the way and then fell. In this case, you may wish to give more time to see the uncertainty of its subsequent business model Will it be further reduced.
