Will China Be a Catalyst for IMAX Corporation Stock?

Future IMAX Corporation (NYSE: IMAX  ) stock returns may depend on how well the company cashes in on the opportunities emerging in China, Fool contributor Tim Beyers says in the following video.

Recently, the theater operator struck a deal to sell a 20% stake in IMAX China to CMC Capital Partners and Chinese private equity firm FountainVest Partners for $80 million in capital, to be paid in two installments. 

Introducing Chinese ownership into the mix should also speed the path to a spinoff IPO for IMAX China, the company said in a press release. "At this juncture, it makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China, including both our core theatre business as well as new business initiatives," said CEO Richard Gelfond in a statement.

Tim says the deal comes as China has been an increasingly important driver of global box-office returns. Marvel Studios films, in particular, have attracted huge audiences in the region. Iron Man 3 opened to a record $21.1 million there last year. IMAX screenings helped create the windfall, accounting for $1.5 million in grosses to set an opening-day record for Chinese cinemas.

The trend hasn't slowed in the year since. Captain America: The Winter Soldier has earned close to $100 million so far at Chinese cinemas -- a huge number earned during just 17 days of screening, according to The Hollywood Reporter.

Yet the good news doesn't end there. Domestic action flicks are also benefiting from the IMAX format. In February, kung-fu epic The Monkey King broke Iron Man 3's opening-day IMAX record with a $1.8 million haul.

Expect more records to fall. Thanks to this deal, the next round of IMAX-ready action epics should be available to even more of the Middle Kingdom. Revenue and profit should expand nicely as a result, Tim says, boosting IMAX stock in the process.

Now it's your turn to weigh in. Do you see IMAX cashing in on this deal? Or is the company overbetting on the Chinese market? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short IMAX stock at current prices.

A stock market game you can win
The rise of streaming and alternative programming has created a $2.2 trillion disruption that three companies are poised to cash in on. You can profit right alongside them. Click here to find out how.


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 27, 2014, at 11:51 PM, tretchikoff wrote:

    HiTim

    I agree with your assesnment of IMAX strategy in China,since it will result in higher sales & thus bigger profits. At this stage I's going to sit on my holdings of IMAX stock ,expecting stock price to raise >$30.

    Cheers

    Dimitri

  • Report this Comment On April 28, 2014, at 9:07 AM, TMFMileHigh wrote:

    Hi Dimitri,

    Thanks for writing. I hope we're both right about this stock!

    Foolish best,

    Tim

    --

    TMFMileHigh in CAPS and on the boards

    @milehighfool on Twitter

    http://about.me/timbeyers

    http://timbeyers.me

Add your comment.

DocumentId: 2928875, ~/Articles/ArticleHandler.aspx, 7/25/2014 5:07:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement