What: Shares of IMAX (NYSE:IMAX) gained 13.6% in October, according to data from S&P Capital IQ. The market-beating gain was driven by two separate engines: a successful IPO for IMAX's Chinese operations and a healthy third-quarter earnings report.
So what: China is the world's second-largest movie market, and the Middle Kingdom accounts for roughly one-quarter of IMAX's total revenues. A separate tracking stock for the company's Chinese operations hit the Hong Kong market on Oct. 7, immediately surging 7% higher.
IMAX collected about $104 million of fresh cash from this partial spinoff, and IMAX China held on to $58 million to support its own Chinese expansion plans. IMAX proper now owns 68.5% of IMAX China.
As for the third-quarter report, IMAX crushed Wall Street's sales estimates while matching consensus earnings targets.
Now what: Looking ahead, IMAX management is already getting excited about the upcoming release of Star Wars: The Force Awakens. Pre-sales for that epic space opera has already set records for IMAX, and the company hopes to milk this beast for as long as possible.
In the third-quarter earnings call transcript, IMAX CEO Greg Foster compared the Walt Disney (NYSE:DIS) title to the historic box office performance of Avatar in 2009 and 2010:
I think many of you remember that when Avatar came out in December of 2009, it continued to play for many, many months, for I think an additional 10 weeks, well into March. Our hope is that Star Wars, based on advance ticket sales, is one of those movies.
That effect will most certainly help Disney and its shareholders, but IMAX offers a unique viewing experience that should match well with this promised larger-than-life tale. If Star Wars VII can live up to its admittedly crazy-high expectations, you should see that title playing in IMAX theaters well into the spring season.
And the longer it stays, the happier IMAX shareholders will be.