IMAX is ready to shine in China, Roth says

As the busiest moving going time in China, Roth MKM analyst Eric Handler likes what he sees from IMAX (IMAX Stock Quote, Chart, News, Analysts, Financials NYSE:IMAX).

In a research update to clients February 9, Handler reiterated his “Buy” rating and one-year price target of $22.00 on IMAX.

The analyst says IMAX has turned its focus to China and he believes it will pay off.

The Lunar New Year Festival kicks off tomorrow, Saturday, February 10, marking the busiest movie going period of the year in China. China, with its strong local language influence, remains a significant (and underappreciated) driver for IMAX. Last month we hosted a webinar with IMAX China’s CEO, Daniel Manwaring and IMAX CFO, Natasha Fernandes, which reinforced our positive view towards the China growth strategy.”

Handler thinks IMAX will generate EBITDA of $145.0-million on revenue of $377.4-million in fiscal 2023. In 2024, he expects the company will post EBITDA of $136.2-million on a topline of $381.9-million.

“IMAX is doubling down in China on local language movies (62% of the company’s box office in the country in 2023),” he wrote. “There is an expectation IMAX will increase its number of local language titles in China this year from the 34 movies selected in 2023. This year’s Chinese New Year Festival has a more diversified lineup compared to last year when Wandering Earth 2 dominated. Top pre-sale titles include Article 20, Pegasus 2, and Yolo. Several notable titles are already teed up for this summer, including Ne Zha 2 and Creation of the Gods 2. Import films restrictions have loosened with regard to censorship and as has the approval volume. Theatre operator interest in IMAX is regaining momentum and the incremental installation opportunity remains sizable.”