IMAX still too cheap at $20:
- IMAX (IMAX -1.8%) CEO Richard Gelfond pushes back against the idea that sequel fatigue is holding back box office sales this year.
- Gelfond points to the strong opening run for Spider-Man: Far From Home and success of Avengers:Endgame. He thinks studios will continue to lean on the sequel formula due to structural changes with the movie industry.
- As for him company, he notes IMAX's box office revenue is up 5% YTD, including a 25% rise in China.
- Shares of IMAX are still up 7% YTD, despite a two-month long stumble.
They look at total box office but the blockbuster movies are, of course, on IMAX screens and those things are packing them in. Several times we've wanted to see something in IMAX and that was sold out and we had to go see it on a regular screen.
Spider Man was worth paying the IMAX fee for.
Look at IMAX's nice, steady revenue growth and yes, they spent a lot of money the last few years and it's supposed to start dropping to the bottom line this year and Q1 was $12.5M in profits so on track for $50M even if Q1 wasn't a low Q in the movie Biz. The company is valued at $1.2Bn at $20 so p/e pushing below 20x and the growth is still there and likely to continue:
| Year End 31st Dec | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | TTM | 2019E | 2020E | CAGR / Avg | |
| $m | 287.9 | 290.5 | 373.8 | 377.3 | 380.8 | 374.4 | 369.6 | 397.5 | 412 | +5.4% | |
| $m | 65.1 | 57.9 | 87.8 | 58.6 | 31.4 | 45.2 | 42.2 | -7.0% | |||
| $m | 44.1 | 39.7 | 55.8 | 28.8 | 2.34 | 22.8 | 22.6 | 70.9 | 76.9 | -12.3% | |
| $ | 0.64 | 0.56 | 0.78 | 0.42 | 0.18 | 0.36 | 0.36 | -10.9% | |||
| $ | 0.66 | 0.65 | 0.82 | 0.49 | 0.38 | 0.62 | 0.60 | 1.14 | 1.27 | -1.1% | |
| % | +4.9 | -0.8 | +26.3 | -40.7 | -22.8 | +65.5 | +19.8 | +82.2 | +11.4 | ||
| x | 32.7 | 34.2 | 18.0 | 16.1 | |||||||
| x | 0.40 | 0.42 | 1.57 | 0.99 | |||||||
| Profitability | |||||||||||
At $80M, the p/e is 15 and they are less than 50% rolled out in China. Keep in mind Avengers was SHOT in IMAX and just passed Titanic (in 6 months) for the most box office ever so, if that catches on, that's a bonus no one was counting for for IMAX.
While projectors don't show [18K] other than our film ones… we employ a lot of technology around that. We scan the film into its digital form at the highest possible resolution, and we process it throughout the entire food chain at these higher resolutions. It's a technique called oversampling. What it means is that when you get to that 4K final content, because you've been processing it at a much higher resolution, you actually get a better quality image.
IMAX has 609 screens in China but that's just 1% of all screens and it's not just our blockbusters but there are huge Chinese movies we've never heard of and if those directors start shooting in IMAX, revenues can go through the roof next decade.
IMAX currently has 1,500 screen world-wide and this year, like the past 5 years, they are putting in about 200 more but now 200 is not such a big percentage so the profits go to the bottom line despite the build-outs. At some point they'll ramp up to 300 per year but they can absorb that now.
The rest of the year looks good for them, 9 big movies in 6 months.
• The Lion King: The IMAX Experience (Walt Disney Studios, July 2019)
• Artemis Fowl: The IMAX Experience (Walt Disney Studios, August 2019)
• The New Mutants: The IMAX Experience (20th Century Fox, August 2019)
• IT Chapter Two: The IMAX Experience (New Line Cinema, September 2019)
• Frozen 2: The IMAX Experience (Walt Disney Studios, November 2019)
• Star Wars: Episode IX: The IMAX Experience (Walt Disney Studios, December 2019)Fast and Furious: Hobbs and Shaw
Joker
Gemini Man (Will Smith)
We have IMAX already but, as a new trade, I like:
- Sell 10 IMAX Jan $20 puts for $1.85 ($1,850)
- Buy 20 IMAX Jan $17 calls for $4 ($8,000)
- Sell 20 IMAX Jan $21 calls for $1.70 ($3,400)
That's net $2,750 on the $8,000 trade that's $6,000 in the money to start so the upside potential at $21 is $5,250 (190%) in just 6 months – nothing to sneeze at. The risk, of course, is owning 1,000 shares of IMAX for net $22.75, which is 10% more than it is now and the margin is $3,966 on ToS (ordinary) so not the greatest but it's only for 6 months.
