Forecast 1H21 net profit of US $15.29 million
IMAX China is expected to announce its 1H21 results in late July 2021 Beijing time. We expect its revenue to increase from US $6.66 million in 1H20 to US $48.21 million in 1H21, while 1H21's net profit turns to a year-on-year loss of US $15.29 million and adjusted net profit of US $15.95 million.
Pay attention to the main points
The box office recovered steadily in the post-epidemic era, and IMAX screen installation or gradual recovery. According to Arne, 1H21's domestic box office (including service charge) was 27.6 billion yuan ($4.12 billion), down 11.9% from 1H19 According to the company's website, IMAX Greater China grossed $84.1 million in 1Q21 and $47.5 million in 2Q21 (as of June 20), thanks to the Spring Festival films "investigation of Chinatown 3", "assassination of the novelist" and imported films "Godzilla vs. King Kong" and "Fast and Furious 9". We believe that more and more domestic films adopt the IMAX standard, and the brand value of IMAX is increasingly recognized by the market. The IMAX screen installation business may also recover somewhat. We expect the number of newly installed screens in 1H21 to be 23, maintaining the forecast of 52 newly installed screens in 2021 / the total of 813 screens at the end of the year. IMAX Greater China is expected to grosse US $305 million in 2021, an increase of 207% over the same period last year.
The business is gradually on the right track, and profitability may recover to a certain extent. Considering that the cost side includes fixed equipment depreciation and revenue fluctuates with the box office, we expect its performance to return to profit year-on-year as the revenue side recovers. 1H21 gross profit margin is 57.8% (1H20 is-60.79%), which is lower than 1H19 (1H19 imported film "Avengers 4" is outstanding, 1H21 imported film box office performance is regular); we expect 1H21 net profit rate to be 31.7%, down 8.7ppt compared with 1H19.
Pay attention to the performance of summer films and follow-up Hollywood film filing. Looking forward to the second half of 2021, the summer domestic films "1921", "Revolutionaries", "Chinese Doctor" and "White Snake: green Snake" all contain IMAX format; according to IMDb, Hollywood key films such as "Venom 2" / "Sand Dunes" / "007: no time to die" / "Yong Heng clan" are also expected to be introduced to theaters in 2021. We expect the company's results to benefit from the accelerated recovery of key deadlines and hit films, while its market share is expected to increase further as IMAX's coverage of more domestic blockbuster films and the pace of introduction of imported films resume.
Valuation and suggestion
As profitability continues to improve, we raise our 2021 net profit by 19.3% to $35.89 million, leaving our 2022 net profit forecast unchanged. The current price corresponds to 14.4 pound E in 2021 / 2022, and it remains to be seen considering the subsequent imported film filming. The industry rating and the target price based on DCF valuation are maintained at HK $19.80, corresponding to 24.6max 23.5 times 2021 / 2022 Phand E, which is 71.3% higher than the current price.
Risk.
The epidemic situation is repeated; the import progress of imported films is not as expected; and the number of new screens installed is lower than expected.