1H21 performance is in line with the previous profit forecast
1H21 IMAX China's revenue was 53.431 million US dollars, up 702% from the same period last year, down 9.896 from 1H19; net profit reversed to 19.198 million US dollars from the same period last year, falling into the profit forecast range of 1900-20 million US dollars; the adjusted net profit was 21.312 million US dollars. The board of directors approved a dividend of approximately $9.7 million ($0.028 per share), with a dividend yield of 50 per cent of net profit (33 per cent in 2017-2019). The company's 1H21 net profit exceeded our expectations ($15.29 million), mainly due to better-than-expected revenue and profitability.
Trend of development
With the steady growth of the box office in the market, the system installation and contract signing have been promoted normally. 1) IMAX box office: despite the regular performance of imported films, 1H21 in IMAX Greater China grossed US $133 million, a recovery rate of 56.3% compared with 1H19. We judged that it benefited from the outstanding performance of domestic films and the continuous improvement of the company's market share. 2) system installation and signing: 1H21 has installed 23 screens, of which the sharing mode and sales mode are 12 and 10 respectively, an increase of 10 and 9 respectively compared with the same period last year, and one screen is laser upgrade; 12 cinema systems have been signed, mainly focusing on high-end laser systems, and the number of cinemas to be built has reached 237; technical sales and maintenance revenue is 31.686 million US dollars, an increase of 24.8 per cent over 1H19.
Profit margin accelerated repair, close to the 1H19 level. 1H21's gross profit margin turned positive to 62.0% year on year, 7.3 ppt lower than 1H19; the rate of sales and management expenses was 14.5%, 1.2 ppt higher than 1H19; and the home net profit rate was 35.9%, lower 4.5ppt than 1H19. We believe that the company's business is on the right track in the post-epidemic era, and the company's profitability may continue to improve throughout the year.
The reserve of the film list is rich, and we pay attention to the box office of key domestic films and the filing of imported films. 1) domestic films: according to Cat's Eye Professional Edition, 2H21 contains IMAX films, "1921" / "Chinese Doctor" 7 Snake 2: green Snake robbing "has been released; action blockbuster" anger "/ theme film" Changjin Lake "/ Youth film" July 30 / August 12 / August 13 respectively. 2) imported films: according to IMDb, Hollywood films such as Venom 2 (Sept. 24) / Bond too busy to die (Oct. 8) / Sand Dunes (Oct. 22) containing IMAX may be released on 2H21, while Strange Doctor 2 / New Batman / Avatar 2 is expected to be released in 2022. We believe that the company's performance is expected to benefit from the acceleration of recovery due to the launch of blockbuster films, and its market share is expected to further increase with IMAX's coverage of more domestic blockbuster films and the recovery of the pace of imported films.
Profit forecast and valuation
We keep our revenue and net profit forecasts unchanged for 2021 and 2022. The current share price corresponds to 12.6 times 2021 / 2022, maintaining an outperform industry rating and a target price of HK $19.80 based on DCF valuation, corresponding to an upside space of 87.1% of 2021 / 2022 for 23.5 times 2021 / 2022.
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.