Stock price when the opinion was issued
(A Top Pick May 13/15. Down 21.19%.) Had what he had thought were quite solid earnings, but that didn’t stop the stock from doing a swan dive of $3 yesterday. They are building IMAX theatres in China at a very good clip, which he loves. Had their 1st week where the box office in China was bigger than North America. Has a 20% interest in all their Chinese theatres. Are now also into home IMAX theatres in China. Probably more of a buying opportunity than a reason to be fearful.
(A Top Pick July 16/15. Down 13.29%.) He loves this. Fundamentals are outstanding. Building theatres at a great pace in China and have a huge amount of buildout ahead of them. Sold their original theatres. They are joint venturing in China and taking 20% of the top side revenue. All the big movies that are opening in China and North America are benefiting this company’s top and bottom lines.
IMAX has been around a very long time, and even had takeover overtures a couple of decades ago. But it hasn't created much value. The stock is about 1/3rd the level of ten years ago. It is not too expensive (but not cheap) at 23X earnings. It has a good global brand and is recovering well from the pandemic. But debt is high, at about 4X cash flow. It showed 8% revenue growth in the 2Q, but this was a sharp deceleration from Q1, as many blockbuster movies disappointed. Q3 'should' be a bit better. EPS did beat expectations. Insiders own 17%. It is hard to get excited here. It remains at the mercy of the movie slate, and with the writer's strike the outlook is probably not great. We would consider it a weak hold, with debt and lack of value creation the main offsets.
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They IPOed in Hong Kong recently. They now take a 20% joint venture interest in theatres as they expand. All the big movies like Star Wars want to open in Imax theatres. They are still building theatres at a good clip. It came off because the China IPO was delayed. He is still buying it at this level and thinks it has huge upside.