Film exhibitor Imax Corp.
on Tuesday announced it was extending its relationship with Chinese state-owned Omnijoi Cinemas, adding another 40 Imax locations through 2021. The new deal will more than double Omnijoi’s commitment, pushing the number of Imax screens to 72. Omnijoi has become Imax’s third largest partner in China and fifth largest in the world, according to B. Riley analyst Eric Wold, who wrote in a note to clients: “We believe this agreement has long-term strategic importance for Imax in enhancing its relationship with the Chinese government — as the company looks to expand its film production and financing presence in the region, secure the most important real estate locations, be involved in discussions around film quota increases and seek out other growth opportunities in the region.” The deal is unlikely to have any noticeable impact on Imax, Wold wrote, but it underlines the Hollywood film industry’s increased focus and reliance on the Chinese market. Though stalling recently, the China film market has growth rapidly compared with the U.S., and is expected to surpass the U.S. as the No. 1 film market by 2020. Hollywood studios and film exhibitors, such as Imax and AMC Entertainment Corp.
which was bought by Chinese conglomerate Dalian Wanda Group in 2012, have made concerted efforts in production and distribution to address the China market and Chinese sensibilities. The result of this was most recently on display when Universal Picture’s
“The Fate of the Furious” notched the largest global opening ever for a film, led by a $190 million draw in China. Wold reiterates a buy rating on Imax, with a $46 12-month price target. Shares of Imax have gained 2.5% in the year to date, but are down 1.9% over the previous 12 months. The S&P 500 index
is up 4.6% in the year.