Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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IMAX China Holding / Equity Capital Markets

<p>IMAX China is a leading cinema technology provider, the exclusive licensee of the IMAX brand and technology and the sole platform for the release of IMAX format movies in Greater China. Its main shareholders, including IMAX Corp, and the company are&nbsp;selling c.US$250m in the coming IPO with 29%/71% split between&nbsp;Primay and Secondary shares.&nbsp;</p><ul><li>We like the company's dominance in the niche premium large format (PLF) film segment and its growth potential at the backdrop of favorable growth of China's film industry (or broadly speaking the entertainment industry). Despite increasing competition, its expansion in recent years has not result in decrease of average revenue per screen for IMAX China. Given the low penetration rate of PLF in China, we think there's still room for expansion for both IMAX and its competitors in the near to medium term. We are concerned, however, about its long term leadership as its competitor are catching up swiftly.</li><li>On valuation, the IPO appears to offer reasonable pricing, if we compare the valuation of 23x - 27x 2016E PER with its parent's (Bloomberg ticker: IMAX US) 26x 2016E PER. As the majority of the growth of its parent company is from Greater China, IMAX China deserves to trade at a premium to its parent. Thus, its parent's valuation should act as a support level for IMAX China.&nbsp;</li><li>The IPO rates well in our Smartkarma IPO Framework for both momentum and value strategy. <strong>We would like to participate in the deal.&nbsp;</strong></li></ul>

IMAX China is a leading cinema technology provider, the exclusive licensee of the IMAX brand and technology and the sole platform for the release of IMAX format movies in Greater China. Its main shareholders, including IMAX Corp, and the company are&nbsp;selling c.US$250m in the coming IPO with 29%/71% split between&nbsp;Primay and Secondary shares.&nbsp;We like the company's dominance in the niche premium large format (PLF) film segment and its growth potential at the backdrop of favorable growth of China's film industry (or broadly speaking the entertainment industry). Despite increasing competition, its expansion in recent years has not result in decrease of average revenue per screen for IMAX China. Given the low penetration rate of PLF in China, we think there's still room for expansion for both IMAX and its competitors in the near to medium term. We are concerned, however, about its long term leadership as its competitor are catching up swiftly.On valuation, the IPO appears to offer reasonable pricing, if we compare the valuation of 23x - 27x 2016E PER with its parent's (Bloomberg ticker: IMAX US) 26x 2016E PER. As the majority of the growth of its parent company is from Greater China, IMAX China deserves to trade at a premium to its parent. Thus, its parent's valuation should act as a support level for IMAX China.&nbsp;The IPO rates well in our Smartkarma IPO Framework for both momentum and value strategy. We would like to participate in the deal.&nbsp;

IMAX China IPO: reasonable valuation, beware of threat from domestic players

Hong Kong

IMAX China Holding, Inc. operates as a holding company. The Company, through its subsidiaries, broadcasts movies in theaters. IMAX China Holding serves customers in China.

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IMAX China Holding (1970 HK)

IMAX China IPO: reasonable valuation, beware of threat from domestic players

IMAX China is a leading cinema technology provider, the exclusive licensee of the IMAX brand and technology and the sole platform for the release...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)