IMAX China Shares Surge 10 Percent on First Day on Hong Kong Market

“Our offering is a ballast against the volatility of the Chinese market,” CEO Richard Gelfond tells TheWrap

Giving Hollywood and global investors a better window on the Chinese economy was part of the motivation for IMAX China’s iniital publc stock offering, IMAX Chairman Richard Gelfond told TheWrap Thursday.

“In a way, our offering is a ballast against the volatility of the Chinese market,” he said after watching shares in IMAX China Holding Inc. surge 10 percent in an impressive first day on the Hong Kong Exchange, when the overall market was down one percentage point. IMAX China shares ended the session at $34.25 HK (U.S. $4.42) after being priced at roughly $4, near the bottom end of its range.

“Until now, people would see the Chinese market drop 5 percent and investors here would say, ‘Oh, my God, I better sell.’ But you have to remember that market is made up of energy companies and airlines and all sort of other interests,” he said. “By having a proxy for the movie industry, we’ll be able to see how the Chinese really feel about the business.”

Gelfond said the IPO marked the beginning of a new era for IMAX in that it’s now two actually companies, and that it’s hard for most investors in North America and globally to grasp the scope of the opportunities in China.

“As of today, our Chinese company is worth $1.6 billion and providing a third of the revenues, and the overall company is worth $2.4 billion,” said Gelfond, who believes the movie boom in China won’t be ending anytime soon.

“We have an operation right in middle of the fastest-growing market in the world, a lot of cash and debt capacity, public stock and a lot of opportunities,” he said. The Chinese box office rose nearly 50 percent to $3.3 billion in the first six months 2015.

When the company entered the Chinese market in 2003, there were roughly 2,000 theaters. Today, there are more than 20,000 and China is expected to overtake the U.S. as the world’s No. 1 film market in 2017.

Gelfond, who took over as CEO in 1994, admitted that the evolution of the Chinese market could “go in ways we can’t fully predict yet.” Still, he said, “The movie business has shown itself to be largely recession-proof, so I don’t think you’re going to see that volatility in our business that you might see in others.”

IMAX has benefited from key partnerships with Chinese media companies, including Wanda Cinemas, and has embarked on a theater-building spree. IMAX has 239 screens in China with another 219 planned.