rating company sell imax chinaimg3.gelonghui.com/pdf201611/pdf20161123093557384.pdf · 2016. 11....

Deutsche Bank Markets Research

Rating

Sell Asia

Hong Kong

Consumer

Hotels / Leisure / Gaming

Company

IMAX China

Date

21 November 2016

Forecast Change

Not everyone will pay a premium for quality; reiterating Sell

Reuters Bloomberg Exchange Ticker 1970.HK 1970 HK HSI 1970

Forecasts And Ratios

Year End Dec 31 2014A 2015A 2016E 2017E 2018E

Sales (USDm) 78.2 110.6 124.1 140.2 148.3

Reported NPAT (USDm) 22.8 -181.9 43.1 48.1 51.4

DB EPS FD(USD) 0.10 0.15 0.12 0.14 0.14

DB EPS growth (%) 13.6 43.2 -18.1 11.7 6.7

PER (x) – 42.3 40.2 36.0 33.7

Source: Deutsche Bank estimates, company data 1 DB EPS is fully diluted and excludes non-recurring items 2 Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses

the year end close

We cut our 2016 and 2017 earnings forecasts by 15% and 20%, respectively

________________________________________________________________________________________________________________

Deutsche Bank AG/Hong Kong

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

Price at 18 Nov 2016 (HKD) 37.85

Price target - 12mth (HKD) 26.00

52-week range (HKD) 59.70 - 34.80

HANG SENG INDEX 22,344

Tallan Zhou

Research Analyst

(+852 ) 2203 6464

[email protected]

Karen Tang

Research Analyst

(+852 ) 2203 6141

[email protected]

Key changes

Price target 31.00 to 26.00 ↓ -16.1%

Sales (FYE) 136 to 124 ↓ -8.7%

Op prof margin (FYE)

46.9 to 43.8 ↓ -6.7%

Net profit (FYE)

50.5 to 43.1 ↓ -14.6%

Source: Deutsche Bank

Price/price relative

20

30

40

50

60

70

10/15 4/16 10/16

IMAX China

HANG SENG INDEX (Rebased)

Performance (%) 1m 3m 12m

Absolute -0.8 -14.0 -17.6

HANG SENG INDEX -4.5 -2.9 0.7


3Q results confirmed our view that demand for IMAX's premium products is not driven by supply but rather growth in IMAX’s box office takings is driven by the popularity of individual Hollywood movies, irrespective of format quality. Audience response this year has been poor, with demand highly skewed to screens in tier 1 & 2 cities. As the company expands its footprint to lower tier locations, we believe returns on each new screen will fall further because of lower occupancy levels and the need to sell tickets at lower prices. There is also a clear trend of increased competition affecting demand. We cut 2016/2017E EPS 15%/20% and our valuation to HKD26: Sell.

The greater the penetration, the lower the return for IMAX’s revenue share model We have consistently argued that IMAX’s strategy to penetrate lower tier cites in China will weaken margins. The current business mix is very concentrated in tier 1 & 2 cities, and expansion into lower tier cities is inefficient as lower occupancy rates and ticket prices will lead to lower yields per screen and margins. On our return sensitivity analysis the per screen sales (PSA) and revenue share rate drop we expect within the next 10 years would significantly lower the return of the revenue share model by almost 36%

External competition to intensify Externally, we see more giant screen operators aiming for China’s market share. Operators such as DMAX (China Film Group), X-land and Dolby cinemas have aggressive expansion plans for the next few years. Although IMAX still enjoys brand power as its competitive advantage, Chinese audiences (especially those in lower tier cities) are very sensitive to price and may shift to other giant screen operators, which are typically 25% cheaper (c.RMB45 vs. IMAX RMB60).

Valuation and risks We cut our price target to HKD26 from HKD31, based on DCF (9.5% WACC and 3% TGR). The share currently trades at 40x/36x 2016/17E earnings, which we believe is overvalued given we project just 12% EPS growth in 2017 and 7% in 2018. Risks include a better-than-expected box office for Hollywood blockbuster movies in China, increasing upfront payment, higher percentage of revenue sharing, and lower production cost.

Distributed on: 21/11/2016 11:03:36 GMT

21 November 2016


IMAX China


Model updated:12 November 2016

Running the numbers

Asia

Hong Kong


IMAX China Reuters: 1970.HK Bloomberg: 1970 HK

Sell Price (18 Nov 16) HKD 37.85

Target Price HKD 26.00

52 Week range HKD 34.80 - 59.70

Market Cap (m) HKDm 13,449

USDm 1,734

Company Profile

IMAX China is a leading cinematic technology provider. The company provides IMAX theatre systems to Chinese movie theatres, and releases films in IMAX format.

Price Performance

20

30

40

50

60

70

Oct 15 Jan 16 Apr 16 Jul 16 Oct 16

IMAX China HANG SENG INDEX (Rebased)

Margin Trends

36404448525660

13 14 15 16E 17E 18E

EBITDA Margin EBIT Margin

Growth & Profitability

-300

-200

-100

0

100

200

0

10

20

30

40

50

13 14 15 16E 17E 18E

Sales growth (LHS) ROE (RHS)

Solvency

-350-300-250-200-150-100

-500

13 14 15 16E 17E 18E

Net debt/equity (LHS) Net interest cover (RHS)

Tallan Zhou

+852 2203 6464 [email protected]

Fiscal year end 31-Dec 2013 2014 2015 2016E 2017E 2018E

Financial Summary

DB EPS (USD) 0.09 0.10 0.15 0.12 0.14 0.14

Reported EPS (USD) 0.09 0.09 -0.62 0.12 0.14 0.14

DPS (USD) 0.00 0.19 0.00 0.06 0.07 0.07

BVPS (USD) 0.0 0.1 0.4 0.6 0.6 0.7

Weighted average shares (m) 200 251 293 355 355 355

Average market cap (USDm) na na 1,833 1,734 1,734 1,734

Enterprise value (USDm) na na 1,743 1,630 1,620 1,598

Valuation Metrics P/E (DB) (x) na na 42.3 40.2 36.0 33.7

P/E (Reported) (x) na na nm 40.2 36.0 33.7

P/BV (x) 0.00 0.00 15.89 8.63 7.62 6.81

FCF Yield (%) na na nm 0.7 1.8 2.6

Dividend Yield (%) na na 0.0 1.2 1.4 1.5

EV/Sales (x) nm nm 15.8 13.1 11.6 10.8

EV/EBITDA (x) nm nm 33.1 24.1 20.4 18.4

EV/EBIT (x) nm nm 41.1 30.0 26.0 23.7

Income Statement (USDm)

Sales revenue 56 78 111 124 140 148

Gross profit 40 55 83 93 107 117

EBITDA 29 40 53 68 79 87

Depreciation 4 4 5 6 8 10

Amortisation 4 5 5 7 9 10

EBIT 21 31 42 54 62 67

Net interest income(expense) 0 0 0 1 1 1

Associates/affiliates 0 0 0 0 0 0

Exceptionals/extraordinaries 0 0 0 0 0 0

Other pre-tax income/(expense) 0 -2 -214 0 0 0

Profit before tax 21 29 -171 55 63 69

Income tax expense 3 6 11 12 15 17

Minorities 0 0 0 0 0 0

Other post-tax income/(expense) 0 0 0 0 0 0

Net profit 17 23 -182 43 48 51

DB adjustments (including dilution) 1 3 225 0 0 0

DB Net profit 18 26 43 43 48 51

Cash Flow (USDm)

Cash flow from operations 20 28 0 46 48 54

Net Capex -12 -11 -12 -33 -16 -8

Free cash flow 8 17 -12 13 32 45

Equity raised/(bought back) 0 37 104 0 0 0

Dividends paid 0 0 -48 0 -22 -24

Net inc/(dec) in borrowings 0 0 0 0 0 0

Other investing/financing cash flows 0 -17 -2 0 0 0

Net cash flow 8 38 42 13 10 21

Change in working capital -2 -4 -53 -10 -17 -17

Balance Sheet (USDm)

Cash and other liquid assets 10 48 91 103 114 135

Tangible fixed assets 36 43 52 80 87 85

Goodwill/intangible assets 0 0 0 0 0 0

Associates/investments 0 0 0 0 0 0

Other assets 39 60 79 84 94 103

Total assets 85 151 222 267 296 323

Interest bearing debt 0 0 0 0 0 0

Other liabilities 82 125 64 66 68 69

Total liabilities 82 125 64 66 68 69

Shareholders' equity 3 26 158 201 227 255

Minorities 0 0 0 0 0 0

Total shareholders' equity 3 26 158 201 227 255

Net debt -10 -48 -91 -103 -114 -135

Key Company Metrics

Sales growth (%) 20.0 39.8 41.4 12.2 13.0 5.7

DB EPS growth (%) 38.3 13.6 43.2 -18.1 11.7 6.7

EBITDA Margin (%) 51.7 50.8 47.6 54.4 56.5 58.7

EBIT Margin (%) 37.4 39.8 38.3 43.8 44.4 45.4

Payout ratio (%) 0.0 208.9 nm 50.0 50.0 50.0

ROE (%) nm 154.7 -197.6 24.0 22.5 21.3

Capex/sales (%) 21.7 13.9 10.7 26.9 11.3 5.6

Capex/depreciation (x) 1.5 1.3 1.2 2.5 0.9 0.4

Net debt/equity (%) -325.0 -183.7 -57.5 -51.5 -50.1 -53.1

Net interest cover (x) nm nm nm nm nm nm

Source: Company data, Deutsche Bank estimates

21 November 2016


IMAX China


Internal expansion issue

More penetration, lower returns

Q3 results confirmed our view that IMAX is not in a supply-driven market…

We believe continuous penetration in China will not help IMAX improve its

profitability. Success at the premium end of the cinema industry is no longer

driven by new supply as it was five years ago.

IMAX Corporation (IMAX, non-rated) reported its RMB-based IMAX China box

office fell 15% and 20% on an USD-basis at its third quarter conference call on

October 20. However, management continued to raise its guidance for IMAX

installation and backlog orders in the third quarter. This also happened in 1H16,

when total IMAX box office and installations grew only 3.4% yoy and 56% yoy,

respectively.

… because IMAX’s box office is concentrated in tier 1 & 2 markets

IMAX’s installations in tier 1 & 2 markets account for only 64% of the total

number of IMAX theatres, while box office accounts for more than 70%,

according to Entgroup, a third-party movie data provider (see figure below).

We think such a distribution makes sense as IMAX is a movie product catering

for the high-end audience segment. IMAX’s per-ticket price averages c.RMB70

vs. China’s average of only c.RMB40, a premium of 75%.

Further, from a content perspective, IMAX’s business nature has a very close

linkage to Hollywood movies. Its content (including such characters as Marvel

figures) has become familiar to Chinese people over the years, especially those

in tier 1 & 2 cities, and visual effects of similar quality are unlikely to be created

by Chinese producers in the near future.

Of the top 10 2016 movies, only two are story-oriented (Operation Mekong and

Mermaid) while the rest are all based on visual effects.

Figure 1: 2012-2016 IMAX box office of tier 1-5 cities in China (RMB m)

Tier-1 cities Tier-2 cities Tier-3 cities Tier-4 cities Tier-5 cities Total 1-2 tier %

2016 330 731 259 106 15 1,486 71%

2015 416 973 332 102 7 1,829 76%

2014 310 667 197 65 10 1,249 78%

2013 238 438 111 20 / 807 84%

2012 157 286 70 5 / 517 86%

Source: Deutsche Bank, EntGroup Inc

21 November 2016


IMAX China


Figure 2: 2016 YTD top 10 movies in China

Rank English Name Chinese Name Box office (RMB m)

1 The Mermaid 美人鱼 3,391

2 Zootopia 疯狂动物城 1,530

3 Warcraft 魔兽 1,472

4 Captain America3 美国队长 3：英雄内战 1,246

5 The Monkey King2 西游记之孙悟空三打白骨精 1,201

6 Operation Mekong 湄公河行动 1,172

7 From Vegas to Macau3 澳门风云 3 1,118

8 Time Raiders 盗墓笔记 1,004

9 Kung Fu Panda3 功夫熊猫 3 1,002

10 The Jungle Book 奇幻森林 979

Source: Deutsche Bank, EntGroup Inc

ASP and occupancy rate will likely drop significantly in lower tier cities

Although IMAX’s box office in lower tier cities has grown faster than in Tier 1

& 2 cities, the base is too small to move the needle. As shown in the figure

below, for example, even though IMAX’s box office in tier 5 cities has grown

122% yoy in 2016 YTD, it only accounts for 1% of IMAX box office revenue, in

our view primarily because of: 1) a lower occupancy rate and 2) a much lower

ASP.

Figure 3: 2013-2016 IMAX box office YoY growth of tier 1-5 cities in China

Tier-1 cities Tier-2 cities Tier-3 cities Tier-4 cities Tier-5 cities

2016 -21% -25% -22% 4% 122%

2015 34% 46% 68% 58% -31%

2014 30% 52% 78% 222% /

2013 51% 54% 59% 318% / Source: Deutsche Bank, EntGroup, Inc

The occupancy rate of IMAX’s theatres in lower tier cities is lower than

in tier 1 and 2 cities. We believe this is mainly because of the higher

proportion of urban population in tier 1 and tier 2 cities. As per the

disclosure of the National Bureau of Statistics shown in the table

below, tier 1 cities such as Beijing and Shanghai have more than 85%

people in urban areas. Jiangsu and Zhejiang, where tier 2 cities are

mostly concentrated, have c.65% of their population urbanized, while

only c.50% of population lived in urban areas in Hebei and Shanxi (tier

3 and 4 cities concentrated).

Figure 4: Proportion of urban population by province

2011 2012 2013 2014

Beijing 86.2% 86.2% 86.3% 86.4%

Shanghai 89.3% 89.3% 89.6% 89.6%

Tianjin 80.5% 81.6% 82.0% 82.3%

Jiangsu 61.9% 63.0% 64.1% 65.2%

Zhejiang 62.3% 63.2% 64.0% 64.9%

Hebei 45.6% 46.8% 48.1% 49.3%

Shanxi 49.7% 51.3% 52.6% 53.8% Source: Deutsche Bank, National Bureau of Statistic

21 November 2016


IMAX China


IMAX’s ticket prices in lower tier cities are below those in tier 1 & 2

cities. In the table below we compare the movie Doctor Strange IMAX

ticket prices in different tiers of cities’ downtown on the afternoon of

November 11.

1) IMAX’s ticket prices are c.RMB100 in tier 1 cities such as

Beijing and Shanghai.

2) IMAX’s ticket prices are c.RMB60 in tier 2 cities such as

Hangzhou and Tianjin.

3) In lower tier cities such as Tangshan, Baotou (tier 3-4 cities) and

Jiamusi (tier 5 cities), IMAX’s ticket prices are all around RMB50,

which is about half tier 1 cities’ prices. Combined with a lower

occupancy rate, the lower IMAX ticket prices generate a much

lower box office per screen in lower tier cities.

Figure 5: IMAX ticket price in different cities

Tiers Cities IMAX Theatre Location Ticket price (RMB)

Tier 1 Beijing 金逸影院 (Jinyi) 朝阳区大悦城 (Chaoyang) 94

Shanghai 百丽宫影城 (Palace) 徐汇区环贸 (Xuhui) 108

Shenzhen 万达 (Wanda) 宝安店 (Baoan) 93

Tier 2 Tianjin 金逸影院 (Jinyi) 南开区大悦城 (Nankai) 59

Hangzhou 金逸影院 (Jinyi) 下城区影视中心 (Xiacheng) 63

Lower tier cities Tangshan 万达 (Wanda) 路南区 (Lu'nan) 53

Shaoxing 万达 (Wanda) 柯桥万达 (Keqiao) 53

Baotou 万达 (Wanda) 青山区万达广场 (Qingshan) 56

Jiamusi 万达 (Wanda) 郊区万达广场 (Jiaoqu) 53

Source: Deutsche Bank, Maoyan

Return analysis of IMAX’s screen − which one is better? Sales or revenue share?

IMAX China operates two different models and we believe it is critical to

understand the economics of these two payment arrangements with their

customers, the cinema operators. The first model is a simple sales

arrangement under which the cinema buys the IMAX system outright. The

second option is similar to a lease arrangement − a smaller payment upfront,

accompanied by a revenue sharing agreement between IMAX China and the

cinema operator. The table below shows the number of screens under each

model.

Figure 6: Number of screens under each model

IMAX screen number 2012 2013 2014 2015 2016E

Sales model 74 88 107 130 162

Full revenue share 51 75 102 130 190

Hypbrid 3 10 25 46 69

Sub total 128 173 234 306 421


Sales model. Currently this is USD1.37m per screen (total upfront payment of

USD34m divided by total installations of 25 in 2015), and we use this as the

benchmark for the revenue share model. If the discounted value under the

revenue share model is higher than the one-time upfront payment under the

sales model, then the revenue share model would be financially better.

Revenue share model. We test whether the discounted value under the

revenue share model is equivalent to that under the sales model. The revenue

21 November 2016


IMAX China


share model is correlated to two variables here: 1) per screen average (PSA)

and 2) revenue share rate.

PSA in 2015 was c. USD1.34m per year and we assume it would

remain unchanged in the next 10 years.

Revenue share rate per IMAX China is 14-16%. We choose 16% as an

optimistic scenario for calculation. Similarly, we assume a 16%

revenue share rate in the next 10 years.

The horizon is 10 years (common service life for IMAX contract).

As a result, the current discounted value for a revenue share model is

USD1.35m, equivalent to its sales model’s one-off sales price of USD1.37m.

In other words, if we assume 1) PSA and 2) the revenue share rate do not

change in 10 years, there would be no difference between IMAX’s sales model

and revenue share model.

However, it is unlikely that the two variables would remain unchanged for 10

years. Rather, we believe:

PSA will continue to drop due to the dilution effect of increasing IMAX

screens. IMAX’s PSA has dropped to USD0.615m from last year’s

USD0.811, a decline of 24%. For 3Q16, PSA of IMAX China was

USD0.171, the lowest among global regions. As a result, we expect

PSA of IMAX China to be c. USD1m in 2016, 30% lower than 2015’s.

We also expect IMAX’ revenue share rate to be under pressure, from

the increased negotiation power of cinemas, such as Wanda Cinema

(002739.SZ, BUY, RMB66.30). We do not expect IMAX to keep the

16% revenue share rate for the next 10 years.

Under the bear case scenario we assume 1) PSA to drop to USD1m

and 2) revenue share rate to drop to 14%; the discounted value under

the revenue share model will be USD0.88m, 36% lower than under the

sales model.

As a result, we believe that increasing penetration of a less efficient

market will eventually lead to lower returns in each IMAX screen.

Figure 7: Discounted value of IMAX’s revenue share model (WACC=9.5%, same as our DCF based valuation)

USDm Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

PSA 0.214 0.214 0.214 0.214 0.214 0.214 0.214 0.214 0.214 0.214

Discounted value 0.196 0.179 0.163 0.149 0.136 0.124 0.114 0.104 0.095 0.087

Total 1.35 Source: Deutsche Bank estimates

Figure 8: Sensitivity analysis of discounted value on PSA and revenue share rate

Box office revenue per screen

0.90 1.00 1.20 1.34 1.50 1.70 1.90

Reven

ue s

hare

rate

10% 0.57 0.63 0.75 0.84 0.94 1.07 1.19

12% 0.68 0.75 0.90 1.01 1.13 1.28 1.43

14% 0.79 0.88 1.05 1.18 1.32 1.49 1.67

16% 0.90 1.00 1.21 1.35 1.51 1.71 1.91

18% 1.02 1.13 1.36 1.51 1.70 1.92 2.15

20% 1.13 1.26 1.51 1.68 1.88 2.13 2.39

22% 1.24 1.38 1.66 1.85 2.07 2.35 2.62

24% 1.36 1.51 1.81 2.02 2.26 2.56 2.86

Source: Deutsche Bank estimates

21 November 2016


IMAX China


External competition

More penetration, more competition

IMAX faces more competitors in China than the US

IMAX seems to be dominating the US giant screen market. In a high spending

economy like the US, IMAX has c.400 screens, accounting for c. 1% of the

market. While China has c.38,000 screens, 2% of them are already giant

screens such as IMAX, DMAX, Polymax, etc., as shown in the table below.

Figure 9: IMAX vs. competitors

Competitors Owners Pricing range (RMB) No. of theatres in China (estimated)

DMAX China Film Group, 中影集团 RMB29-53 150 in Aug 16

X-Land Wanda, 万达 RMB50 41 in 1H15

POLYMAX Poly Pictures 保利影业 na Target 30 in next 3 years

Dolby Cinemas Wanda, 万达 RMB50 7 in Nov 16,Target 100 in next 5 years

4DX CJ CGV RMB45-60 50 in 2015

IMAX IMAX RMB50-100 306 in 1H16


Figure 10: Giant screen market share by the end of 2014

Competition technology

No of theatres Box office market share Avg box office per screen(US$m)

IMAX China 204 81.1% 1.2

China Film Giant Screen

73 11.5% 0.5

CJ CGV 4DX 28 7.4% 0.4

Wanda X-Land 32

Total non-conventional

4.5%

Other formats 95.5%

PRC industry average 0.2 Source: Deutsche Bank

IMAX is an expensive option for both cinemas and customers

IMAX is a high end product. Technically, IMAX still gives the best viewing

experience compared with lower cost giant screens. However, movie

audiences may choose the cheaper option because it would be difficult to tell

the detailed difference unless they compare the two screens at the same time.

For the majority of non-branded cinemas, the cost of purchasing the

equipment and related refurbishment expenses are too high (DBe

USD0.5-1.3m).

DMAX/X-Land/POLYMAX ticket prices are only c.80% of IMAX’s

because of their lower upfront installation payments (i.e. RMB5-6m for

DMAX).

Chinese audiences, especially those in tier 3-5 cities where incomes

are lower (see table below), are very sensitive to prices and may shift

to other giant screen operators such as DMAX/X-Land as their ticket

prices are cheaper.

21 November 2016


IMAX China


Figure 11: Income in tier1-5 cities of China

Tiers Tier-1 cities Tier-2 cities Tier-3 cities

GDP (RMB billion) >1,200 >500 >200

GDP per capita (RMB) >90,000 >75,000 >40,000

Population (Million) >10 >5 >3

Disposable income (RMB) >40,000 >28,000 >20,000


Competition is also coming from IMAX’s biggest client

IMAX is reliant on several big clients including Wanda and CJ CGV. As per

Wanda’s disclosure, it had 156 IMAX screens at the end of 1H16. However,

Wanda and CJ CGV are expanding their own competing products in tier 2-4

cities.

Wanda Cinema, IMAX’s largest customer, has both X-Land and Dolby

Cinemas. Most of the X-Land theatres are in tier 2-5 cities in China. In

addition, Wanda had 41 X-Land as of 1H15 and four new Dolby

Cinemas (audio effect publicly appreciated) as of 1H16, and will

strategically work with Dolby Lab to open 100 Dolby Cinemas in the

next five years.

Currently, there are seven Dolby Cinemas in mainland China. As

shown in the table below, most of them are owned by Wanda in tier-2

cities. Dolby Lab cooperated with Wanda to open four Dolby Cinemas

in Dalian, Changchun, Chongqing and Ji’nan as its first batch of Dolby

Cinemas in China. Since the newly added Dolby Cinemas in Nanjing

and Changsha in November 2016, Wanda has announced that by the

end of 2016, it will have a total of 10 Dolby Cinemas, including those

in Beijing and Chengdu.

Figure 12: Dolby Cinema in mainland China

City City Tiers Owner

Dalian (大连) Tier-2 Wanda Cinema

Changchun (长春) Tier-2 Wanda Cinema

Chongqing (重庆) Tier-2 Wanda Cinema

Ji'nan (济南) Tier-2 Wanda Cinema

Beijing (北京) Tier-1 Jackie Chan (耀莱成龙)

Nanjing (南京) Tier-2 Wanda Cinema

Changsha (长沙) Tier-2 Wanda Cinema

Beijing (北京) (Planned) Tier-1 Wanda Cinema

Chengdu (成都) (Planned) Tier-2 Wanda Cinema

Source: Company data, Deutsche Bank

CJ CGV, IMAX’s second-largest customer, also has its self-developed

4DX in China. As of 2015, CJ CGV had 50 4DX screens.

In addition, Evergrand Cinemas will strategically work with China Film

Giant Screen to open 100 Giant Screen Cinemas in the next three

years. By the end of July 2016, China Film had 150 DMAX giant

screens in mainland China.

21 November 2016


IMAX China


RealD also introduced giant screen brand LUXE to China and the first

LUXE cinema started operation in Tianjin at the end of May 2015.

Since then, LUXE giant screens have been introduced to Guangzhou,

Chengdu and Beijing.

IMAX is a product, not a platform

In addition, IMAX is significantly reliant on movies. Hollywood blockbusters are

the major movies screened on IMAX, while movie producers in China are more

likely to choose cost-effective movies rather than high-cost IMAX format

Chinese-language movies in 2016.

Of the eight movies in China exceeding RMB1bn at the box office in 2015, five

were Chinese language movies and two of them were low cost and non-IMAX

movies.

As per the movie profit-sharing policy, China’s movie producers can only

collect c.30% of total box office as revenue; we believe they will be more

sensitive from a cost perspective and will produce more low-cost movies.

21 November 2016


IMAX China


Earnings forecast changes

We cut our earnings forecast by 15-20%

We expect 2H IMAX’s box office to drop by 14% yoy

We cut 2016 and 2017 earnings estimates by 15% and 20%, respectively. At

IMAX Corp’s 3Q conference call, management announced that the RMB-based

box office of IMAX China dropped 15% and USD-based IMAX box office

(USD52m) dropped 20% yoy in 3Q.

We estimate IMAX’s RMB-based box office will drop 13% yoy and USD-based

box office will drop 18% in 4Q, factoring in unfavorable fx movements.

As a result, although we maintain our revenue forecasts under the sales model,

we lower the revenue contribution estimate because of: 1) the revenue share

model and 2) the format conversion business. These two businesses are

significantly correlated to IMAX’s box office. We lower our revenue forecasts

for the revenue share model by 7% for 2016 and 7% for 2017, and for the

format conversion business by 24% for 2016 and 33% for 2017.

As a result of revenue mix change we expect and the likely lower returns of

IMAX’s screens we have mentioned, we expect gross margin to drop 310 bps

in 2016 and 410 bps in 2017.

The table below details our earnings forecast changes.

Figure 13: Our earnings forecast change for 2016E and 2017E

OLD NEW DIFF

USDm 2016 2017 2016 2017 2016 2017

Revenue 136 160 124 140 -9% -12%

-IMAX theatre business 97 109 95 106 -3% -3%

1)Sales model 47 50 47 50 0% 0%

2)Revenue sharing model 36 42 34 39 -7% -7%

3)Theatre system maintenance 12 15 12 15 0% 0%

4))Other 2 2 2 2 0% 0%

-IMAX Format conversion 39 50 29 34 -24% -33%

Gross profit 92 110 80 90 -13% -18%

Gross margin 67.4% 68.8% 64.3% 64.4% 310 bps 440 bps

EBIT 63.8 78.0 54.3 62.3 -15% -20%

Pre-tax profit 65 79 55 63 -15% -20%

Net profit 50 60 43 48 -15% -20%

Core net profit 50 60 43 48 -15% -20%

EPS (USD) 0.142 0.169 0.121 0.135 -15% -20% Source: Deutsche Bank

21 November 2016


IMAX China


Figure 14: DB estimate vs. Consensus

2016E 2016E 2017E 2017E

DB estimate Consensus Diff. DB estimate Consensus Diff.

Total Revenue 124 132 -6% 140 161 -13%

Gross profit 80 84 -5% 90 108 -16%

EBIT 54 57 -5% 62 77 -19%

Pre-tax profit 55 59 -6% 63 79 -20%

Net profit 43 46 -7% 48 61 -21%

Adjusted net profit (excluding one-off)

43 46 -6% 48 61 -21%

EPS (USD) 0.12 0.13 -7% 0.14 0.18 -25% Source: Deutsche Bank estimates, Bloomberg LP consensus estimates

Figure 15: IMAX China box office estimate for Q4 and 2016E

Period IMAX box office estimated (RMB m) YoY

1Q16 520 39%

2Q16 617 -17%

3Q16 383 -15%

4Q16E 373 -13%

2016E 1,893 -5.3%

1H16 1,137 2%

2H16E 756 -14% Source: Deutsche Bank estimates, company data

Valuation − Price target cut to HKD26 from HKD31

Reflecting our earnings cut, our target price moves to HKD26 from HKD31,

based on the DCF presented below. Our other assumptions are unchanged.

Figure 16: DCF assumptions (unchanged)

Our assumptions

Equity as % of capital structure 90%

Beta 1.1

Risk free rate 3.9%

Equity risk premium 5.6%

Cost of equity 10.1%

Debt as % of capital structure 10%

Cost of debt 6.0%

Tax rate (for discount rate calculation) 25%

Terminal growth rate 3.0%

WACC 9.5%

Source: Deutsche Bank estimates

21 November 2016


IMAX China


Figure 17: IMAX China-DCF based valuation

USD million 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E

Revenue 140 148 155 162 181 199 215 230 244 259

EBIT 62 67 72 78 112 125 136 146 156 167

Tax Rate 24.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%

NOPAT 47 51 54 58 84 93 102 110 117 125

D&A 17 20 22 23 18 20 22 23 5 5

Capex (16) (8) (8) (8) (9) (4) (4) (5) (5) (5)

Change in W/C (17) (17) (18) (20) (27) (24) (22) (23) (24) (26)

FCF 31 45 49 53 66 85 97 105 93 99

Discounted FCF 28 37 37 36 41 49 51 50 40 40

TV 1,574

DCF firm value 1,056

Net cash (debt) 103

Equity Value 1,160

No of Shares Outstanding(m) 355

Value per Share(USD) 3.3

Value per Share(HKD) 26.1 Source: Deutsche Bank estimates

21 November 2016


IMAX China


Figure 18: Movie & media comps

Ticker English name

Current

price

Market cap

(USD m) ROE (%) P/B

2016E

PER

2017E

PER

2016E

EV/EBITDA

2017E

EV/EBITDA

DB

Recomm.

China movie & media

002739 CH Equity WANDA CINEMA L-A 67.90 11,678 19.7 7.4x 40.7x 29.6x 23.4x 16.6x Buy

300133 CH Equity ZHEJIANG HUACE-A 13.96 3,528 11.4 3.7x 34.0x 26.8x 27.2x 20.8x Buy

300027 CH Equity HUAYI BROTHERS-A 12.38 5,088 9.6 3.2x 34.8x 27.7x 20.2x 15.5x Hold

300251 CH Equity BEIJING ENLIGH-A 11.42 4,852 9.2 4.5x 50.8x 38.4x 35.6x 26.0x Hold

300291 CH Equity BEIJING HUALUB-A 23.22 2,708 5.1 3.0x 41.3x 30.3x 36.9x 25.7x NR

000802 CH Equity BEIJING JINGXI-A 22.06 2,336 1.3 3.8x 46.2x 53.4x N.A. N.A. NR

601801 CH Equity ANHUI XINHUA-A 15.90 4,672 11.6 4.0x 30.9x 28.5x 36.9x 29.8x NR

000719 CH Equity CENTRAL CHINA-A 11.06 1,664 11.1 N.A. N.A. N.A. N.A. N.A. NR

000156 CH Equity WASU MEDIA HOL-A 19.30 4,005 6.3 2.8x N.A. N.A. N.A. N.A. NR

002071 CH Equity GREAT WALL MOV-A 13.64 1,079 32.7 N.A. N.A. N.A. N.A. N.A. NR

600386 CH Equity BEIJING BASHI -A 15.30 914 5.2 3.6x 30.5x 26.2x N.A. N.A. NR

300426 CH Equity ZHEJIANG TALEN-A 32.94 1,908 18.5 15.1x 136.6x 72.8x N.A. N.A. NR

300058 CH Equity BLUEFOCUS COMM-A 10.47 3,034 7.8 4.5x 28.7x 21.5x 25.2x 19.0x NR

000607 CH Equity ZHEJIANG HUAME-A 15.25 2,319 18.9 9.5x 60.2x 52.2x N.A. N.A. NR

600825 CH Equity SHANGHAI XINHU-A 9.48 1,432 2.3 3.8x N.A. N.A. N.A. N.A. NR

600088 CH Equity CHINA TELEVISI-A 24.12 1,170 (2.3) 7.1x N.A. N.A. N.A. N.A. NR

Average 5.4x 48.6x 37.0x 29.3x 21.9x

Global movie & media

1970 HK Equity IMAX CHINA HOLDI 37.70 1,727 24.0 8.6x 40.2x 36.0x 24.1x 20.4x Sell

8243 HK Equity DAHE MEDIA CO-H 0.43 45 N.A. N.A. N.A. N.A. N.A. N.A. NR

8075 HK Equity MEDIA ASIA GROUP 0.36 94 (11.2) 0.9 N.A. N.A. N.A. N.A. NR

1060 HK Equity ALI PICTURES 1.45 4,717 1.0 2.0x 64.2x N.A. N.A. N.A. NR

391 HK Equity MEI AH ENTERTAIN 0.58 428 (10.3) 4.4x N.A. N.A. N.A. N.A. NR

198 HK Equity SMI HOLDINGS 0.74 1,299 9.3 1.9x 16.4x 11.4x 9.6x 6.8x NR

079160 KS Equity CJ CGV 64,400.00 1,184 12.3 3.0x 25.4x 16.4x 10.9x 8.1x Buy

AMC US Equity AMC ENTERTAINMEN 34.50 3,367 8.1 2.1x 34.4x 25.6x 9.6x 8.3x NR

CINE LN Equity CINEWORLD GROUP 548.00 1,840 12.1 2.4x 16.9x 14.9x 10.2x 9.1x NR

CGX CN Equity CINEPLEX INC 50.15 2,378 18.3 4.3x 34.1x 24.9x 14.4x 12.1x NR

RGC US Equity REGAL ENTERTAI-A 23.02 3,666 N.A. N.A. 22.2x 19.1x 9.6x 8.9x NR

CNK US Equity CINEMARK HOLDING 41.66 4,865 20.5 4.0x 20.7x 18.0x 9.2x 8.4x NR

MAJOR TB Equity MAJOR CINEPLEX 30.00 744 19.0 4.0x 23.6x 19.9x 12.5x 11.3x NR

EVT AU Equity EVENT HOSPITALIT 14.06 1,685 13.2 2.2x 16.6x 15.6x 8.2x 7.7x NR

CKEC US Equity CARMIKE CINEMAS 34.05 832 2.1 2.9x 60.9x 44.6x 9.2x 8.6x NR

DIS US Equity WALT DISNEY CO 97.92 166,994 21.4 3.7x 17.1x 16.4x 10.7x 10.5x Buy

TWX US Equity TIME WARNER INC 86.80 72,257 18.8 2.8x 15.3x 0.0x 11.0x 10.0x Buy

FOXA US Equity TWENTY-FIRST C-A 27.52 58,469 17.8 3.9x 15.9x 14.5x 10.8x 9.8x Buy

VIAB US Equity VIACOM INC-B 38.86 15,529 36.4 3.6x 10.7x 10.4x 9.9x 8.9x Hold

CBS US Equity CBS CORP-B 58.86 28,658 37.2 6.1x 14.2x 13.2x 11.2x 11.1x Buy

Average 3.5x 26.1x 18.4x 11.1x 9.7x

Source: Deutsche Bank, Bloomberg LP consensus estimates for NR stocks

21 November 2016


IMAX China


Appendix: 2017 Hollywood movie pipelines in China

Movie pipeline in 2017

Figure 19: 2017 Hollywood movie pipelines in China

No. English Name Chinese Name Release date

1 Resident Evil 6 生化危机 6 January 27, 2017

2 Wolverine 3 金刚狼 3 March 3, 2017

3 Kong: Skull Island 金刚：骷髅岛 March 10, 2017

4 Beauty and the Beast 美女与野兽 March 17, 2017

5 Smurfs： The Lost Village 蓝精灵：失落的村庄 March 17, 2017

6 Power Rangers 恐龙战队 March 24, 2017

7 Ghost In the Shell 攻壳机动队 March 31, 2017

8 Fast and Furious 8 速度与激情 8 April 14, 2017

9 Guardians of the Galaxy 2 银河护卫队 2 May 5, 2017

10 Pirates of the Caribbean 5 加勒比海盗 5 May 26, 2017

11 Wonder Woman 神奇女侠 June 2, 2017

12 The Mummy 新木乃伊 June 9, 2017

13 Kingsman: the golder circle 王牌特工 2 June 16, 2017

14 Cars 3 赛车总动员 3 June 16, 2017

15 Transformers 5 变形金刚 5 June 23, 2017

16 Despicable Me 3 神偷奶爸 3 June 30, 2017

17 The New Avenger 蜘蛛侠归来 July 7, 2017

18 Rise of the Planet of the Apes 3

猩球崛起 3 July 14, 2017

19 Alien: Covenant 异形:契约 August 4, 2017

20 Lego Ninjago 乐高忍者 September 22, 2017

21 Thor 3 雷神 3 November 3, 2017

22 Justice League 正义联盟 November 17, 2017

23 Star War 8 星球大战 8 December 15, 2017

Source: WIND,Deutsche Bank

21 November 2016


IMAX China


Appendix 1

Important Disclosures

*Other information available upon request

Disclosure checklist

Company Ticker Recent price* Disclosure

IMAX China 1970.HK 37.85 (HKD) 18 Nov 16 NA *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=1970.HK

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Tallan Zhou

Historical recommendations and target price: IMAX China (1970.HK) (as of 11/18/2016)

1

2

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Oct 15 Jan 16 Apr 16 Jul 16 Oct 16

Secu

rity

Pri

ce

Date

Previous Recommendations

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

Current Recommendations

Buy Hold Sell Not Rated Suspended Rating

*New Recommendation Structure as of September 9,2002

**Analyst is no longer at Deutsche Bank

1. 18/02/2016: Upgrade to Sell, Target Price Change HKD36.00 Tallan Zhou

2. 22/07/2016: Sell, Target Price Change HKD31.00 Tallan Zhou

http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=1970.HK

21 November 2016


IMAX China


Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.

Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock

Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.

Newly issued research recommendations and target prices supersede previously published research.

53 %

37 %

10 %19 % 18 % 25 %

050

100150200250300350400450500

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

21 November 2016


IMAX China


Additional Information

The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively

"Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources

believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness.

If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this

report, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche

Bank may act as principal for its own account or as agent for another person.

Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own

account or with customers, in a manner inconsistent with the views taken in this research report. Others within

Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those

taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis,

equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication

may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies or

otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on.

Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment

banking, trading and principal trading revenues.

Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do

not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank provides

liquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts

sometimes have shorter-term trade ideas that are consistent or inconsistent with Deutsche Bank's existing longer term

ratings. Trade ideas for equities can be found at the SOLAR link at http://gm.db.com. A SOLAR idea represents a high

conviction belief by an analyst that a stock will outperform or underperform the market and/or sector delineated over a

time frame of no less than two weeks. In addition to SOLAR ideas, the analysts named in this report may from time to

time discuss with our clients, Deutsche Bank salespersons and Deutsche Bank traders, trading strategies or ideas that

reference catalysts or events that may have a near-term or medium-term impact on the market price of the securities

discussed in this report, which impact may be directionally counter to the analysts' current 12-month view of total return

or investment return as described herein. Deutsche Bank has no obligation to update, modify or amend this report or to

otherwise notify a recipient thereof if any opinion, forecast or estimate contained herein changes or subsequently

becomes inaccurate. Coverage and the frequency of changes in market conditions and in both general and company

specific economic prospects make it difficult to update research at defined intervals. Updates are at the sole discretion

of the coverage analyst concerned or of the Research Department Management and as such the majority of reports are

published at irregular intervals. This report is provided for informational purposes only and does not take into account

the particular investment objectives, financial situations, or needs of individual clients. It is not an offer or a solicitation

of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Target prices are

inherently imprecise and a product of the analyst’s judgment. The financial instruments discussed in this report may not

be suitable for all investors and investors must make their own informed investment decisions. Prices and availability of

financial instruments are subject to change without notice and investment transactions can lead to losses as a result of

price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor's

currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarily

indicative of future results. Unless otherwise indicated, prices are current as of the end of the previous trading session,

and are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank,

subject companies, and in some cases, other parties.

The Deutsche Bank Research Department is independent of other business areas divisions of the Bank. Details regarding

our organizational arrangements and information barriers we have to prevent and avoid conflicts of interest with respect

to our research is available on our website under Disclaimer found on the Legal tab.

Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise

to pay fixed or variable interest rates. For an investor who is long fixed rate instruments (thus receiving these cash

http://gm.db.com/

21 November 2016


IMAX China


flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a

loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the

loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse

macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation

(including changes in assets holding limits for different types of investors), changes in tax policies, currency

convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and

settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed

income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to

FX depreciation, or to specified interest rates – these are common in emerging markets. It is important to note that the

index fixings may -- by construction -- lag or mis-measure the actual move in the underlying variables they are intended

to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon

rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is

also important to acknowledge that funding in a currency that differs from the currency in which coupons are

denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to

the risks related to rates movements.

Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk.

The appropriateness or otherwise of these products for use by investors is dependent on the investors' own

circumstances including their tax position, their regulatory environment and the nature of their other assets and

liabilities, and as such, investors should take expert legal and financial advice before entering into any transaction similar

to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can

be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be

incurred that are greater than the amount of funds initially deposited. Trading in options involves risk and is not suitable

for all investors. Prior to buying or selling an option investors must review the "Characteristics and Risks of Standardized

Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the

website please contact your Deutsche Bank representative for a copy of this important document.

Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i)

exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by

numerous market factors, including world and national economic, political and regulatory events, events in equity and

debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed

exchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values are

affected by the currency of an underlying security, effectively assume currency risk.

Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the

investor's home jurisdiction. Aside from within this report, important conflict disclosures can also be found at

https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to

review this information before investing.

United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and

SIPC. Analysts located outside of the United States are employed by non-US affiliates that are not subject to FINRA

regulations.

Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated

in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under

German Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal

Financial Supervisory Authority.

United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester

House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the

Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial

Conduct Authority. Details about the extent of our authorisation and regulation are available on request.

Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch.

http://www.optionsclearing.com/about/publications/character-risks.jsp

https://gm.db.com/equities

21 November 2016


IMAX China


India: Prepared by Deutsche Equities India Pvt Ltd, which is registered by the Securities and Exchange Board of India

(SEBI) as a stock broker. Research Analyst SEBI Registration Number is INH000001741. DEIPL may have received

administrative warnings from the SEBI for breaches of Indian regulations.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial

instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA,

Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks

involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by

multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to

losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional

losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories

of investment advice, products and services. Recommended investment strategies, products and services carry the risk

of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in

market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the

relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in

this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the

name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank

Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are

not disclosed according to the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's

equity analysts are based on a 12-month forecast period.

Korea: Distributed by Deutsche Securities Korea Co.

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register

Number in South Africa: 1998/003298/10).

Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles

Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters

arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who

is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and

regulations), they accept legal responsibility to such person for its contents.

Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should

independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank

research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without

written consent. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and

is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited,

Taipei Branch may not execute transactions for clients in these securities/instruments.

Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre

Regulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall

within the scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower,

West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related

financial products or services are only available to Business Customers, as defined by the Qatar Financial Centre

Regulatory Authority.

Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute,

any appraisal or evaluation activity requiring a license in the Russian Federation.

Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated by the

Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities that fall

within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al Olaya

District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated

21 November 2016


IMAX China


by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services

activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai

International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been

distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as

defined by the Dubai Financial Services Authority.

Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product

referred to in this report and consider the PDS before making any decision about whether to acquire the product. Please

refer to Australian specific research disclosures and related information at

https://australia.db.com/australia/content/research-information.html

Australia and New Zealand: This research is intended only for "wholesale clients" within the meaning of the Australian

Corporations Act and New Zealand Financial Advisors Act respectively.

Additional information relative to securities, other financial products or issuers discussed in this report is available upon

request. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent.

Copyright © 2016 Deutsche Bank AG

https://australia.db.com/australia/content/research-information.html

David Folkerts-Landau Group Chief Economist and Global Head of Research

Raj Hindocha Global Chief Operating Officer

Research

Michael Spencer Head of APAC Research

Global Head of Economics

Steve Pollard Head of Americas Research

Global Head of Equity Research

Anthony Klarman Global Head of Debt Research

Paul Reynolds Head of EMEA

Equity Research

Dave Clark Head of APAC

Equity Research

Pam Finelli Global Head of

Equity Derivatives Research

Andreas Neubauer Head of Research - Germany

Stuart Kirk Head of Thematic Research

International locations

Deutsche Bank AG

Deutsche Bank Place

Level 16

Corner of Hunter & Phillip Streets

Sydney, NSW 2000

Australia

Tel: (61) 2 8258 1234

Deutsche Bank AG

Große Gallusstraße 10-14

60272 Frankfurt am Main

Germany

Tel: (49) 69 910 00

Deutsche Bank AG

Filiale Hongkong

International Commerce Centre,

1 Austin Road West,Kowloon,

Hong Kong

Tel: (852) 2203 8888

Deutsche Securities Inc.

2-11-1 Nagatacho

Sanno Park Tower

Chiyoda-ku, Tokyo 100-6171

Japan

Tel: (81) 3 5156 6770

Deutsche Bank AG London

1 Great Winchester Street

London EC2N 2EQ

United Kingdom

Tel: (44) 20 7545 8000

Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

United States of America

Tel: (1) 212 250 2500

rating company sell imax chinaimg3.gelonghui.com/pdf201611/pdf20161123093557384.pdf · 2016. 11....

Documents