Analysts are drooling over the potential box office in China. The country is set to overtake the North American box office within ten years, with the possibility of a sooner five years. Domestic movies made up $1.11 billion of the first half box office, an increase of 144%. Imported films made 21% less at the box office, with a total of $675 million. In 2012, China passed Japan as the number two movie market. The potential in the country offers several investing opportunities.
Bona Film Group Ltd (ADR) (NASDAQ:BONA) is one of the purest plays on the Chinese movie market. The company, which went public at $8.50 a share in 2010, is now trading at half of its IPO price and offers a great opportunity in China. The company distributes movies, produces movies, owns a talent agency, and owns movie theaters in the country. This diversification provides a great investment to capture money from domestic and imported movies in China
In the company’s first quarter, revenues dropped to $43.3 million. The company released three movies, which did well, but were up against a strong 2012. Bona Film Group Ltd (ADR) (NASDAQ:BONA), which releases 16 to 20 movies a year, has a bright pipeline that includes several 3D movies, which will bring higher ticket prices.
More importantly, Bona Film Group Ltd (ADR) (NASDAQ:BONA) is increasing its theatrical presence. At the end of the first quarter, Bona had 20 movie theaters. In the first quarter of 2012, the company had only 12 theaters. Movie theaters made up 55% of first quarter revenue ($8.0 million). In the second quarter, Bona Film Group Ltd (ADR) (NASDAQ:BONA) will open two additional theaters.
Bona continues to power through with several North American partnerships. The company has deals with Fox International, Universal Pictures, and Working Title Films. More importantly, Bona Film Group Ltd (ADR) (NASDAQ:BONA) has a long term partnership with News Corp. In 2012, News Corp. bought 20% of Bona Films. Founder Yu Dong owns around 30% of the company. Bona Film Group Ltd (ADR) (NASDAQ:BONA) is a great investment into China’s strong box office potential.
Another option to play the Chinese movie market is IMAX Corporation (USA) (NYSE:IMAX). The large screen movie company ended the 2012 year with 731 theaters. The company’s huge backlog continues to power revenue and earnings, and is one of the reasons I am recently bullish on the company.
In January, IMAX Corporation (USA) (NYSE:IMAX) opened its 100th theater in China. The country continues to be an area of growth, as the Chinese are becoming more willing to pay premium money for movies. The company has a long term goal of 1700 theaters worldwide. In China, IMAX Corporation (USA) (NYSE:IMAX) sees the potential for 400 theaters, representing almost 25% of the company’s goal.
In July, IMAX Corporation (USA) (NYSE:IMAX) brought Keanu Reeves directorial debut “Man of Tai Chi” to IMAX Corporation (USA) (NYSE:IMAX) theaters in China. Invest in Imax to enjoy the success of China, with the baked in success of the North American box office as well.
