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IMAX Fortifies South African Presence with 2 Theatre Openings

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With the recent launch of two theatres in South Africa, IMAX Corporation (IMAX - Free Report) has strengthened its partnership with Ster-Kinekor Theatres, a unit of Primedia (Pty) Ltd. The first movie hall is scheduled to open by the end of this month at The Grove Mall in Pretoria East while the next will be opened in the second half of 2015 at the Eastgate Shopping Centre in Johannesburg.

In collaboration with the country’s leading movie chain company, Ster-Kinekor, IMAX launched its first theatre in South Africa at the Gateway mall in Durban in Nov, 2013.  Following its success, both the companies planned to launch two more halls in different locations.

The Grove Mall theatre may open with the blockbuster flick, Transformers: Age of Extinction, which has been partially shot with 65mm IMAX 4K digital large-format 3D camera. The Ster-Kinekor group remains optimistic on the success of the partnership this year as IMAX plans 25 movie releases in the current fiscal.

A few days back, IMAX signed an agreement with Europe’s Nordic Cinema Group to install a theatre at the latter’s SF Bio multiplex. Nordic Cinema Group is one of the major cinema operators in Europe with 590 theatres across the continent. Thus, the deal with Nordic Cinema will certainly fortify IMAX’s position in the region. Moreover, IMAX has also initiated operations in Germany, Switzerland and Portugal in 2013.

More recently, IMAX entered into a multi-picture agreement with The Walt Disney Company (DIS - Free Report) and received strategic investments in its Chinese venture. We believe these two developments will significantly benefit the company over the long term.

In the recently concluded first quarter of 2014, IMAX recorded total revenue of $48.2 million, down 3% year over year. In the first quarter of 2014, IMAX signed 35 new theaters compared with 17 in the prior-year quarter. Hence, we believe that such strategic deals, smashing movie hits and the upcoming release of Transformer 4 from Paramount Pictures Corp., a unit of Viacom, Inc. (VIAB - Free Report) , will certainly boost the company’s top line.

IMAX currently carries a Zacks Rank #4 (Sell). Another better-ranked stock in the movie/TV production/distribution industry is News Corp. (NWSA - Free Report) , which carries a Zacks Rank #2 (Buy).

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