UPDATE 2-Imax signs JV for up to 15 theaters in South Korea

Wed Mar 10, 2010 1:41pm EST

* Signs JV with S.Korean operator CJ CGV Co

* Says CJ CGV to upgrade existing four locations

* Imax shares hit 9-year high (Recasts; adds details, analyst comments, updates share movement)

By Ashutosh Joshi

BANGALORE, March 10 (Reuters) - Imax Corp (IMX.TO) IMAX.O agreed to form a joint venture with a South Korean theater exhibitor to operate up to 15 new theaters in the country as the giant-screen movie operator seeks to expand its presence in Asia.

The agreement with CJ CGV Co Ltd was signed following the success of the exhibitor's five existing Imax locations in South Korea, where the current 3D release of the blockbuster movie "Avatar" has generated more than $6.5 million, Imax said.

"It is a big market opportunity out there (in Asia) for the success of Imax," Craig-Hallum Capital analyst Mark Argento told Reuters by phone.

In December, Imax, known for digitally remastering Hollywood blockbusters, said it was in talks with at least five film companies in China. [ID:nTOE5B6073]

Some of the big movies last year created lot of incremental demand for Imax's products and the international market offers natural growth opportunities, the analyst said.

"We expect to see more type of such deals going forward," Argento said.

The deal with CJ CGV will add 10 new joint venture locations in the major cities in South Korea, and has an option to increase that number to 15.

Brigantine Advisors analyst Steven Frankel said Imax may not follow a similar pattern to expand in China.

"I think in China there isn't sufficient infrastructure around in reporting of box office receipts to form joint ventures. So, they have been selling equipments in China," Frankel said.

3D BOOST

Imax, which will report its fourth-quarter earnings on Thursday, said it has been seeing increasing demand in South Korea, and the rollout of its new locations is expected to begin later this year.

"We expect the company could grow in excess of 30 percent in 2010, which is a combination of more theaters, larger installed base of Imax theaters and better performance, more and more revenue growth at box office per theater," analyst Argento said.

Imax said that separately, CJ CGV will upgrade four of its existing Imax film-based locations to the company's digital projection system.

Imax shares were up about 1 percent, or 14 Canadian cents, at C$16.24 Wednesday afternoon on the Toronto Stock Exchange. They hit a high of C$16.63 earlier in the day. (Reporting by Ashutosh Joshi in Bangalore; Editing by Ratul Ray Chaudhuri, Anne Pallivathuckal)

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