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IFMK: iFresh Moves Forward with Programs to Generate Organic Sales Growth

By Steven Ralston, CFA


During the first five months of 2018, iFresh (IFMK) has implemented several initiatives that should generate organic sales growth. First, the company’s supermarket in Orland has been upgraded; second, iFresh’s two stores in the Boston area (Ming’s Supermarket and Zen Market) should benefit from a 4-month 30th Anniversary promotion program; and third, some New York stores, and eventually all stores, will offer the e-commerce services of the payment option of Alipay’s Mobile Wallet and of money transfers, bill payments and money orders provided by Western Union.

Company-Owned Store News

On May 5, 2018, iFresh celebrated the Grand Opening of its renovated and upgraded supermarket in Orlando, Florida located at 2415 E. Colonial Drive. The grocery, fresh fruit, meat counter and live seafood offerings have been broadened. After a ribbon-cutting ceremony, the company hosted a traditional Chinese lion dance show and provided customers with free snacks, soft drinks, and food tastings. The Orlando store is the first supermarket that is under iFresh the banner, the majority of the rest being New York Marts.

View iFresh Stores

Promotion for the Company’s Two Stores in the Boston Market

From May through August, iFresh is celebrating the 30th Anniversary of the original opening of Ming’s Supermarket, which the company’s acquired in 2009. The celebration spans both locations in the Boston area: Ming’s Supermarket at 1102 Washington Street and Zen Market at 733 Hancock Street in Quincy. Not only is iFresh offering over 100 featured discounted products, but also the company plans run raffle drawings with tickets being earned by customers who make purchases up to $30. Prizes include a Mercedes-Benz ML350, iPhone X, iPad Mini, iFresh $500 gift card, iFresh $50 gift cards, a rice cooker and a water boiler.

Engagement with Western Union

On January 18, 2018, iFresh announced that Western Union Company has been engaged to provide global payment, money transfer and money order services at iFresh supermarket locations. By mid-May,
Western Union services (money transfers, bill payments and money orders) were being provided at four locations:
     ◦ 128 Mott Street, New York, NY 10013
     ◦ 75 East Broadway, New York, NY 10002
     ◦ 142-41 Roosevelt Ave, Flushing, NY 11354
     ◦ 6023 8th Avenue, Brooklyn, NY 11220

Engagement with Alipay’s Mobile Wallet

On February 15, 2018, iFresh announced that Alipay’s Mobile Wallet will become a method of payment at iFresh locations in early March. Alipay is a digital payment platform, which is a very popular method of online and mobile payment for Chinese consumers accepted by more than 40 million merchants in over 38 countries. This e-commerce wallet enables seamless cross-border mobile payment for the purchase of goods at iFresh.

Potential Acquisition

On March 20, 2018, iFresh announced the signing of a non-binding Letter of Intent (LOI) to acquire 75% of Fujian Fuding Seagull Fishing Food Co., Ltd. in a cash and stock deal worth approximately 525 million RMB ($83 million). Located in Fuding City, Fujian Province, mainland China, Seagull Fishing offers a variety of aquaculture services, including seafood breeding, farming, fishing and processing, and generated sales of approximately 1.2 billion RMB ($190 million) in 2017. According to the company’s web site, Seagull Fishing has 100,000 square meters of marine farming cages, 30,000 square meters in plant area and 20,000 tons of cold storage capacity. The company is export-oriented with over 80% of its products being exported (mainly to Japan, South Korea, U.S., Australia, Canada and Europe). Its products are segmented into three categories:
     • Refrigerated seafood (yellow croakers)
     • Frozen seafood (approximately 32 species of frozen seafood, including yellow croakers, shrimp, squid, eel etc.)
     • Ready-to-eat dried seafood (dried shrimp, dried octopus, dried anchovies)
Seagull Fishing appears to be a dominate force in supplying the yellow croaker market.

The completion of the acquisition would enhance iFresh’s supply chain and result in an improved product selection at New York Mart/iFresh retail locations. The prospective transaction would also fundamentally change the business mix of iFresh. Management is proceeding with its formal due diligence and expects to sign a definitive agreement within 90 days. 

Potential Offerings Possible

On April 23, 2018, iFresh filed an S-3 for a potential offering of up to $50,000,000 in common stock, preferred stock, debt securities, warrants, subscription rights, and/or Units. As stated in the prospectus, the company intends to use the net proceeds for general corporate purposes, including working capital, capital expenditures, R&D and acquisitions. Management’s stated strategy includes expanding the store base and the company has already announced the non-binding LOI to acquire 75% of Fujian Fuding Seagull Fishing Food Company (see above).

Company Overview

iFresh is a specialty Chinese/Asian grocery chain that owns and operates nine retail supermarkets, located primarily in the Greater New York City (five stores) and Greater Boston (two stores) areas, along with two stores in Florida (one in Sunrise and the other in Orlando). An additional four stores are slated to open during 2018. Furthermore, the company manages another six stores through management contracts another one scheduled to open in 2018. In addition, iFresh owns and operates two wholesale businesses (Strong America Limited and New York Mart Group, Inc.).

iFresh manages six stores that are owned by others in exchange for a management fee. In mid-November 2017, the company announced several new management agreements. In November, iFresh entered into management agreements to manage iFresh Harwin in Houston, TX. With iFresh having entered into management contracts to manage stores in Texas and California (iFresh El Monte), it indicates even larger expansion potential, especially since there are also several metropolitan areas in the Mid-West and on the West Coast with highly concentrated Asian populations.

View Market Distribution Map

iFresh is in the emerging growth phase of its corporate history. The company is still in the early stages of establishing its grocery store footprint and supply chain network. In addition, the company has already embraced digital retailing with social media sales drivers (WeChat), e-commerce ordering with delivery options and mobile payment capabilities (Alipay) that specifically cater to its target consumer group. The full potential and financial impact of management’s strategy has yet to be observed financially.

Due the character of the company’s enterprise, namely a small-capitalization company in the specialty food retail/distribution business with an expected growing sales profile, we expect iFresh to attain a second quartile P/S ratio versus the comparable companies listed above. On projected TTM sales (as the four new company-owned stores open during 2018), our share price target is $16.00, which is predicated on attaining a P/S multiple of 1.68.


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