The first Chinese supermarket chain listed on a major U.S. exchange, iFresh Inc. (IFMK) has two wholesale facilities and eight retail supermarkets across New York, Massachusetts, and Florida. The Long Island City, N.Y.-based concern has entered several strategic partnerships over the past few months. And its stock has gained 24.1% in price over the past month to close yesterday’s trading session at $1.08. However, the shares have lost 20% over the past six months and 41.9% over the past nine months.

IFMK has yet to report its Form 10-K for the period ended March 31, 2021. Furthermore, as stated in its Form 8-K on October 27, 2021, the company is still preparing its financial statements for its fiscal year ended March 31, 2021, for the quarter ended June 30, 2021, and for the quarter ended September 30, 2021.

Also, Nasdaq had notified the company in September 2021 that due to its continued non-compliance with Nasdaq’s annual meeting and filing requirements, its securities were subject to delisting unless requested a hearing before a Nasdaq Hearings Panel. So, its near-term prospects look uncertain.

Here is what could influence IFMK’s performance in the near term:

Strategic Collaborations

On August 30, IFMK entered an exclusive agency agreement with Bit Farm Inc., making IFMK the exclusive distributor of Bit Silica +, a fertilizer that promotes plant growth. The company also established a partnership with HungryPanda in April 2021 to jointly launch an online perishable goods delivery service in New York.

Negative Impact of China’s Tech Crackdown

IFMK entered a Master Product Supply Agreement with Alibaba Group Holding Limited’s (BABA) Tmall Global group on November 10, 2021. This enables IFMK to sell American food and products to China via Tmall Global’s cross-border e-commerce platform.

However, BABA’s profit for its most recent quarter plunged 81% amid the Chinese government’s crackdown on technology companies. China's economy also hit its slowest pace of growth in a year in the third quarter, hurt by power shortages and wobbles in the property sector. So, IFMK’s expansion into China could be significantly impacted.

Weak Profitability

In terms of trailing-12-month gross profit margin, IFMK’s 21.25% is 37.5% lower than the 33.99% industry average. Likewise, the stock’s 0.04% and 0.79% respective trailing-12-month EBITDA and net income margins are lower than the 13.68% and 5.33% respective industry averages. Furthermore, its 0.57% trailing-12-month ROTA is 88.4% lower than the 4.89% industry average.

POWR Ratings Don’t Indicate Enough Upside

IFMK has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. IFMK has a C grade for Quality, which is consistent with its lower-than-industry profitability ratios.

The stock has a D grade for Momentum, which is in sync with its 6.1% loss over the past three months and 20% decline over the past six months.

IFMK also has a D grade for Value, which is consistent with its 4,003.22x and 3.22x trailing-12-month EV/EBITDA and P/B, respectively, which are higher than the industry averages of 12.92x and 2.93x.

IFMK is ranked #37 of 40 stocks in the Grocery/Big Box Retailers industry. Also, click here to see IFMK’s ratings for Stability, Sentiment, and Growth as well.

Bottom Line

IFMK had reported strong sales of exotic fruit varieties like dragon fruit, lychee, and longan in August 2021. However, the stock is currently trading 74.6% below its 52-week high of $4.25, which it hit on February 11, 2021. In its latest Form 8-K, the company stated that it is working on restating its consolidated financial statements for the three, six, and nine months ended June 30, 2020, September 30, 2020, and December 31, 2020, respectively. So, we think it could be wise to wait before betting on the stock.

How Does iFresh (IFMK) Stack Up Against its Peers?

While IFMK has an overall POWR Rating of C, one  might want to consider investing in the following Grocery/Big Box Retailers stocks with an A (Strong Buy) rating: Albertsons Companies, Inc. (ACI), Woolworths Holdings Limited (WLWHY), and Ingles Markets, Incorporated (IMKTA).

IFMK shares fell $0.06 (-5.56%) in premarket trading Friday. Year-to-date, IFMK has gained 37.93%, versus a 26.87% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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