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  5. IFX: What is your analysis of this company and it's long term perspective? [Imaflex Inc.]
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Q: What is your analysis of this company and it's long term perspective?

Thank you very much
Asked by Jean on November 24, 2023
5i Research Answer:

IFX has seen revenues decline over the last 12 months, down -18.8% to $96.1M. The balance sheet is not as strong as earlier in the year with net debt rising to $7M and cash declining from prior periods to $3M. Cash from operations as well as free cash flow are positive in the last twelve months, however, in Q2 both of these came in negative. Net income in Q2 came in a bit above $400K which was a significant year-over-year decline from $3.4M. IFX's share price is down -33% year-to-date but still has a cheap valuation at 12x forward earnings. IFX is facing a slowdown due to small-cap pressures and management has tied the weak first half of 2023 to economic headwinds, customer destocking, and a competitive pricing environment. Management remains optimistic for the second half of the year, but being such a small company, future outlook is uncertain. It has one analyst, who does expect higher earnings next year. But we would consider it too risky for a general investor.