Not many investors in small and microcap stocks can gloat about their winners to date in 2023. But new shareholders in iFabric can. The shares of this Company are up 127% in value since Investorfile appointed this stock to its list of Top Ideas for Small Cap Value investments (See: iFabric is geared up for growth and the stock is value-priced).
Based in Markham, Ontario, iFabric Corp.’s (TSX: IFA – C$1.25) wholly owned subsidiary, Intelligent Fabric Technologies (IFT), has exclusive worldwide distribution rights, consisting of a number of proprietary chemical formulations that can be applied to textiles to kill bacteria and viruses, repel insects, absorb odours, repel and wick moisture, block ultraviolet light and help encourage a healthy skin environment. These treated textiles become finished performance apparel, medical apparel and protective products, as well as swimwear, integrating one or more chemical enhancements to achieve the performance characteristics demanded by the Company’s customers and consumers.
IFT current product offerings include Protx2® (anti-microbial and anti-viral formulations), Enguard® (insect repellant technology), Dreamskin® (skin polymer), UVtx (ultraviolet light blocker), FreshTx (odour-absorbing technology), RepelTX (durable water repellant) and DryTx (moisture-wicking technology), among others.
IFT was the beneficiary of a number of program wins that took effect in 2023, namely the execution of a license agreement with the famous Canadian apparel brand, Roots. This license provided IFT with the right to use Roots' trademarks in connection with the manufacturing and distribution of men’s, women’s and children's swimwear to retailers and other approved distribution channels, including Roots stores. iFabric said: "IFT commenced shipping Roots’ licensed swimwear products to two major Canadian retailers and sell-though of these products at the retail level has significantly exceeded management’s expectations." We note this program has already been renewed for next year at higher order levels as disclosed by the Company.
The success of Roots swimwear and other apparel program wins is now being reflected in iFabric’s financial results for 2023. In the Company’s most recent quarterly results, it reported revenues of C$6.64 million compared to C$3.48 million in the same period for the year prior, an increase of 91%. The increased revenue was a result of significant contributions from both of the Company’s subsidiaries, Intelligent Fabric Technologies and Coconut Grove Pads Inc. (which produces intimate apparel). For the first half of fiscal 2023, revenues have now topped C$11.6 million and gross margins as a percentage of revenue increased to 40%. Adjusted EBITDA for the six months amounted to C$845,470 and after-tax earnings attributable to iFabric's shareholders for this first half were C$603,985 (C$0.020 per share basic and diluted). The Company also continues to maintain a strong balance sheet.
As we suggested in our introductory blog post on iFabric, there were several possible business development catalysts in regard to the Company’s proprietary chemical formulations that could come to fruition in 2023. One of the catalysts iFabric announced earlier this month was that its subsidiary IFT had received a United States Environmental Agency ("EPA") registration for PROTX2® as a "Continually Self-Sanitizing Textile.” According to the Company, this registration allows textiles treated with the PROTX2 technology, to make public health claims for use in non-apparel products, including curtains, carpeting and home furnishing fabrics, among others.
Under this new registration, qualifying textile products integrating PROTX2 are now able to make a number of meaningful public health claims including: PROTX2® Treated Textiles - Kills 99.99% of bacteria in 10 minutes, with nonstop disinfection for 24 hours; Kills pathogenic bacteria; Kills 99.99% of bacteria non-stop for 24 hours; and continuously disinfects bacteria after 24 hours of continuous use without washing. This approval may lead to new product opportunities for iFabric outside of the apparel market. While this is an important milestone and a potential driver of new business opportunities, the Company has said it intends to build upon this initial registration to achieve similar public health claims for the use of PROTX2 in apparel. This and further approvals by the EPA would provide iFabric with enormous new market opportunities.
It has been about five months since Investorfile recommended that small cap investors should accumulate iFabric’s stock up to a price of $0.85 from its then-current trading price of C$0.55. Today the stock trades at C$1.25, which represents significant capital appreciation for investors who took advantage of the low valuation. While the share price today may not represent the same value, the opportunity for much bigger gains still exists.
The Company has about 30.3 million shares outstanding.
iFabric Corp. website: www.ifabriccorp.com
Author Ownership Disclosure: TSX: IFA – Yes
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