Replies to post #85266 on Flexpower Inc. (FLXP)

[copperVulture]

5,600 stores in Hebei Province? LOL. No way.

From the Press Release

"The merger with Haorizi represents an incredible opportunity for rapid and sustained growth for our shareholders. CEO Dongmei Jia has done a remarkable job building a retail chain of 1,600 stores within Hebei Province in less than a decade. Working on a franchise retail business model, Haorizi has developed a very sophisticated web-enabled operational environment."

"Business Plans call for a total of 4,000 franchised stores (an increase of 250%) and a total of 8 logistics centers (up from 3) by the end of 2008. Within Hebei Province alone, the Company estimates market demand for another 6,600 stores."

Let me put this in perspective for everyone

The Hebei Province has a population of roughly 66 million people, per wikipedia: http://en.wikipedia.org/wiki/Hebei_Province#Demographics

Map of Hebei: http://en.wikipedia.org/wiki/Image:China-Hebei.png


This PR indicates they have "plans" to add 4,000 stores to their current 1,600 by end of 2008. That would make a total of 5,600 stores in a province populated by 66 million people. That's one store for every 12,000 people. LOL.

Right now, their company website says, "It has grown from a handful of stores to the largest chain of convenience stores with roughly 1,600 retail outlets serving more than 2.4 million people under the Haorizi retail banner in Hebei." http://www.goodlifechina.com/eglchina.php

1,600 stores serving 2.4 million people equals one store for every 1,500 people. LOL!

In comparison, The US has a population of 303 million per wikipedia: http://en.wikipedia.org/wiki/United_States_Population#Current_U.S_Population

Perhaps the #1 well known convenience store in the US is 7-Eleven. 7-Eleven operates about 7,100 stores in North America, and an additional 30,000 stores internationally. http://www.7-eleven.com/about/history.asp

For the 7,100 stores in North America, let's just stick to the US population of 303 million for the sake of this comparison, and leave out Canada (population 32,852,849). http://en.wikipedia.org/wiki/Demography_of_Canada

7,100 stores serving 303 million people equals one store for every 42,675 people, and that's not even counting Canada.

OK, now let's compare it to Walgreens, another type of convenience store, although Good Life China doesn't have a pharmacy (to my knowledge) in their stores. Walgreens opened up their 6,000th store in 2007. 1,100 stores less than 7-Eleven. http://www.walgreens.com/about/press/facts/fact3.jsp?cf=ln&t1=t1&Nav_Group_Name=Nav_Group_Name

And EFGO says it'll have 5,600 stores in Hebei by end of 2008! With a population of just 66 million people! Yeah right.

MAJOR RED FLAG

Now, this isn't to say that Good Life China isn't a legitimate operating company. In fact, all the information on their website makes Good Life seem like a worthy investment (aside from the very hard to believe 1,600 stores). But, there are in-store photos, distribution center photos, trucks, storefront branding standards, etc.

China Nepstar Drugstores (NPD:NYSE) IPO'd in August and has done very well... basically selling themselves to US investors as the Walgreens of China. I know first-hand, as their IPO was highly anticipated and I was able to make a nice profit on them during their first week of trading. They are the largest retail drugstore chain in China based on the number of directly operated stores. They have 1,791 drugstores located in 62 cities in China. http://www.nepstar.cn/eng/about_1.asp

Map of their stores: http://www.nepstar.cn/eng/images/map4.jpg

If Good Life does in fact have 1,600 many operating stores and has the branding power to go with it, they could make many investors happy.

However, with these outrageous numbers and goals stated in the PRs, one has to wonder if this merger is legit.