Cann Group Limited

Decent Outlook: Cann Group Limited (ASX: CAN) provides a range of medicinal cannabis products to its global and Australian patients. The company has an objective to cultivate and manufacture several medicinal cannabis products.
 
 

Financial Statement (Sources: Company Reports)

The company reported a net loss of $4.72 million approximately in FY18 as compared to $2.58 million in FY17 an increase of 82.58% approximately. This was witnessed primarily on the back of higher operating expenses. Among the key ratios, the current ratio and quick ratio stood at 89.32x and 87.55x for FY18 as compared to 28.66x and 28.60x in FY17 driven by a significant increase in current assets Y-O-Y.

What to Expect from CAN Moving Forward: Going forward, in FY19, the company is committed to maintaining strong momentum. The company is further targeting to secure meaningful value from the partnerships that it has already established. Moreover, by the end of the period, the construction of the Phase 3 expansion facility will be well underway. The company will also enhance its engagement with the medical community as it supports a streamlining of the requirements for patient access, enhancing the number of medical prescribers, and increased public awareness about its product mix.

A Look at Stock’s returns: The stock of the company is currently trading at $2.290 with an increase of 2.691% during the trade on 22 January 2018. Cann Group Limited has a market capitalization of ~$311.54 million. The stock has generated a YTD return of 11.50% and a return of 26.70% over the period of last one month. The future expansion project plans are backed by the raising of funds in the financial year, also leading to higher cash balance.

Largely on the backdrop of the short-term performance of the stock backed by its financials and decent outlook, we maintain our “Buy” recommendation on the stock at the current market price of $2.290.
 

Elixinol Global Limited

Sustained Revenue Growth Quarter-over-Quarter: Elixinol Global Limited (ASX: EXL) happens to operate in the industrial hemp and medicinal cannabis. As of now, the company focuses to increase the shareholders’ value via its business strategies. It is into production and marketing of hemp-based products around the globe, including food supplements and skin care products.

The company in its recent announcement on 8-January-2019 has mentioned that the CFO and Company Secretary of the company Mr. Ron Dufficy will relocate to the United States to assist the substantial international growth opportunity of the company. Moreover, the company has raised $40 million through its placement to new and existing domestic and international institutions as well as sophisticated investors, to enhance international growth.

Revenue Growth Chart (Sources: Company Reports)

The revenue of the company stood at $10.4 million for 3Q FY2018, representing 159% growth on prior corresponding period and 27.0% growth vs. 2Q FY2018 (December year-end), primarily driven by Elixinol USA where demand for hemp-derived cannabidiol (CBD) dietary supplements and skincare products continues to grow strongly. The capital expenditure during 3Q FY2018 stood at $1.5 million. The company had a net cash outflow from operations of $1.9 million approximately for the quarter ended 30 September 2018. However, there was an outflow from investing of $1.49 million approximately for the quarter ended 30 September 2018.

Going forward, in FY19, the company might benefit from the trade and marketing opportunities, driven by the Farm Bill passed by the US president in 2018 as per the Hemp Farming Act. However, the stock is currently trading at $2.760, with a market capitalization of $351.23 million. The stock has generated a YTD return of 4.83% and produced a return of 12.80% over the last month. On the back of quarterly financial performance of the company, and the momentum in the stock performance over the last few months, we maintain our “Hold” rating on the stock at current levels of $2.760.   
 

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