Cann Group Limited (ASX: CAN)

Cann Group Limited (ASX: CAN) is engaged in the cultivation of medicinal cannabis for medicinal and research purposes. It also develops and manufactures finished product formulations through third-party arrangements.

Financial & Operational Performance: On 25 January 2022, the company announced that it has achieved an important regulatory milestone for the Company with the Therapeutic Goods Administration (TGA) granting to Cann a GMP licence to manufacture therapeutic goods for its Southern facility (Southern GMP Licence).

On 20 January 2022, the company highlighted that the acquisition of Zalm Therapeutics Limited (of which Cann holds 8.36% shares) by Rua Bioscience Limited (NZE: RUA) (Rua) was approved by Rua’s shareholders.

Under September quarter update, the company highlighted that its net cash outflows from operating activities for the quarter ending 30 September 2021 were $2.575 million. Cashflow from investing activities included $22.08 million in expenditure associated with the construction and development of Cann’s new production facility near Mildura. An amount of $18.669 million was drawn down from the Company’s NAB facility for this development. Unaudited sales for the quarter were $1.25 million and are expected to build steadily, given strong demand momentum and expected progress with various revenue-generating initiatives over the coming months.

Technical Analysis: On the daily chart, CAN stock prices are sustaining below the rising trend line at AUD 0.285 level and facing resistance of the trendline. Moreover, the prices are trading below the trend-following indicators 21-period and 50-period SMA, indicating bearish momentum in the stock. Further, the leading indicator RSI (14-period) is trading at ~48.39 level, indicating negative momentum. An important support level for the stock is placed at AUD 0.26 while the key resistance level is placed at AUD 0.300.

Considering the trading levels, acquisition synergies from Zalm Therapeutics Limited, September 2021 quarterly results, we give a “Sell” recommendation on the stock at the current market price of $0.285 per share, 11:42 AM (GMT+10), Sydney, Eastern Australia, as on 27^th January 2022.

Daily Technical Chart – CAN 

Source: REFINITIV

AusCann Group Holdings Ltd.

AusCann Group Holdings Ltd. (ASX: AC8) is in the business of cultivating, manufacturing as well as supplying medical cannabis products.

Financial & Operational Performance: On 15 December 2021, the company highlighted that it has submitted its final regulatory data modules to the Australian Pesticides and Veterinary Medicines Authority (‘APVMA’) to complete the submission of its dossier for the registration of DermaCann® as an approved veterinary medicine for antiinflammatory and immune support in dogs with dermatological conditions.

On 14 December 2021, the company highlighted about the appointment of Mr Tod McGrouther as the Company’s new Chairperson of the Board. Mr Tod McGrouther has over 35 years’ experience in the Australian capital markets primarily in the areas of equity capital markets and corporate advisory. Mr McGrouther Holds a Bachelor of Laws (First Class Honours and University Medal) from the University of Sydney and a Bachelor of Finance (First Class Honours and University Medal) from the University of New South Wales. He also holds a Diploma in Finance from the Securities Institute of Australia.

In the September quarter update, the company informed the market that it is well funded with net cash of $12.5 million as at September 30, 2021. Operating outflows totaled $1.16 million for the quarter, with $788k (67%) related to research and development costs in respect of the Company’s core human and animal programs. During the quarter the Company was pleased to announce that it had submitted its first module to the Australian Pesticides and Veterinary Medicines Authority to commence the submission of its dossier for the registration of DermaCann®, a world ‘first in class’ cannabinoid-based medicine in development for anti-inflammatory and immune support in dogs with dermatological conditions.

Technical Analysis: AC8's prices are trading on the lower levels and broke a crucial support level of AUD 0.0800 on the downside, indicating the possibility of a further downward trend. On the weekly chart, the trend-following indicators 50-period SMA and 20-period SMA are placed above the CMP, supporting a negative stance. The leading indicator RSI (14-period) is trading around the oversold zone at ~33.36 levels. Now the next important support level for the stock is at AUD 0.0700, while resistance is at AUD 0.0850 level.

Considering the negative operating cash flows, nil operating revenues, trading levels, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.077 per share as of 27^th January 2022.  

Weekly Technical Chart – AC8

Source: REFINITIV

Note: The purple color line in the chart depicts RSI (14-period), while the green and red-color lines show 21-Period SMA and 50-Period SMA, respectively.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

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