Elixinol Global

EXL Details

Commenced Trading on OTCQX Market in United States:Elixinol Global Limited (ASX: EXL) informed the market that it has commenced trading on the “OTCQX Best Market” in the United States under the scrip code of “ELLXF” on 18 September 2018. This forms part of its ongoing strategy to introduce Elixinol Global in the US and broaden its investor base in a market where consumer interest and demand for hemp-derived products is growing at a rapid rate. As per the management, the group has strong brand awareness in the US market through its US subsidiary, namely Elixinol USA. In addition to this, the listing on OTCQX trading platform will provide exposure for Elixinol Global as the parent-company and provide US-based investors with the opportunity to take part and invest in a company with exceptional growth and one that is well positioned to continue to lead the sector. From the analysis standpoint, revenue substantially grew by 110% to $14.9 Mn in 1HFY18 as compared to the prior corresponding period (PCP). Based on topline growth, EBITDA and NPAT turned around to be positive and recorded $0.8 Mn and $0.6 Mn, respectively in 1HFY18. Moreover, AVG recorded basic earnings per share for 1H FY18 at 0.12 cents per share. We expect that the company will continue to sustain its growth momentum in years to come at the back of increased capacity and product development, expanding market base and strong footprints in traditional cannabis business.


Strong growth trajectory across key metrics (Source: Company Reports)

Meanwhile, the share price has risen 39.73% in the past three months (as at September 17, 2018) and traded close to 52-week high level of $2.10. Given the backdrop of aforesaid facts along with improving financial performance and its capital position, the stock is expected to be witnessing improved momentum in future. Hence, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $ 1.94 (down by 4.9 percent on September 18, 2018).


EXL Daily Chart (Source: Thomson Reuters)
 

Cann Group 

CAN Details

Value-Adding Partnerships will Support Topline Growth: Cann Group Limited (ASX: CAN) aims to be a leading developer and supplier of medicinal cannabis into the Australian market and to supply into overseas markets. Over the period, the company has formed a strategic alliance with several medical practitioners such as Aurora Cannabis, Agriculture Victoria, Commonwealth Scientific and Industrial Research Organization (CSIRO), La Trobe University and Anandia Labs. These partnerships will support to facilitate the acquisition of required licenses, government allowances, intellectual property, manufacturing facilities, and wholesale distribution channels and ensure long-term growth. On the financial front, the company has delivered decent FY18 performance in which revenue grew by 18,692 % to $1.50 Mn over the prior year while the bottom line fell by 82.62% in FY18. Based on splendid topline growth, Gross Margin (GM) came in at 215.5% in FY18 which is higher than the industry median of 67.1%. Besides this, the group has also strengthened its relationship with its strategic shareholder, Aurora Cannabis Inc (Canada) as it has total 19.90% holding in CAN shareholding. As of now, the group is actively pursuing opportunities to export its product mix portfolio to overseas markets that have legalized medicinal cannabis. We believe that the company has a brighter outlook backed by shareholder support in term of sound financial position, secured licenses, a strong partnership with several medical practitioners.

 
 

Value-Adding Partnerships (Source: Company Reports)

Meanwhile, the share price has fallen 8.19 % in the past three months (as at September 17, 2018) and traded at an average price of the 52-week high and low levels. Hence, we maintain our “Speculative Buy” recommendation on the stock at the current price of $2.660, considering positive momentum to continue in 2019 at the back of Federal Government’s initiative to permit all Australian producers of medicinal cannabis to export their products to overseas markets as this will help to place CAN at the forefront of the industry in Australia and ensures sufficient capacity is available to meet both domestic needs and export opportunities.


CAN Daily Chart (Source: Thomson Reuters)
 

Medlab Clinical 

MDC Details

Decent Outlook:Medlab Clinical Limited (ASX: MDC) posted decent FY18 performance wherein revenue from ordinary activities was up by about 25 percent against FY17, while net loss after tax decreased by 25% and amounted to about $4.57 million against $3.84 million of the prior year. The bottom line for the period was increased due to the costs incurred in accelerating the Company’s research projects and other costs in relation to the support of NanaBis under the Government’s Special Access Scheme. Moreover, the group has raised approximately $22.68 Mn after costs through share placement program. The funds are used to execute its ongoing growth plans which ensures long-term returns for its shareholders. As at 30 June 2018, the company had Cash and cash equivalents of $20.33 Mn with virtual debt-free status. The current ratio substantially increased from 3.25x to 10.13x in FY18 over the prior year. Overall, the company is in a sound financial position to continue with the expansion plans. Further, the company has a solid overall patent position with 27 patents in which 7 patents are granted and rest are in pending stage.


Strong IP Portfolio (Source: Company Reports)

On the other hand, the group has recently received positive results from the research conducted by the University of Sydney’s Nano Institute to review its patented delivery platform, NanoCelle. We expect that these results will provide a significant level of confidence in Medlab’s NanoCelle platform and further confirm a specific proposed function for Medlab’s cannabis medicines. Meanwhile, the share price has fallen 29.41% in the past six months as at September 17, 2018 and traded close to 52-week low level of $0.410. Based on foregoing and current trading level, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $0.450 (down by 6.25% on September 18, 2018).


MDC Daily Chart (Source: Thomson Reuters)
 
 

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