5 Pot Stocks under the Radar in terms of stock price movements – AC8, CAN, THC, SCU & ZLD

With some encouraging news coming in from the U.S. as President Donald Trump endorsed individual states to take a call on regulating marijuana, the pot industry has got some boost. As a result, many investors seem to be leveraging the opportunities available through few ASX listed stocks.
 

Stocks’ Details
 

Auscann Group Holdings Limited

Healthy cash position:Auscann Group Holdings Limited’s (ASX: AC8) stock advanced up 0.709 per cent on April 16, 2018 with the sector driven movement. Through its Chilean partner, DayaCann recently announced about the special access scheme which allows Doctors to prescribe medicinal cannabis to Chilean patient. The group aims to provide Australia and selected international markets the high-quality and economical cannabinoid medicines. It reported a cash balance of $12.3 million at the end of half year and is well-funded for H2FY18. The group will be importing its cannabinoid medicines from its Canadian partner Canopy Growth Corp for Australian patients. AC8’s Joint Venture in Chile has planted its second crop and its harvest is due in mid of FY18. The stockprice zoomed by about 243.9% in past six months as on April 13, 2018 but was down by 4.73 per cent in past five days as on April 13, 2018. We maintain our “Hold” recommendation on the stock at the current price of $ 1.425.
 

Cann Group Limited

Addition to All Ordinaries S&P/ASX Index:Up 4.1% on April 16, 2018, Cann Group Limited (ASX: CAN) has been re-gaining momentum on ASX after a 15% fall seen in last three months. The group is a leading developer and supplier of cannabis, cannabis resin and medicinal cannabis products into the Australian market. CAN disclosed to the market that director Geoffrey Pearce who has an indirect interest in the Company, was initially holding 1,377,040 shares and now acquired 103,672 more shares for a consideration of $266,182. On the other hand, the Group incurred an operating loss of $1,462,561 after tax for the half year ended 31 December 2017. Revenue from ordinary activity amounted to $44,102 in 1HFY18 which consists solely of research and development (R&D) credit received. No dividends were proposed or paid during the period. During the quarter, Cann Group got some boost from the grant of import permits by the drug control section of Therapeutic Goods Administration to help with import of cannabis products from its Canadian partners. Recently, Tribeca Investment Partners Pty Ltd ceased to be a substantial holder of the Group since end of March 2018. On the other hand, CAN has been added to All Ordinaries S&P/ ASX Index effective March 19, 2018, as per the latest S&P Dow Jones Indices rebalance. The share price was up by 144.2 per cent as on April 13, 2018 which is a significant rise over the previous six months. Given the run-up, we maintain our “Expensive” recommendation on the stock at the current market price of $ 3.050.
 

The Hydroponics Company Limited

Focus on the expanding business:Up 10% on April 16, 2018, The Hydroponics Company Limited’s (ASX: THC) stock has been zooming up following a 6 per cent rise on 13 April 2018. THC announced that the group has appointed an Executive Team to expand its medicinal cannabis strategy in Australia and Canada province. Under this, Ken Charteris has been appointed Executive Director of Canndeo while Henry Kinstlinger has been appointed as Joint Company Secretary of THC. Further, THC’s Australian medicinal cannabis business has secured operating and established valuable international partnerships and supply of product. This is supported by a solid revenue growth of Canada business. The group remains focused on expanding the business, considering further opportunity in Canada as well as expanding domestic research. The management stated that it will continue to assess a number of short and long-term growth prospects and remains focused on appointing resources that have required skills and expertise to lead this expansion internationally, especially in North America and Australia. Besides this, THC disclosed to the market that one of its directors, Gary John Radcliff who has an indirect interest in the Company, has acquired 14,000 shares for a consideration of $7,840. Based on expansion of existing product suite, we maintain our “Hold” recommendation on the stock at the current market price of $ 0.550.


Global Cannabis Landscape (Source: Company Reports)
 

Stemcell United Limited

Co-operation Agreement with HFIH might support top-line growth: Against the trend and down 9.4% on April 16, 2018, Biotechnology company, Stemcell United Limited’s (ASX: SCU) stock was seen to be losing the gains it made last week (6.667 per cent rise on April 13, 2018). The group has recently signed a co-operation agreement with Yunnan Hua Fang Industrial Hemp Co. Ltd. (“HFIH”). As per deal, SCU will be able to utilize HFIH’s import-export licence and existing market network in China to explore further distribution of SCU’s dendrobium related products and any future TCM Cannabis beauty products it may develop. In addition to this, the import/export licence has an indefinite term and provide indefinite utilization across the market network. The agreement enables SCU use the potential HFIH industrial hemp licence, on an exclusive 10-year basis, to research TCM beauty products utilising SCU’s stem cell technology. SCU will pay approximately A$400,000 to HFIH to secure the rights. After instalment of the underlying RMB 2 million (i.e., A$400,000), SCU will be qualified for a seat on the HFIH board. On this development, SCU holds the exclusive right to acquire 51% interest in HFIH. On the other hand, the group had cash around $779,000 as at 31 December 2017 and has since raised approximately $1.65 million via a right issue. Meanwhile, Lai Danny Kong Sang, substantial holder of SCU has disposed about 10,000,000 ordinary shares with the consideration of $398,700. Based on the volatile nature of the stock, we maintain our “Hold” recommendation on the stock at the current price of $ 0.029.
 

Zelda Therapeutics Limited

ZLD received IRB Approval for US Autism Study:Australian-based bio-pharmaceutical company, Zelda Therapeutic Limited’s (ASX: ZLD) was up 5% on April 16, 2018, after some fall noted on 13 April 2018. The group has recently received Institutional Review Board’s (IRB) approval for US autism study, which will be conducted at the USA-based Children’s Hospital of Philadelphia (CHOP) and the results are expected within six months. This research will support better understanding of the treatment in existing patients and the group will work closely with patient advocacy groups and licensed growers. This study will utilise CHOP’s extensive research infrastructure and is designed to capture several key efficacy and safety measures including bioanalytical studies. This initial study will lay the groundwork for a possible future clinical trial to generate high quality, robust and acceptable data to validate the extensive positive anecdotal data amongst patient populations. The ultimate goal is to identify cannabinoid-based compounds that may demonstrate efficacy in the treatment of paediatric autism. We expect that positive results will allow Zelda to potentially expand into a formal clinical trial to study the efficacy of standardised, high-quality medicines. ZLD stock still has the potential for growth given the pipeline of activities and good news flowing over six months. We maintain our “Hold” recommendation on the stock at the current price of $ 0.105.


Strong Pipeline of Activities (Source: Company Reports)

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