ZENITAS HEALTHCARE LIMITED

Zenitas Healthcare Limited (ASX: ZNT) with a market cap of $107m has recently received a confirmation from the  Supreme Court of Victoria. The court has approved the acquisition of the group, via a scheme of arrangement. Under this arrangement, ZNT is being acquired by Guardian Alphabet Pty Ltd. Guardian Alphabet is a company that is controlled by Australian-based private equity firm, Adamantem Capital and a specialist investment and advisory group, Liverpool Partners.

After this announcement on November 16, 2018, trading on ZNT shares was completely suspended. On December 7, 2018, ZNT shareholders who hold the shares on the record date will receive $1.445 cash per share under this consideration scheme.

Strong Financial metrics: Financial metricswas supported by the Underlying EBITDA which grew by approximately $6.9m from $7m in FY17 to $13.9m in FY18. Underlying EBITDA was above the management guidance provided between $13m-$13.5m. 12% growth in the underlying EBITDA margin up to 18.2% in FY18 ended on June 30, 2018 was noted. Cash at year end was recorded at $6.7m.

Forecasted Decent Gross profit: Management has forecasted an increase of up to 12% from the mobile health segment which was 9% in FY18, Allied Health is expected to contribute to 41% in FY19 as compared to 44% in FY18 and homecare can provide 29% contribution in FY19 as compared to 21% during FY18.



Gross Profit by business segment (Source: Company reports)

 ZNT has recently completed and integrated 13 community-based health care businesses.

Zenitas with a market cap of $107m, P/E at 23.90 and beta below 1x has received an acquisition approval and “Trading has been Suspended” on ZNT shares from November 16, 2018.

ALTHEA GROUP HOLDINGS LIMITED

Althea Group Holdings Limited (ASX: AGH) with a market cap of $75.22m, under its long-term strategy to acquire all the necessary licenses and permits needed for the import, cultivation, production and the supply of medicinal cannabis to the patients all across Australia has recently acquired two new licenses. On November 13, AGH has received an Export license, and on November 2, 2018, it has secured the manufacture license by the Australian Government’s Office of Drug Control.

Full Suite of Licenses along with strong distribution network:The group has received a number of licenses that will provide strong support for the overall growth of the company. Import license, a medicinal Cannabis license for cultivation and production of Cannabis, Manufacture license and the export license provide a complete pack of ODC cannabis licenses. The fully complemented ODC cannabis licenses will help the company to work towards its next phase of planning for its Victorian based production facility that will provide vertically integrated, state of the art medicinal cannabis operational facility to its shareholders. AGH’s strong distribution partnerships have provided support to the company to commence sales of five Althea branded medicinal cannabis products in Australia.

AGH has reported total loss of $1,871,585 for the financial period ended on June 30, 2018. Cash and Cash equivalents were recorded at $ 2,300,335.

Technically, the scrip after making 52 week high at the levels of $0.75 in the month of September, has remained in downtrend and after showing slight pull back on November 1, 2018, the scrip is trading in red territory. On a 3-month chart with daily candle interval, the closing price has remained below the 20-day EMA (Exponential moving average). Relative strength index indicates weakness and is currently in oversold zone, along with moving average and convergence indicator consolidating in the negative territory.

AGH with its innovative web-based platform and mobile application known as Althea Concierge program is making an effort to educate and provide easy access to medicinal cannabis across Australia. Increase in the number of patients from 47 to 156 and general doctors to 54 who have prescribed the Althea products to the patients will support in the overall growth of the company.

At current juncture, we give a wait and watch view on the scrip that traded at the levels of$0.365 while the cannabis sector boost may help the stock going forward.
 

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