ESE Details
Esense-Lab Ltd (ASX: ESE) is one of the latest additions to the companies specialising in the commercialisation of the phytochemical profiling of plants, on the ASX, and has witnessed a stock price fall of 35.45% in last one month but has risen 39.22% since its listing (movement as at April 28, 2017). The group is an Israeli-based company having a proprietary plant profiling technology for generating a comprehensive model of targeted plants for reverse engineering and reconstructing the terpene profile (terpenes are naturally occurring compounds contributing to certain attributes of plants). In one way, the group is said to be capable of re-engineering cannabis into terpene, and works on alternate plant sources. The technology is said to have reduced commercial production costs to a large extent. The group had raised about $3.5 million through an oversubscribed initial public offer prior to listing. ESE has used up US$657,000 in operating activities in the last quarter ending March 31, 2017 while cash and cash equivalents stand at US$2.4 million. The group intends to target markets ranging from alcohol, beverages, pharmaceuticals, to essential oils.

Delivering cannabis terpene profiles to the U.S.:The group has recently inked a commercial agreement with Allor Vaporizers (US electronic vaporizer company) for the supply of e-liquids that include reconstructed cannabis terpene profiles. The bagged order is worth US$470,000. Allor intends to engage in further sales to its sub-distributors and directly to consumers. The group has also undertaken commercialisation discussions to ship samples to over 200 potential customers.

Recommendation:The recent developments have boosted the stock to soar about 9.23% in last five days (as at April 28, 2017) but is down 8.5% on May 01, 2017. The stock is still trading at low levels but has witnessed a lot of volatility over the past couple of months. Given the present scenario, investors need to be cautious on risks related to limited operations, demand scenario, cost of entering new markets and so forth. We believe that it might be prudent to wait for other potential developments and updates as ESE seems to be a stock with high level of risk. We give an “Expensive” recommendation at the current price of $ 0.32


ESE Daily Chart (Source: Thomson Reuters)

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