Creso Pharma Ltd (ASX: CPH)

Expansion Plans: Creso Pharma is an Australia-based company engaged in developing cannabis and hemp-derived therapeutic-grade Nutraceuticals and Medical Cannabis products with a range of applications in both human and animal health. Creso is tracking well with regards to plans in Canada with construction of 20,000 square foot facility commenced in Q3 2017 following acquisition of Mernova Medical Inc., which is a Nova Scotia-based medical cannabis producer. It was also reported that few constructions were completed with supply of water and sewerage services being set, the construction for concrete pouring of the foundation and walls also commenced and CPH entered into mechanical and electrical contracts for ordering of steel. This construction is targeted to complete by July 2018 and it is expected to produce 2,000 kilograms to 4,000-kilogram cannabis annually. This facility will be operated as per Good Agricultural and Collection Practices and Good Pharmaceutical Practice standards which will help Creso to expand its research and development capabilities. The group had recently signed a binding letter of intent with LGC Capital Ltd and Baltic Beer Company Ltd, which will create a bespoke portfolio of unique cannabis and hemp deprived alcoholic and non-alcoholic beverages; and is also planning to expand its products offerings into the growing edible and lifestyle markets. The group has also Kunna Canada Ltd and its wholly owned Colombian subsidiary, and has gained direct exposure to Colombian market estimated to be exporting above 40.5 tonnes of medicinal cannabis oil by 2019. CPH’s stock has risen by almost 68.4% in six months but fell 17% in last one month (as at December 18, 2017) owing to confusion about the company’s strategic entry into China which Creso finally cleared up by highlighting about agreement signed with a subsidiary of Hong Kong-listed Kingdom Group. So, by looking at the overall performance and current scenario, we give a “Hold” recommendation for this stock at a current price of $0.795
 

AusCann Group Holdings Ltd (ASX: AC8)

Focus on integration of supply chain: Recently, AusCann announced that its 50:50 Chilean joint venture, DayaCann, has commenced planting of its second medical cannabis crop. After the grant of its cultivation license, a maximum of 435 plants will be planted which will help in extraction and processing of cannabis strains into trial cannabinoid formulations for the treatment of chronic and neuropathic pain. Post processing, it can be sent for clinical trials and for registration with the Chilean National Institute of Public Health and can be used for export purposes. DayaCann is currently the only licensed producer in Chile which is giving AC8 a key competitive advantage in a growing market. After the successful harvest of its first crop, AusCann selected its second highest yielding strains and its intention is to develop a final dose of medicine for the treatment of chronic and neuropathic pain that will be supplied into significant areas of Latin American market.
 

Second Crop at Chile’s Facility (Source: Company Reports)
 
Stock Performance: In last six months, the stock has moved up 76.6%, as at December 18, 2017, but fell about 8% in last one month owing to some volatility and profit booking. We give a “Hold” recommendation as of now at the current price $ 0.67

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