Currency in EUR
Last close As at 09/06/2023
EUR3.81
▲ −0.11 (−2.81%)
Market capitalisation
EUR14m
Research: Consumer
Management plans to utilise its experience in scaling profitable companies to accelerate SynBiotic’s strategy and become a leading platform company in the cannabinoids industry. It acquired SolidMind Group in June 2020, followed by subsequent smaller deals, and we expect further M&A activity as the platform grows. Increasing consumer acceptance of cannabinoids across a range of applications (from healthcare to wellbeing) ensures a huge target market. New product sources (both cannabinoids and plants) may enhance efficacy and lawful commercialisation.
SynBiotic |
Building a cannabis platform
Consumer |
Deutsches Eigenkapitalforum 2021
1 November 2021 |
Share price graph Share details
Business description
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Analysts
SynBiotic is a research client of Edison Investment Research |
Management plans to utilise its experience in scaling profitable companies to accelerate SynBiotic’s strategy and become a leading platform company in the cannabinoids industry. It acquired SolidMind Group in June 2020, followed by subsequent smaller deals, and we expect further M&A activity as the platform grows. Increasing consumer acceptance of cannabinoids across a range of applications (from healthcare to wellbeing) ensures a huge target market. New product sources (both cannabinoids and plants) may enhance efficacy and lawful commercialisation.
Across the board
SynBiotic has embarked on a well-defined buy-and-build strategy by acquiring majority stakes in profitable medical and direct to consumer (DTC) companies across the value chain of the cannabis plant. This extends from research into synthetic production to the development and distribution of innovative cannabinoid-based drugs and wellbeing products. SynBiotic’s claimed unique selling proposition is an active investigation into the potential of both the 100+ cannabinoids beyond the traditional CBD and THC and alternative plants to hemp. It is hoped that the former may result in more effective product by combining cannabinoids, while extraction from plants such as hops and cacao should reduce regulatory risk.
So far, so good
While still in its infancy, SynBiotic’s development is shaping up well with the successful integration of its financial driver, SolidMind, a leading brand builder in the wellbeing sector. This is complemented by subsequent smaller deals and product launches, demonstrating SynBiotic’s strategy to acquire companies in the cannabinoid space and build an EU platform to research, develop and distribute pharmaceutical and dietary supplements and cosmetic products.
Valuation: Trading at a discount to CBD peers
Due to the scale and nature of SynBiotic’s continuing evolution with reliance on early-stage unlisted investments, financial forecasts cannot be made with any certainty. This is compounded by strict and volatile regulatory risk (substantial ‘grey areas’). However, the market opportunity for SynBiotic appears clear. The shares are trading on c 4x management’s estimated FY21 sales of €15m, which gives the company room for multiple expansion, even ignoring more established CBD peers rated at over 20x revenue. We note the company recently announced plans to list on the Canadian NEO exchange, which could potentially improve its visibility to cannabis-oriented investors. In addition, it recently completed a 10% capital increase, thus 334,000 shares are due to be created shortly, bringing the total to 3.674m.
Historical financials
Source: Company accounts |
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Research: Real Estate
Foxtons has traded well ytd, with total revenue exceeding £100m and only c £3m short of the £106.9m reported for the whole of FY19. The company has not only benefited from the implementation of its strategy, but also from a recovering sales market and improving lettings market where rental rates recovered sharply during the quarter. It enters the final quarter with a sales pipeline of properties ‘under offer’, which is 20% higher than at the same point in 2019. We value the shares at 128p, slightly reduced from our previous 130p, as costs are likely to increase modestly.
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