CannTrust is a leading producer of high-quality, standardised, pesticide-free medical cannabis (MC) products for chronic healthcare applications such as the treatment of pain, anxiety, depression, nausea and other conditions. Recent formalised MC regulation in Canada led to strong MC demand and CannTrust is increasing its production capacity accordingly.
CannTrust Holdings |
Capitalising on medical cannabis opportunity
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Pharma & biotech |
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16 May 2018 |
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CannTrust is a leading producer of high-quality, standardised, pesticide-free medical cannabis (MC) products for chronic healthcare applications such as the treatment of pain, anxiety, depression, nausea and other conditions. Recent formalised MC regulation in Canada led to strong MC demand and CannTrust is increasing its production capacity accordingly.
MC patients in Canada expanding at triple-digit rates
Canadian MC producers and consumers must be registered through the Access to Cannabis for Medical Purposes Regulation (ACMPR) provisions. The number of ACMPR patients rose 108% in 2017 to 0.27 million, and CannTrust had c 37,000 active patients at year end 2017. It sells both dried cannabis (DC) and oils derived from cannabis. Its 2017 revenue of C$20.7m (+372% y-o-y) reflected 1,027kg of DC and 1,206kg of DC equivalent sold from oil, and was driven by its 40,000 sq ft Vaughan facility (annual MC capacity of 3,600kg). CannTrust’s initial focus is on the Canadian market, but it also plans to exploit emerging MC opportunities in other countries including Germany, Denmark, Mexico and Brazil.
Fenwick site provides strong capacity growth
CannTrust’s Fenwick facility is being redeveloped for MC in two phases: the first phase (250,000 sq ft) received ACMPR certification in early 2018. The second phase (180,000 sq ft) should be completed in mid-2018. Both phases combined can provide over 50,000kg in annual MC growing capacity, reflecting c C$350-500m in sales at current pricing levels. 30 (of 46) acres not yet utilised at the Fenwick site can support additional greenhouse construction and MC capacity.
Joint ventures (JVs) can provide differentiation
CannTrust’s exclusive global JV with Apotex, aiming to develop novel and proprietary MC dosage formats, including sustained-release, provides validation and product differentiation as the competitive environment evolves. A JV with Club Coffee is launching BrewBudz, a patented formulation permitting single-serve cannabis doses using brewing pods compatible with popular brewing machines. A JV with specialty animal health company Grey Wolf will serve the veterinary market.
Valuation: EV of C$876m
CannTrust finished FY17 with $18.2m in net cash and consensus estimates call for a near quadrupling of sales and profitability in 2018. CannTrust expects c $27m in 2018 capex costs to enhance its Vaughan facility to serve the recreational cannabis market, and to complete Phase II of Fenwick’s conversion to ACMPR standards.
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Consensus estimates
Source: Bloomberg |
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Research: TMT
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