Currency in EUR
Last close As at 09/06/2023
EUR3.81
▲ −0.11 (−2.81%)
Market capitalisation
EUR14m
Research: Consumer
SynBiotic has extended its lead in the European hemp and cannabis sector and is continuing to build a cannabis ‘ecosystem’, encompassing cultivation, production and trade. Based on preliminary figures, SynBiotic has delivered pro forma sales of €15m for FY21, in line with management guidance. The company has now added a target of becoming profitable as of FY23. Full consolidated financial statements will be presented at the AGM, planned in Q4.
SynBiotic |
Management update – on track
Consumer |
Spotlight - Update
9 August 2022 |
Share price graph Share details
Business description
Bull
Bear
Analysts
SynBiotic is a research client of Edison Investment Research Limited |
SynBiotic has extended its lead in the European hemp and cannabis sector and is continuing to build a cannabis ‘ecosystem’, encompassing cultivation, production and trade. Based on preliminary figures, SynBiotic has delivered pro forma sales of €15m for FY21, in line with management guidance. The company has now added a target of becoming profitable as of FY23. Full consolidated financial statements will be presented at the AGM, planned in Q4.
Historical financials
Source: Company accounts |
Operational projects bring more revenue
The existing legal market for cannabinoids remains SynBiotic’s core market while it prepares for the legalisation of recreational cannabis and it has recently launched CBPlus, an alternative CBD extract containing cannabinoids and terpenes, but not derived from hemp. Management reports that the first batches of CBPlus have sold out. SynBiotic plans to launch its own medical cannabis brand, Hempamed Rx, in the near future.
Ecosystem should help stability
There is significant uncertainty around cannabis and cannabinoids, with substantial regulatory risks and the big unknown as to when and if recreational cannabis will be legalised in SynBiotic’s main markets. Management believes legalisation is now highly likely, given recent developments and progress on the political side. Management is continuing to build its infrastructure and acquiring companies to include in its ecosystem. SynBiotic now has capabilities in cultivation, production and trade, and by focusing more on B2B customers, it is less reliant on marketing directly to consumers and can therefore avoid the additional regulatory uncertainties linked to this.
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 1.9x management’s estimated FY22 sales of €26m, which gives the company little benefit of doubt, even ignoring more established cannabidiol (CBD) peers rated at over 3x revenue.
|
|
Research: Industrials
paragon has spent much of the pandemic refocusing on its core automotive activities and addressing the issue of bond refinancing. Both are now largely complete and management’s revised growth strategy targets ambitious financial targets over the next few years, with a positive start already made. As much of its product portfolio is fuel type agnostic, paragon is well positioned to address the evolving connectivity, digitalisation and electrification requirements of electric vehicles (EVs). We believe the strong growth outlook merits a higher FY23e P/E rating than the current 3.6x, which we feel reflects concern over the refinancing of the outstanding CHF21m bond due in April 2023.
Get access to the very latest content matched to your personal investment style.