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Research: TMT
Thin Film Electronics (Thinfilm) has announced an agreement with California’s leading medical marijuana supplier, Caliva, to incorporate Thinfilm NFC solutions into its packaging. Caliva sells a wide range of products including 21 different strains of cannabis with different potencies and cultivation practices, as well as a range of over 130 cannabis-containing foods and ancillary equipment. Caliva is looking to enhance the shopper experience and provide more consistency, transparency and accessibility towards the cannabis space, as well as boosting marketing via offers and events. In 2016, California became the fifth US state to legalise recreational use of marijuana. Public sales of cannabis from stores are expected to start in 2018, which should lead to a further substantial increase in Caliva’s sales.
Written by
Thin Film Electronics |
Tapping the booming medical marijuana market |
New market segment |
Tech hardware & equipment |
12 June 2017 |
Share price performance
Business description
Analysts
Thin Film Electronics is a research client of Edison Investment Research Limited |
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Thin Film Electronics (Thinfilm) has announced an agreement with California’s leading medical marijuana supplier, Caliva, to incorporate Thinfilm NFC solutions into its packaging. Caliva sells a wide range of products including 21 different strains of cannabis with different potencies and cultivation practices, as well as a range of over 130 cannabis-containing foods and ancillary equipment. Caliva is looking to enhance the shopper experience and provide more consistency, transparency and accessibility towards the cannabis space, as well as boosting marketing via offers and events. In 2016, California became the fifth US state to legalise recreational use of marijuana. Public sales of cannabis from stores are expected to start in 2018, which should lead to a further substantial increase in Caliva’s sales.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
EV/Sales |
EV/EBITDA |
Yield |
12/15 |
4.4 |
(28.3) |
(5.3) |
0.0 |
75.9 |
N/A |
N/A |
12/16 |
3.8 |
(43.0) |
(6.6) |
0.0 |
87.1 |
N/A |
N/A |
12/17e |
10.8 |
(42.5) |
(5.2) |
0.0 |
30.9 |
N/A |
N/A |
12/18e |
48.3 |
(29.9) |
(3.7) |
0.0 |
6.9 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
We see a very good fit between Thinfilm’s NFC solutions and the marketing of nuanced, high-value, frequent repeat purchase products such as marijuana, particularly where the customer demographic is smart-phone savvy, as should be the case with Caliva’s clientele.
Also, without doubt, Thinfilm is tapping into a very high-growth, high-potential market. Currently, 21% of the adult population in the US live in areas where it is legal to use marihuana, with numbers growing as more states legislate for its de-criminalization. As a result, the cannabis market in North America grew 30% in 2016 to $6.7bn and is expected to grow at 25% per annum to 2021, according to Arcview Market Research forecasts.
The first 'smart' Caliva products are expected to ship to California dispensaries in the third quarter of 2017.
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Disclaimer
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Disclaimer
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Research: Investment Companies
Heliad Equity Partners (Heliad) is a DACH-focused (Germany, Austria and Switzerland) closed-ended fund investing in the tech, e-commerce and lifestyle sectors. It is managed by Heliad Management GmbH, a company wholly owned by Heliad’s largest shareholder, FinLab (A7A). Stakes in listed tech companies FinTech Group (FTK) and MagForce (MF6) account for 69% of the portfolio value and their value currently exceeds Heliad’s market cap, having appreciated 36% and 82%, respectively, in 2017 to date. The performance of these holdings and the diversification offered by Heliad’s 12 other investments may make it an attractive way to access the German tech, e-commerce and lifestyle sectors at a discount.