We have updated our Aphria research pitch, including the impact of COVID-19 on our forecast. We have also updated our recommendation, price target, and cannabis price/demand curves. We have also made our Aphria financial model available.
Cannabis Industry
23 posts
After a 3-month planned break, Perspectec has re-started. Our team has been busy finalizing some changes to our portfolio. As of November 29, 2019 prior to the market open we are: – We are upgrading Lightspeed (LSPD.TO) to a HOLD from a SELL. We believe Perspectec’s research was a primary driver in moving the stock price lower. – We are upgrading Aurora Cannabis (ACB.TO) to a HOLD from a SELL. We believe Perspectec’s research was a primary driver in moving the stock price lower. – We are moving Shopify (SHOP) from our Focused Portfolio to our General Portfolio. We have […]
We recently toured both Aphria’s and Canopy Growth’s primary facilities in Ontario. This is Part 1 of our two part series. This 42-slide presentation includes detailed estimated cost breakdowns of Aphria’s energy, labour, TFW program, oil extraction, product and other costs. Our 5-hour tour included examining both Aphria One and Aphria Double Diamond. https://drive.google.com/file/d/1PVqulah2GYJUgKJA7cbLxJ4jwpCKv3m8/view?usp=sharing
This 20-page powerpoint slide deck in PDF form outlines our quick takeaways from last week’s cannabis news. This includes Aphria’s fiscal Q2/19 results, the takeaway from Constellation Brands earnings release, Peter Thiel’s announcement and Friday proving out a bull case as to why Tilray continues to trade somewhere North of 35x Price/Book Value.
Aphria released further details on the Latin America operations. The details on the release did not portray businesses worth anything close to the amount paid and played into Quintessential Capital Management arguments. No financials or even pictures were provided by Aphria. Details on the nearly 100 employees remain cloudy and at this point it would appear that Vic Neufeld will need to step down.
Long/Short equity fund Quintessential Capital issued a scathing report this morning, focused on Aphria’s international business. The three early takeaways for us are: 1) CEO Vic Neufield will likely be forced to resign or have his role at Aphria reduced. 2) International operations are essentially worth zero. This was our prior position. 3) Our prior concerns earlier this year about delays with Health Canada approvals appear to have been legitimate. Recall we raised the issue of Phase 3 expansion approvals taking longer than expected (March 12, 2018 rather than January 2018). Raising this concern with Aphria, the issue was quickly dismissed by the company as a non-issue. This report, however, […]
Aurora Cannabis’ (ACB-Toronto) released its year-end MD&A and financial statements last week. Issues previously discussed, including questionable disclosures, a limited German market, questionable vertical integration, a lack of operating leverage, excessive shipping costs and oil extraction costs continue to play out as expected. We have expanded our investor pitch to 61-slides in order to more appropriately cover the increasing number of issues with Aurora. Again our coverage of Aurora Cannabis is being made public for marketing purposes. By accessing our investor pitch on Google Drive, you agree to allow Perspectec to contact you via email for marketing purposes. We do not disclose your email […]
We have launched coverage of Aurora Cannabis (ACB-Toronto) with this 48-page investor pitch. This pitch has been made public for marketing purposes. Our financial model is available for subscribers only. Important Disclosures and Disclaimer This publication is produced by Perspectec Inc. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure,distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Neither Perspectec Inc. nor any of its respective parent, holding, subsidiaries or affiliates, nor […]
We have updated our full marketing presentation on Aphria. This easy to follow 18-slide pitch updates the expected per store sales change for Ontario, Canadian EBITDA expectations and assumptions on the impact of oil-based products on ASP’s. International medical sales we believe will not have a material impact over the next two fiscal years and our expectations per country are shown. Finally, we have created two tables outlining both our financial and non-financial assumptions and valuation.
Ontario’s plan to delay opening up brick and mortar cannabis stores until April 1, 2019 increases our fiscal 2020 revenue and EBITDA estimates. We had previously thought that the 80 store target by July of 2019 versus an estimated 200+ stores in Alberta by that time was telling as to what was likely to be an under-penetrated Ontario market. The Ontario Cannabis Store acting as a wholesaler to private businesses while running online sales beginning on October 17th, 2018 we believe will keep average wholesale prices under $6 per gram. We will be updating our financial forecast in an upcoming note. Important […]
We have completed a holistic overview of Canada’s recreational cannabis market. Based primarily on data from Colorado as well as taking into account capacity increases from Canada’s lowest-cost producer, we have a materially different assumption on future market prices and demand. Attached is our overview of the industry. All graphs used are sourced from either the State of Colorado, BDS, Provincial government press releases or BDS Analytics.
On Wednesday February 21, Aphria posted on its social media accounts that their phase 3 expansion was complete. The next step before the greenhouse can have marijuana plants move in is receiving Health Canada approval. A timely phase 3 expansion is key to meeting EBITDA expectations over the next year – Phase 3 is expected to more than triple Aphria’s production capacity (excluding their Broken Coast acquisition) from 9,000 KG/year to 30,000 KG/year. This is well above retail and wholesale medical demand for Aphria’s marijuana products, which are selling at a 5,000 KG/year run rate. In other words this expansion is […]
Updated on February 7th. Written by Robin Manson-Hing with Contributions from Saif Shah. We have received exclusive photos on Aphria’s phase 3 and 4, 700,000 square foot expansion from Saif Shah. These pictures along with those coming out on Aphria’s phase 3 expansion have caused us to raise questions on a topic that does not appear to be widely discussed. Recall based on Aphria’s September press release it was said that phase 3 would be completed by September 2017 (12 months following a September 2016 press release) and that Health Canada approval would take place by January 2018 (four months following the expansion’s completion). As […]
Aphria is set to release their fiscal Q2/18 results (quarter ending November 30) around the middle of January. As is normally the case, there is not expected to be a press release of results or an earnings conference call. Stock Prices Has Been Going Up After Quarterly Reports – Aphria has seen its share price increase 14% and 2% the day after reporting its last two quarterly results. Fiscal Q4 (quarter ended May 2017) saw cash costs reach a Canadian industry low of $0.79 per gram by competitors’ definition ($1.11 by Aphria’s definition) and a 181% Q/Q increase in EBITDA […]