3 Hemp-Related Stocks Under Spotlight- ECS, THC, CPH

  • August 13, 2019 09:01 PM AEST
  • Team Kalkine
3 Hemp-Related Stocks Under Spotlight- ECS, THC, CPH

Industrial hemp, commonly referred as hemp, is a strain of a plant, which is known as Cannabis Sativa. The plant, which is cultivated for the industrial usage, is amongst the fastest growing plants. In the month of November 2017, industrial hemp was legalised for consumption by humans in Australia and New Zealand.

In this article, we would discuss three hemp stocks - ECS Botanics Holdings Ltd, THC Global Group Limited and Creso Pharma Limited. Let us have a look at the recent updates and performance of these stocks on the Australian Securities Exchange.

ECS Botanics Holdings Ltd

ECS Botanics Holdings Ltd (ASX: ECS), which is one of the largest players in the Australian hemp market, is focused on retail as well as wholesale hemp food products. The company has filed applications with the Office of Drug Control to secure medicinal cannabis licences, though they are yet not granted. If secured, the licences would form a non-core complementary facet to the company’s business.

Products (Source: Company’s Report)

New Investment: ECS updated the market on 13 August 2019 about a strategic investment into a grain handling, marketing, storage and export packing facility, TapAgrico, in the northern midlands of Tasmania. Initially, the company would invest $ 750,000 in Tasmanian Agricultural Producers Pty Ltd or TapAgrico for a stake of 28.4%. The company also holds a call option to boost its stake in TapAgrico to 34.6%. The terms of the call option remain same. The investment would be directed towards the purchase of a hemp seed dryer, storage and handling equipment and other key infrastructure. The investment would support the expansion of ECS cultivation and other hemp manufacturers in the region.

On the same day, the company also announced to have inked a retail food distribution agreement with Eden Foods. Under the terms of the deal, a range of ECS’ retail food products, including hemp seed oil, hemp hearts, capsules, curry sauces, soups and protein mixes would be made available to the network of retailers of Eden Foods in Tasmania.

Stock Information: ECS’ stock declined 18.391% on 13 August 2019, closing the day’s trading at $ 0.071, with a market cap of $ 44.16 million. It has approximately 507.59 million outstanding shares. The company’s stock got listed on the ASX in March 1986.

THC Global Group Limited

Operating under a ‘Farm to Pharma’ pharmaceutical model, THC Global Group Limited (ASX: THC) announced (31 July 2019) to have obtained two licences for the manufacturing of cannabis, as part of its quarterly update for the period ended 30 June 2019. The cannabis manufacture licences were awarded by the Australian Office of Drug Control (ODC). Of the two, one licence is for THC’s bio-pharmaceutical plant (Southport) in the Southern Hemisphere, which is engaged in extraction activities. The facility is engaged either in the production of Active Pharmaceutical Ingredient (API) isolates, which are GMP compliant, or full-spectrum and broad-spectrum extracts. It has an initial annualised production of 12,000 kg. In the fourth quarter of 2019, the company intends to conclude full product validation for TGA certified bulk API handling and manufacturing at the facility. Moreover, THC plans to start revenue generating production in early 2020.

The second licence was awarded to the Bundaberg Strain facility, which is engaged in research & development and cultivation activities.

During the concerned quarter, at the end of which THC had a cash balance of $ 5.68 million, the company also made key appointments in Australia and Canada, with Laura Harvey joining the company’s Canadian operations as Chief Operating Officer and Scott Coleman joining the company’s Bundaberg facility as Quality Manager. The company also appointed Elsie Green as the Compliance Officer across all cannabis projects in Australia. Its net cash used in operating activities during the quarter ended 30 June 2019 stood at $ 1.89 million.

Source: Company’s Report

Stock Information: THC’s stock closed the day’s trading at $ 0.480 on 13 August 2019, up 1.053% from its previous closing price, with a market cap of $ 64.47 million. It has approximately 135.73 million outstanding shares. The company’s stock got listed on the ASX in May 2017. The stock has given a positive return of 7.95% in the past three months, while six-month return stands at -12.04%.

Creso Pharma Limited

In early August 2019, Creso Pharma Limited (ASX: CPH), a developer of cannabis and hemp de-rived therapeutic, nutraceutical, and life style products, announced the signing of a distribution agreement between the company and JC Logistics Ltd t/a Medleaf Therapeutics for the distribution of CPH’s cannaQIX® 50 and 10% CBD Oil in New Zealand till 31 December 2022.

The agreement also has the clause of minimum purchase targets and CPH can end the agreement by giving a notice of six months, if the company is not able to attain its targets. Both the companies have already confirmed the placement of second order for the cannaQIX® 50 after the company received good response for the product in New Zealand during early 2019.

Moreover, for the June quarter 2019, the company reported a 434% increase in revenues from sales of human and animal products to CHF519,603 compared to the March 2019 quarter. The company at the end of the June quarter, had cash and cash equivalents of $ 3.580 million. While during the quarter, cash used in operating activities stood at $ 2.37 million and cash used in investing activities reached $ 0.626 million. Its net cash from financing activities was $ 3.35 million for the quarter ended 30 June 2019. For the next quarter ending September 2019, the company expects cash outflows of $ 3.62 million.

Source: Company’s Report

Stock Information: CPH stock closed the day’s trading at $ 0.445 on 13 August 2019, down 1.111% from its previous closing price, with a market cap of $ 68.19 million. It has approximately 151.54 million outstanding shares. The company’s stock got listed on the ASX in October 2016. The stock has given a negative return of 5.26% in the past three months, while six-month return stands at 20%.


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