Globally, the cannabis market is estimated to be valued at around USD 150 billion. According to the European Consumer Staples Report released by Barclays in September 2018, the market value could shoot up, and may staggeringly increase to USD 272 billion by 2028. Even though, the Australian cannabis market has joined relatively late in the game, it has made major strides over the past two years and seems well positioned to become a major global player in the cannabis export market.
Of late, Australia has a good number of companies engaged in the business and is quite receptive to the accelerated expansion of the cannabis market on the back of its’ already thriving agricultural sector. Let’s look briefly through the following six Australian cannabis stocks.
THC Global Group Limited
THC Global Group Limited (ASX: THC), established in 2016 and based in Sydney, Australia, offers medicinal cannabis products to patients in Australia and worldwide. In addition, the company also provides hydroponics equipment, materials, and nutrients for North America’s medicinal cannabis industry.
Commercial Partnerships; Source: Company’s Website
With a market capitalisation of around 57.94 million and around 134.75 million shares outstanding, the THC’s stock closed flat (as on 1 July 2019), at AUD 0.430 with approximately 125,085 shares traded.
Recently on 17 June 2019, THC Global informed the stakeholders that it had received the approval for a medicinal cannabis manufacturing license, which implies that the company now holds the full suite of licensing necessary for the research and production of medicinal cannabis products in Australia. In addition, EVE Investments Limited (ASX: EVE), through its agreement with THC Global would also have an option to obtain access to THC’s cannabis licensing to conduct R&D for its own range of cannabis honey products.
The agreement between THC and EVE, covers tea-tree off-take, site lease, cannabis off-take, and primarily directed towards the organic farming operations of THC Global and development of novel-tree and cannabis products by both the companies.
Ecofibre Limited (ASX: EOF), through its subsidiaries, operates in the hemp-derived nutraceutical sector, and serves customers across Australia and the United States. The Group has a market capitalisation of around AUD 649.63 million and approximately 309.35 million shares outstanding. On 1 July 2019, the EOF’s stock price settled the trading session flat at AUD 2.110, with approximately 124,417 shares traded.
In addition, the stock has delivered a positive return of 23.53% for the last three months.
In its recently released Investor Presentation, the company touched upon its achievements since the time of inception, operating performance, and provided an overview of its three business segments.
Source: Investor Presentation
According to Ecofibre, its business model is based on profitable and sustainable growth and delivered a total revenue of $ 10.1 million in the third quarter of FY2019 (Q3 FY19), driven primarily by Ananda health. The gross business margin has also expanded (65% as of 1HFY19) on account of business choices, operational maturity and scale. Meanwhile, a rise in the operating expenses reveals growth in Ananda Health and investment in Hemp Black and Ananda Food business units.
Murray River Organics Group Limited
Murray River Organics Group Limited (ASX: MRG), established in 2010 and headquartered in Dandenong South, Australia, is engaged in the production, marketing and commercialisation of organic and natural food products primarily in Australia with exports to the United States, Asia, and Europe.
Company’s BRANDS; Source: Company’s Website
With a market capitalisation of around AUD 34.27 million and approximately 433.76 million shares outstanding, the MRG stock price settled the day’s (1 July 2019) trading at AUD 0.080, climbing up 1.26% by AUD 0.001 with ~ 57,008 shares traded. Recently, company’s Director Michael Richard Porter acquired 200k fully paid ordinary shares (Direct Interest) at a value consideration of $ 0.079 each on market trade.
Recently on 18 June 2019, MRG notified on the further solidification of its strategy related to China export, through a strategic collaboration with the present consumer from the food industry in China. The collaboration is anticipated to be valued above $ 6.5 million in sales across the next 3 years period. The recent development is a result of Murray River Organics’ six months growth campaign (Taking
Suda Pharmaceuticals Ltd
Suda Pharmaceuticals Ltd (ASX: SUD), headquartered in Perth, operates as a drug delivery company that focuses on oro-mucosal administration in Australia. The company’s product pipeline includes an oral spray of zolpidem for insomnia, ZolpiMistTM (US-approved) and other products in development include oral sprays to treat migraine, chemotherapy-induced nausea, erectile dysfunction and others.
Source: Company’s Corporate Presentation
With a market capitalisation of AUD 7.75 million and ~ 2.58 billion shares outstanding, the SUD’s stock price settled the trading session on 1 July 2019 at AUD 0.004, climbing up 33.33% by AUD 0.001 with ~ 12.09 million shares traded.
On 28 June, Suda Pharmaceuticals’ Director Stephen John Carter acquired 4,522,222 ordinary shares and 2,261,110 listed options (indirect interest) at a total value consideration of $ 18,089. On 27 june 2019, company’s Director Paul Hopper also acquired around 1,000,000 ordinary shares (indirect interest) at a total value consideration of $ 4,500 on market trade, boosting investors’ confidence.
The company also recently completed a renounceable rights issue (announced on 3 June 2019) whereby it raised $ 3.44 million and has issued 860,653,044 shares and 430,326,522 listed options. Also, due to the overwhelming demand, the company has issued placed a further 113,759,502 fully paid ordinary shares at $0.004 and attaching 56,879,751 SUDOD options to raise an additional $455,038.
Creso Pharma Limited
Creso Pharma Limited (ASX: CPH) provides cannabis derived therapeutic grade nutraceutical products for customers in Australia. With a market capitalisation of around AUD 70.22 million and around 133.74 million shares outstanding, the CPH stock price settled the trading session, on 1 July 2019 at AUD 0.500, down 4.76% by AUD 0.025 with ~ 354,472 shares traded.
Products with Innovative Delivery Systems (Company’s Report dated 4 December 2018)
Recently on 7 June 2019, the company announced that it had entered into a scheme implementation agreement (a Share Scheme and an Option Scheme) with PharmaCielo Limited whereby PharmaCielo would be acquiring Creso Pharma. PharmaCielo (TSXV: PCLO) is a cannabis company fully licensed to produce and commercialise medicinal cannabis oil products in Colombia, in the northwest of South America.
Under the scheme, Creso Pharma shareholders would receive 0.0775 PCLO shares for every CPH share held, depicting a value of AUD 0.63 based on the PharmaCielo VWAP. Meanwhile, CPH listed option-holders would obtain 0.0185 PCLO’s shares for each of the CPH’s listed option held, depicting a value of AUD 0.15 based on the PharmaCielo VWAP.
Elixinol Global Limited
Elixinol Global Limited (ASX: EXL), based in Sydney, is engaged in the manufacturing and distribution of industrial hemp-derived dietary supplements and skincare products in the Americas, Europe, Asia, and the Pacific Region. With a market capitalisation of AUD 517.1 million and around 137.89 million shares outstanding, the EXL’s stock price settled the trading session at AUD 3.620 (as on 1 July 2019), down 3.47% by AUD 0.130 with 258,322 shares traded.
Source: Investor’s Presentation
Recently on 12 June 2019, D&G Health LLC became a substantial shareholder in the company upon purchase of 12,791,977 fully paid ordinary shares, translating into a voting power of 9.225 in Elixinol Global.
On 11 June 2019, EXL notified that its wholly owned subsidiary, Elixinol LLC had established a strategic partnership with RFITD Holdings, LLC, an affiliate of RFI, LLC via a newly incorporated Colorado based company Infusion Strategies, LLC (owned 60% by Elixinol and 40% by RFI). Both parties will contribute in their relevant proportion to the working capital requirements necessary to operate the company.
Elixinol Global has also recently, on 5 June 2019, completed an institutional placement whereby it would be issuing approximately 12.8 million shares at AUD 3.90 per share, representing an 8.7% discount to the last closing price (as on Monday, 3 June 2019). The funds raised will be directed towards supporting the ongoing expansion initiatives, with a particular focus on growing the USA CBD business.
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