Earnings updates for Cannabis Players amid market challenges- CAN, AGH, EOF

The fear of COVID-19 turning into a deadly disease is increasing with each passing day, and in China and other parts of globe, aggressive measures are being undertaken to stop the spread of the virus. Some measures include shutting down the business and focusing on quarantining individuals. This will have an adverse effect on the growth of some companies at least for a short span.

In the current reporting season, companies are posting their mixed earnings update due to the impact of coronavirus on their business performance. This is the high time investors closely watching the financial performance of the company, as well as the business outlook for the stocks in their portfolio.

Here in this article, we are highlighting earnings update for three ASX listed cannabis stocks- CAN, AGH, EOF

Do read What's happening in the Cannabis space?

Cann Group Limited (ASX: CAN) reported operating loss of $8.4 million

An ASX listed medical cannabis company Cann Group Limited is engaged in breeding, cultivating and manufacturing the medicinal cannabis for sale and use in the Australian market. CAN was the first Australian cannabis company which has been granted license and permit from Federal Government for the cultivation of medicinal cannabis in Australia and has the license for medicinal cannabis research and its cultivation, and both licenses were granted to it in 2017.

Highlights for the first half of FY2020-

  • Cann Group revealed that the company reported revenue $0.57 million from sales and an operating loss of nearly $8.4 million for the first half of 2020 (ended 31 December 2019);
  • The net assets of the consolidated group are approximately $69.23 million as at 31 December 2019;
  • During the first half of 2020, Cann Group progressed works associated with its new production facility near Mildura and revealed a revised, staged construction plan for targeting the commissioning of 12,500 kgs of dry flower cannabis production (stage 1A) by the end of CY 2020.
  • By the end of March, the company anticipates to announce a funding package for the development of stage 1A.
  • Subsequent to the end of the period, the company announced that it had successfully secured institutional funding support for working capital via the issue of convertible notes, raising $8 million.
  • Moreover, the company is in good faith discussions with Pure Cann regarding long-term supply and technical services agreements

Stock Performance-

On 27 February 2020, CAN last traded at $0.930, going up by 6.286% from its previous close. The market capitalisation of the stock stood at around $124.62 million, with nearly 142.42 million shares outstanding. The 52 weeks high and low price of the stock was noted at $2.570 and $0.375, respectively. CAN stock has generated a positive return of nearly 40% on a year to date basis.

Ecofibre Limited (ASX: EOF) Revenue up by 118%-

An ASX listed biotechnology company Ecofibre Limited is engaged in the hemp-derived nutraceutical sector and serves customers in the United States and Australia.

Ecofibre manufactures nutraceutical products as well as topical creams and salves for human and pet consumption in the United States. In Australia, it produces fully Australian cultivated and processed cannabis food products which include de-hulled hemp seed, protein powders and hemp oil.

Half-Year Results FY20

  • The company has delivered profitable growth while investing in future growth businesses, revenue increased by 118% from $13.3 million to $29.0 million;
  • Net profit after tax of the company up from $0.4 million loss to +$7.1 million;
  • Fully diluted Earnings Per Share increased by 592% from 0.5 cents per share loss to+2.4 cents per share;
  • The United State Headquartered Hemp Black facility on schedule to open in April 2020;
  • Commercialisation of hemp black is schedule for the financial year 2020.

Early commercialisation activity for FY2020

The infrastructure for business model of Hemp Black to be completed in the financial year 2020;

  • Early revenues from athleisure wear utilising Hemp Black technologies will launch in the fourth quarter of the financial year 2020, to build brand and technology awareness;
  • With partners across a range of applications and industries product development in progress. From these products the revenue generation to begin over the period of the fiscal year 2021;
  • For certain application, the development and testing requiring longer lead times because of approval from regulatory (FDA and EPA). Revenue from these would be generated after the financial year 2021.

Ecofiber operates in three main businesses Ananda health, Ananda food and Hemp black, and these are currently at various stages of development. For each business, the company is confident, but an accurate forecasting of the financial results is not possible, at this stage. Also, Ecofiber will continue to provide its development update on quarterly basis.

Stock Performance-

On 27 February 2020, stock of EOF was at $2.500, going down by 2.344% from its last close. The market capitalisation of the stock stood at around $806.3 million, with nearly 314.96 million shares outstanding. The 52 weeks high and low price of the stock was noted at $1.450 and $3.900, respectively. EOF stock has generated negative return of nearly 3.76% on a year to date basis.

Althea Group Holdings Limited (ASX: AGH) Revenue up by 963.8%

An ASX listed cannabis space player Althea Group Holdings Limited is engaged in the supply of medicinal cannabis (pharmaceutical grade) products for improving the lives of patients who are suffering from debilitating illnesses.

The company is a licensed producer, supplier and exporter of medicinal cannabis and currently operates in Australia and the United Kingdom cannabis market. Althea has plans to expand its business in Asian and European emerging markets.

The company provides various products, access & management services, education to support health care professionals and eligible patients in directing the treatment pathways of medical cannabis. Althea was founded in 2017 and was listed on ASX in September 2018, and the company has made immense developments in a short span of time.

Althea reported its financial results for the first half of 2020 (ended 31 December 2019) and highlighted the achievements for the period-

  • Revenues from ordinary activities up 963.8% to $1,851,000;
  • Althea group achieved its target of reaching 4,000 patients in Australia, and the patient growth is exceeding targets;
  • Medicinal cannabis product portfolio of the company was expanded in October 2019, with the successful introduction of its cannabis based drug CBD100;
  • In June 2019, for the first time Althea’s medicinal cannabis was prescribed in the United Kingdom. The market has continued to experience solid growth, with a total of 88 prescriptions received as at 29 January 2020.
  • In early November 2019, for the distribution and sale of medicinal cannabis products in Germany, the company signed a Memorandum of Understanding with nimbus health;
  • Another significant achievement during the first half of FY2020 was the successful acquisition and settlement of Peak Processing Solutions, which is a Canadian-based cannabis extraction and contract manufacturing organisation.

Stock Performance-

On 27 February 2020, stock of AGH last traded at $0.315, going up by 3.279% from its last close. The market capitalisation of the stock stood at around $71.16 million, with nearly 233.31 million shares outstanding. The 52 weeks high and low price of the stock was noted at $1.445 and $ 0.295, respectively. AGH stock has generated negative return of nearly 20.78% on a year to date basis.

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