CannTrust is the most undervalued and efficient marijuana play in the sector when taking into account their rapid growth and market leading positions.
• CannTrust has been growing 23,000kg/yr of pharmaceutical grade marijuana since December and by May 2018 will be producing 43,000kg/yr. They definitely have a large first mover advantage since most other LPs’ growing facilities will take until late 2018/early 2019 for completion.
• CannTrust has been one of only four public LPs to generate positive EBITDA in the last 12 months. Which is projected to increase by 2554% this year - highest amongst it’s peers by a wide margin.
• Canntrust has the highest marijuana yields amongst it’s public peers with 250-350grams per sq ft at their Vaughn facility - which is 60-80% higher than the industry average.
• They have the second lowest SG&A of ~$5gram in the industry, which is expected to improve considerably in their 430,000 sq ft facility by May 2018.
• CannTrust’s development teams along with their exclusive global pharmaceutical partner, Apotex Inc.., are diligently innovating and developing cannabis-based products that will make it easier for patients to use and for doctors to prescribe. The joint development of a cannabis-based registered drug would create significant shareholder value.
• CannTrust is capturing 25% of all new MMJ patients. From less than 4000 in 2016 to ~40,000 currently. Expected to reach 100,000 by end of 2018. Very impressive since there’s now over 80 MMJ companies to compete with and they haven’t bought out a Mettrum or Cannimed to currently have the 3rd largest MMJ patient base in the sector.
• Canntrust’s cannabis extracts accounted for over 64% of their total sales of $7 million their last quarter - highest in the sector. Extracts have a price premium and higher margins to that of dried flower, which undeniably increases profitability.
• CannTrust is currently approved for the production of capsules and is awaiting approval for sales from Health Canada - expected H1 2018. Its equipment can produce 80,000 capsules/hour. This will expand CannTrust’s product portfolio, making them more attractive to potential patients and prescribing physicians.
• CannTrust is currently in the process to become GMP-certified in order to expand its export opportunities internationally in addition to the existing export relationship in Australia. Management indicated that with the help of Apotex, its pharmaceutical partner, the company could expect certification in Q2/18.
• International expansion expected to be ongoing through 2018/2019. CannTrust has received Health Canada approval to export medical cannabis last November and has begun shipments in Australia. CannTrust recently acquired 25% of StenoCare - A Danish Licensed Marijuana Producer that has agreements in place to supply 99% of Denmark’s pharmacies. Initially TRST will be supplying medical marijuana to StenoCare while working towards building a domestic growing facility with CannTrust’s expertise. TRST is also working towards Germany and Brazil as countries where it would like to export its medical cannabis products.
• TRST has one of the lowest fully diluted share count in the sector of 91 million with approx 30% inside ownership. They’ve been very successful while not undergoing big dilution, which is a definite testament to how well managed this company is.
• CannTrust will be one of a select few who will have substantial amounts of products ready and growing in time for recreational legalization. They’ve been in full production since December at their 250,000 sq ft Niagara facility and another 180,000 sq ft facility will be completed by this May. By May 2018 they’ll be producing a minimum 43,000kg/yr of pharmaceutical grade marijuana flower.
Canntrust can easily be amongst the top 3 producers in a few months, due to them being one of the best fundamentally sound marijuana companies in the sector. The thing with TRST is that they don’t make much noise hyping their achievements, instead they keep improving and outperforming while under promising. Case in point is they’ve underestimated their yields by 60% for their 430,000 sq ft Niagara facility to be ~150grams per sq ft, which equals 40,000 kg/yr. A recent tour of their Niagara facility confirms that they’ve been able to achieve 300grams and higher per sq foot. That in itself is huge! Another catalyst is the fact that they’ve been in full production since December at their 250,000 sq ft Niagara facility (20,000kg/yr) and by May will be growing in an additional 180,000 sq ft facility (20,000kg/yr). By August 2018 both those facilities will have produced a combined minimum of 20,000kg of dried flower for a value of $138 million @ $7gram. With that kind of large production output of 43,000kg/yr by this May and an inventory of ~ $130 million by August, there’s no doubt CannTrust is quietly positioning themselves as a company who’s gaining a large share of the medical marijuana market while poised to do the same with the recreational market much earlier than most.
5-6 months to go!
GLTA