AltacorpOrganigram - Altacorp Initiates With Outperform Report OrganiGram Holdings Inc. (OGI; C$9.81) David Kideckel, PhD, MBA.647-776-8240 OGI | Where Solid Cannabis Fundamentals Meet Innovation, CPG and the Future of Biosynthetics (May 31, 2019) Rating: Outperform; C$13.30 target Event: We are initiating coverage on Organigram Holdings Inc. (OGI, Company) with an Outperform rating and a $13.30/sh price target. Investment summary: OGI is a leading Canadian LP and currently operates a large scale indoor cannabis cultivation facility in Moncton, New Brunswick. The Company boasts industry leading adj. gross margins at 60% and has been EBITDA positive since Q4/F18 which in our view, sets them apart from many of their competitors. In our view, OGI is one of the premier names in the Canadian cannabis sector and will continue to demonstrate operational excellence as we shift towards the next phase of Canadian cannabis legalization, in the derivatives market. Cost leadership and industry leading yields: OGIs unique three-level indoor growing technology has allowed the Company to maximize their square footage and has resulted in some of the highest yields in the industry. Also contributing to OGIs excellent yields has been optimizations made around their cultivation process using OGIs proprietary IT system OrganiGrow. To our knowledge, OGI has become the lowest cost producer among publicly listed Canadian LPs to date. In our view, OGIs industry leading cultivation process coupled with the lowest cost location nationwide will allow the Company to maintain their low cost structure and continue producing extraordinary yields over the longer term. Positioned well for Canadian cannabis legalization 2.0 in the derivatives market: We believe OGI has taken all the right steps to prepare for the highly anticipated, cannabis-derivative product segment. OGI has been purposefully stockpiling inventory for extraction and has formed partnerships with both The Green Solution (TGS) (private) and Canadas Smartest Kitchen (CSK) (private), ensuring that the Company is positioned well for product development and formulation (e.g. vapes, chocolate edibles, etc.). OGIs partnership with Valens GroWorks (VGW-CNSX, OP, TP $7.75, here) will support their extraction needs, ensuring that they are prepared to deliver product to the market as soon as regulations permit. Beyond these partnerships, OGI has also developed their own shelf stable, thermally stable, water-soluble, and tasteless cannabinoid nano-emulsion formulation. With this technology, OGI is actively seeking a global strategic partner for distribution, and product development. Forward thinking and hedging their bets with biosynthetically-derived cannabinoids: As we have previously written (link to our primer on biosynthetically-derived cannabinoids), we believe that biosynthetic cannabinoid production has the potential to disrupt the cannabis industry supply chain. OGIs investment in Hyasynth Biologicals Inc. (private) demonstrates their ability to be forward thinking, ensures that the Company will be able to maintain their low-cost operating structure going forward and positions them well as a leading partner of choice for global consumer packaged goods (CPG) companies, ultimately placing OGI as a front-running LP in the Canadian cannabis space. Initiating Coverage with a $13.30 Price Target and an Outperform Rating: We are initiating coverage on OGI with an Outperform rating, and a 12 month price target of $13.30, based on our discounted cash flow valuation, using a 9.5% discount rate and 3.0% terminal growth rate.