RE:RE:RE:Auxly Cannabis Lol what?!
Imperial is writing down and taking a loss on their books for their investment in Auxly due to the fact that there is a good chance they don't get paid on the due date.
How are you reading that they don't have to make the payments and have been deferred? It does't say that above.
They may choose to loosen any covenants but I haven't gone deep enough to look into what they are. Regardless, liquidity still remains an issue.
It has been a nice run for you guys, but the fundamentals haven't changed. We'll get more color on that I'm coming days.
below is today's update from Raymond James analyst:
Raymond James analyst Rahul Sarugaser thinks Auxly Cannabis Group Inc. (XLY-X) suffered through a “tough” third quarter, seeing “its market share plateau and landing itself in a relatively poor cash position with persistently high SG&A, and continued dilution from convertible debt.”Accordingly, he lowered his rating for the Toronto-based company to “market perform” from “outperform” ahead of the release of its earnings report in tje coming weeks.Mr. Sarugaser said the opportunity to expand has “been hard to come by” in an overcrowded market, despite 25-per-cent growth in the Canadian adult-use cannabis market in the third quarter.“Bellwethers such as Canopy Growth and Aphria saw increasing revenue commensurate with a flat market share, while Aurora Cannabis (ACB-NASDAQ, not covered) saw its share decline,” he said. "Among the top 10 LPs, only Village Farms truly captured market share from its peers last quarter.“Our channel checks reveal that XLY saw modest revenue growth (estimate $9.7-million), commensurate with a slight decline in national market share (2.8 per cent to 2.6 per cent). We expect the introduction of XLY’s deep value brand Back Forty and the launch of a few premium cannabis SKUs will support XLY’s revenue and market share growth in future quarters, but we estimate their impact being negligible during 3Q20.”The analyst thinks Auxly may begin to see the benefits its large Sunens greenhouse, which began to harvest in September. He sees it reducing reliance on streaming partners and expanding its margins.Though he trimmed his revenue and earnings expectations for 2020 and 2021, he maintained a 40-cent target for Auxly shares. The average is 48 cents.“From the time of our analysis of XLY’s 2Q20 results—in which we reiterated our conviction that the company was well set up, with its focus on C2.0 and with support from its heavyweight partner, IMB — we maintained belief in our 40 cent target, even when the stock was under serious pressure (low of 13 cents in late Sep.)," he said. The stock has since run up to our TP, and now, with the headwinds of plateauing market share—a short-term issue, we suspect—combined with the company’s weak cash position driven, in part, by persistently high SG&A and compounded by continued dilution from its convertible debt, we lower our rating to Market Perform. We now await clarity on XLY’s strategy to expand its market share, reduce SG&A, remain liquid without egregious dilution, and on the outcomes of IMB’s strategic review.”