Current ValuationI'm going to make some basic assumptions, which I think are unbeleavably safe.
1. Sales for combined assests totaling 1 million USD/month what we saw in June will continue.
2. USD/CAD Exchange of 1.3
At 12 million USD sales per year, this represents about 15.6 million CAD in annual revenue. This assumes current sales continue. The current market cap of this company is about 30 million CAD. We are paying under 2x current revenue for this company.
In a high margin industry, such as this, 2-4x revenue is typical. Which means, this comapny is undervalued on a current sales financial analysis. More importantly, unlike the rest of the MJ industry, it means that all future growth is not yet built into the Market cap of the company. Which means that as our revenues increase our market cap should increase proportionally.
With Rec just having started and Sutton publically stating that he is looking for a facility expansion, to approximately add 4x more production space (50,000 sqft). We now know that Infused is growing faster than TGIF's projections.
Now the newest raise. Baised on current prices, we are raising (7.5-10 million dollars) At the current share price. Sure it adds dilutiion but you will see a proportional increase in market cap as soon as the shares hit. This cash is what is going to allow us to grow the revenues beyond CAD 15 mil/year.
Because this growth is NOT accounted for at all in the current SP we will catch every bit of upside as it occurs. I love that this company has a fair value, based on current sales unlike many of the Canadian LP's.
This company also has a tremendous amount of growth avenues, I will be interested to see how the TGIF team chooses to purse growth. There is:
Organic Growth/Market Penetration
As more and more distribution is set in place in Nevada. More retailers will be able to buy our products. In other words there will be more demand as the network to supply all tourists and locals with our product is set up.
As time goes on and people become more comortable with MJ as a recreational drug, the stigma associated with smoking should let up, leading to more people experimenting and using MJ in general, thus increasing demand.
Growing our brand to become a desired product over other MJ companies in nevada. Leveraging our first mover advantage and experiance. Growing capture all 44 Nevada dispensaries, or all 2+ liquor distribution companies to dispense our product.
Product Diversification
We currently sell dried flower and some oil products. We currently focu on higher THC products (>30%) We can easily expand our line to have more CBD based products. More variety of oils, edibles, THC infused beverages, e-vapes, clothing and apparrel, tourism and plant tours ect. All all new ways that we can generate revenue, should we sho choose.
Market Diversification
I am going to leave out facility expansions.. these will be needed as the sales pile up and the demand increases.
As MJ becomes legal in other states it will be possible to expand to those areas, should we have the supply. It is nice that we will ahve significant revenue in place soon to be able to grow out our facility to create this supply without much more financing. The most notable, our neighbor to the West...California. This will be one of the worlds largest markets in about 6 months.. I know there are federal laws against transporting MJ across State lines.. However this is a rare case where we are neighboring states. Should the supply meet the demand in Nevada, I don't see why we wouldn't be able to help meet the massive demand in California.
The liquor companies only have rights to distribution for 18 months, perhaps after this we look into mail order as seems to be the trend in the medical distribution. This would offer us some direct to consumer sales that could offer higher margins.
Acquisition
Let's just hope this doesn't happen to us not for a few years anyways.
We are in a great thing here, don't let the share price be the metric that you use to determine successes right now. Use corporate updates, sales and if you must have day to day validation...volume.
Volume speaks wonders on a stock like this. We are selling about 1-1.5 million shares per day that a lot interest, and once Anon has sold off enough of his position that he is satisfired the amount of share to fill this volume will have to come at a higher price.
I am long here and would lobe to hear how other people think this will pay out. GLTA and Thank God its Friday!