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OrganiGram Holdings Inc T.OGI

Alternate Symbol(s):  OGI

Organigram Holdings Inc. is focused on producing cannabis for patients and adult-recreational consumers, as well as developing international business partnerships to extend the Company's global footprint. The Company, through its subsidiary, Organigram Inc., is a licensed producer of cannabis, cannabis- derived products and cannabis infused edibles in Canada. It has also developed and acquired a portfolio of legal adult-use recreational cannabis brands, including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, SHRED’ems, Monjour, Laurentian, Tremblant Cannabis and Trailblazer. It specializes in vape and infused pre-roll categories backed by a portfolio of owned brands, including the BOXHOT brand. Its products include pre-milled flower, pre-rolls, weed gummies, shred x vapes, and extracts. It operates facilities in Moncton, New Brunswick and Lac-Superieur, Quebec, with a dedicated edibles manufacturing facility in Winnipeg, Manitoba. Its subsidiaries also include 10870277 Canada Inc.


TSX:OGI - Post by User

Bullboard Posts
Post by blueboyon Dec 11, 2017 11:40pm
376 Views
Post# 27135465

Comparing OGI to a couple of the larger LP's is interesting

Comparing OGI to a couple of the larger LP's is interestingFor this comparison, I will use Aurora Cannabis (ACB) and Aphria (APH).  I won't include Canopy (WEED) in this comparison, since WEED is so much larger than these other  LP's, but ACB and APH should make my point well enough.

I am a numbers guy, so here goes (numbers are as close as I could figure, so check them yourselves, of course).  I got the revenue numbers from the latest reported quarters for each company in their news releases:

(1) ACB's revenue for their last reported quarter was $8.3 million.  ACB's market cap was $3.0 billion at the close today.

(2) APH's revenue for their last reported quarter was $6.17 million.  APH's market cap was $2.1 billion at the close today.

(3) OGI's revenue for their last reported quarter was $1.92 million.  OGI's market cap was $440 million at the close today.

** Using ONLY the last reported revenue for each company as a guide:

(4) If you use the ratio of ACB revenue to APH revenue and apply it to ACB's $3.0 B market cap, it says that APH's market cap should be about $2.23 billion.  APH's market cap actually sits around $2.1 billion right now, so this comparison method seems pretty accurate.  If ACB and APH have very similar RELATIVE valuations, then other similar companies (like OGI) should have similar RELATIVE valuations as well.

5) If you use the ratio of ACB revenue to OGI revenue and apply it to ACB's $3.0 B market cap, it says that OGI's market cap should be about $694 million.

(6) If you use the ratio of APH revenue to OGI revenue and apply it to APH's $2.1B market cap, it says that OGI's market cap should be about $653 million.

** Now, does anyone else (other than me, of course) find it fascinating how close the results are from points (5) and (6)?  Because the two valuations are so close to each other, let's use the average of the two, or $674 million.

** The $674 million market cap for OGI would represent an increase of 53.2% over OGI's current valuation.  WOW!  Now, this is just to give OGI the same RELATIVE valuation as ACB and APH.  I am not saying that ANY of these companies are PROPERLY valued right now (that is another separate discussion), but RELATIVELY their valuations should compare well, at least in my opinion, as they are very similar companies and their sizes are different by an order of magnitude.

** Applying the 53.2% increase to OGI's closing price of $4.10 today, gives a projected price of $6.28 per share.  Another WOW!

*****  Now, remember that OGI's last revenue numbers were put out when OGI had a production capacity of 25,000 kg / year (I guess they are still at that level), BUT they just announced $50 million in financing to more than DOUBLE their capacity to 65,000 kg / year. 

*****Future revenues figure to more than double (so let's call it $4 million, although it will likely be higher than that) along with OGI's increase in production, SO if we use ACB's and APH's last reported revenues and current market caps again as a guide, that would mean that OGI's expected RELATIVE share price would then be over $12.50 per share.

Now, I know that is A LOT to digest (never mind for me to calculate and type out), but the bottom line is that it looks to me that OGI is COMPARATIVELY significantly undervalued, as compared to two of its larger (but very similar) peers.

I already have all the OGI shares I want to own, but I wanted to share my numbers with the group so people can pick holes in it.  I think this comparison explains the recent share price action, as well as some of the large share purchases by houses like Canacord (of course CANAcord is into cannabis stocks).  This comparison also shows that there is A LOT of room for OGI's share price to rise, just to catch up (or even come close to) the relative valuations of ACB and APH.

Thank you to anyone who actually got all the way through this long post.  I know that numbers aren't for everyone, but it is how I evaluate things.

Well group, pick away, and give me your feedback...  I can take it  :)

BB

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