To all new IMH shareholders - READ HERE FOR UPDATED TIMELINE Warrants currently being exercised are holding the price around the 1.75 to 2.35 range. However, this will increase Invictus MD's capacity to 67,000 kg earlier (2019 to 2020) leading to a valuation of 12.00 based on a conservative $1.125/gram net profit and a P/E of 20. This estimated future share price can be even higher if you take into account oil sales due to higher margins. I posted this one month ago, and I was right about warrants being exercised. They now have an additional $16.5 million in the bank for expansion as of Feb 5, 2018.
Why am I long?
2018 January:
-Finish building 5000 kg production capacity in acreage pharms Expansion of facility is near complete.
-Possibly receive sales licenses for AB labs / Acreage Pharms. AB Labs sales license is now secured
-Announce revenue from wholesale agreement with Canopy Growth Corporation (TSX : WEED). Revenue secured by sale of 120 kg from AB Labs
-Oils strategy has been announced to become much more profitable.
2018 February - 2018 March: WE ARE HERE.
-Almost 100% positive we receive acreage pharms sales license by this time [BIGGEST CATALYST]
-Production of 5,000 kg of cannabis annually starts at Phase 2 of Acreage
Pharms.
-Oil production license applied for.
-Receive production license with buildout for AB Ventures.
2018 April to 2018 June :
-Finish capacity expansion for AB Labs (+2000 kg capacity)
-Partnerships, MOUs to be announced in preparation for the legal market. Alberta has private retail allowed so far, leading to much higher margins.
2018 July - 2018 September (RECREATIONAL WEED IS LEGALIZED):
-Invictus MD will have 3000+ kg ready to sell in the rec market (15 mil in revenues immediately).
-Expansion of Acreage Pharms will be finished as well, and oils license received.
-End result at September 2018 is 22,000 kg annual production capacity across all 3 of their licensed producers, giving 110 million in revenue.
-Strong argument for acquisition will come after completion of Acreage Pharms expansions.
Here's the big kicker: Why is IMH only at 180 million market cap with 22,000 kg ready for recreational? My big theory is that warrant holders are manipulating the price in order to make it more attractive for a buy out. This feels like a Mettrum situation with Canopy Growth Corporation back in the day, where the valuation just didn't make sense so it got acquired. Either way, it has a LOT to gain in share price from here. Minimum price target imo should be $4 (fully diluted), based on a conservative net income of $1.125 per gram after taxes and a P/E of 20. If all expansions come to fruition we can be looking at $12.
I am very excited for IMH's future, GLTA!
Disclosure : I hold IMH shares and no WEED shares.
This post will be updated, revised and reposted after any notable catalysts are announced.
Last updated Feb 12, 2018.