A great write up from FaceBookby JF (RLV IR),
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Dear Relevium Investors, I will take the opportunity to put together my investment thesis on RLV and why believe the company remains undervalued. Although there is no one else more frustrated with the share price than I, investors don’t have to look too far to see many securities to be held under pressure lately. We just have to look at daily trading volumes on both the CSE and TSX Venture exchange which has dwindled during the summer months. I am of the opinion that if a stock has suffered from the summer doldrums it provides a great buying opportunity for when speculative stocks start catching a bid again after the seasonal summer drought. As with every year, I believe we will start to see more volume start to pour in after labor day - in fact on larger names in the sector, the rallies have already started.
BGX-E-Health
Bioganix is a growing brand which has recently begun selling its products on Walmart.com and will be being selling in Europe shortly. I share the frustration with the delay of Walmart but products are now online and available for purchase which should help not only boost brand recognition but ultimately revenues as well. It's important to note that both the expansion on Walmart and Amazon in Europe are additional revenue streams which does not require dilutive financing. This alone I believe to be quite accretive and I’m looking forward to additional products, sales channels and ultimately its international presence!
Biocannabix
As part of a growing company in the health and wellness space I see it only natural to include CBD’s as part of it’s growth strategy. Currently in Canada CBD’s are illegal and the only people able to purchase such oils are ACMPR patients. In order to be able to sell CBD’s in Canada, a company needs a license from Health Canada. The company first selected a building and recently received the City approval for its facility. IMO this was crucial and mitigated significant risks especially since we are seeing some municipalities not approving cannabis operations. Not having municipal approval is a very costly mistake. I’m eager to see the company sign its lease agreement going forward and an application to Health Canada be submitted shortly thereafter. I think the Biocannabix subsidiary will be a major value driver for shareholders going forward.
Below I have attached a balance sheet of a company I will use for comparison purposes. I have decided to omit the companies name as I do not want to “bash” someone else’s investment nor is it the purpose of the comparison. The purpose is simply Market Cap comparables in relation to revenues. First we see sales of only $4,027 with the Cost of goods sold (COGS) being $6,344 for a total gross margin loss of $2,317. We can see that this company has hardly any sales and that the COGS are higher then their revenues which resulted in negative profits. This company is valued at a market cap of $44 Million. Most companies in this situation will need to rely on dilutive financing as their revenues are insufficient.
In comparison, for the 3 month ending March 31st 2018, Relevium reported sales of $1,036,176 with cost of sales being $460,681 which resulted in a gross profit of $575,495 or 55%. If we multiply the sales times 4 (Quarters) we get $4,144,704 per year. The market cap divided by annual sales gives 3.3. This tells me that RLV is trading at 3.3 times price to sales. Now with the comparison in terms to revenues and market capitalization we can see one is trading at a significant discount or one is extremely overvalued. The above valuation of RLV does not take into account all the accretive assets currently being built and being executed on and I do expect the market to eventually take notice of this growth."
