RE:Some DD for you - Very Conservative NumbersSome DD for you - Very Conservative Numbers This is a purely medical play. Lets get that straight first. No hype, its not a media darling, no Snoop, no Post Malone, no million square ft greenhouse...and at 30 something million market cap, very little risk since there is no let down of grandeur promises of making a killing off rec sales.
Here's what we know, through MFT, they have welcomed 14,000 new registrants and referred them to different LPs through the 17 contracts they currently have. They need only 10k patients of their own to be a home run. I'll explain; through medical and over time, if they can establish an active client base of 10k pateints, here is your math:
10k patitents x 3 grams per day (also happens to be Health Canada allottment for coverage for vets) is 30k grams per day. If you multiply that by 365 you get 10,950,000 grams per year. If they can profit only $1 per gram thats $11 million profit. We are currently at a total of 175 million fully diluted shares, I will dilute another %45 for future funding and use 250,000,000. If you divide the $11 million profit by 250 mil shares you get an EPS of 4.4 cents. Use a conservative PE ratio of 15 and you get $0.66 cent shae price. Use a more realistic PE ratio to allow for future growth of 25, and you have a share price of $1.10. I'm not even factoring any potential from Knalysis, just medical sales to 10k active patients making $1 profit per gram, whether they grow it or outsource it.
You might ask "do they even have 10k kilogram per year production"? The answer is no, not yet. But according to the latest MD&A, "phase 1 will have the ability to produce 2-3k kilos of premium cannabis per year, eventually increasing to over 13,000 kg". Sounds like they have some expansion plans. However, I don't even want to go there, bc even if they can buy from other LPs, they will be able to turn $1 profit after their expenses. These are facts.
So the real question really is...Do you believe Canada House Wellness can procure an active client base of 10,000 medical patients?. That's it. Really simple. My answer is an absolute yes. They built up 14k over the last few years, they can build 10k no problem over the next 2 with more clinics online now. The downside risk to this vs upside potential is mind boggling.
My first buy was CGC in the $2s bc I can see future growth potential. I'm accumulating here.
Disclosure: I own 600k shares at an average of just under .23 going long til its over $1
Great post Toronto CGC,
I differ a bit on the strictly medical play though I do agree, that is the cornerstone on which the Canada House is built.
First, the deal with Medmen brings opportunity on sale of nutrients and IP to the coming micro grower market. This fits in neatly with the sale of seeds and genetics that CHV was recently licensed to begin selling.
Second, the JV with EAT will bring products for the recreation market along. Yes, regular LP edible oils will be part of the offering but so too will be edible product lines, vape pens and other recreational offshoots of cannabis infused products.
