SmarterSquirrel.com - Is Aphria a buy? I don't own it, but am just curious enough to do the math.
They sold 1,778.2 kgs in the last quarter. They claim to have 35,000 kgs of current capacity in Canada (30,000 kgs at Aphria One and 5,000 kgs at Broken Coast). They claim to have 255,000 kgs per annum capacity coming online sometime after 2019. Remember that according to StatsCan Canadians consumed about 770,000 kgs of cannabis in 2017. So even if they produce 255,000 kgs, will they be able to sell it all? Or will there be too much supply?
Ok so for this past quarter they reported, they showed a sale price of about $7.48/gm and an all in cost of $1.83/gm. That gives them a healthy margin of $5.65/gm. Let's say they get a 20x margin valuation.
At current production rate annualized, that''s 7,112.8 kgs for a valuation of $803M vs current market cap of $1,569M, for a reduction in valuation of 49%.
Assuming they can sell the current claimed capacity in Canada of 35,000 kgs, that's a valuation of $3,951M for a gain in valuation of 152%.
Assuming they can sell their future planned capacity of 255,000 kgs, that's a valuation of $28,789M for a gain of 1735% (17.35x your current investment).
I have a concern that there are a lot of producers coming on board with significant claims of production capacity, but if Canadians only consumed 770,000 kgs of cannabis in 2017 according to StatsCan, then is there too much capacity coming online that will eventually cause a glut in the market resulting in poor financial performance for most cannabis producers?
I did some further analysis... https://smartersquirrel.com/invest/are-marijuana-stocks-too-high
I am not pro or con on marijuana stocks, I just want to be informed...