Labs Financials vs. Valens FinancialsOveral good financials for Labs, good margins 40%, good for the sector,
For me the red flags that I still keep on seing for the moment for Labs (this could chage in the future) is
- The higher administrative costs then Valens
- The fact that they boost about being able to extract 250 000KG a year but yet they got 3 800KG of weed last year and this year have so far 6 600KG of weed to extract into oils... While VGW has HUGE contracts (Way better long term in my opinion)
- They made 10 million in sales in december but : The first large shipments of cannabis oil supply left the Company’s dock in December 2018 andwere aggregately valued at over $10 million. One such sale was to Canopy Growth Corporation (“Canopy”)pursuant to the 18-month strategic supply agreement dated November 29, 2018 by which MediPharm Labs agreed to supply up to 900 kilograms of cannabis extract to Canopy and its subsidiaries. (from their SEDAR repport)
So as I see it, this is a ONE TIME contract for Labs... And Valens has multi-year agreements and will process much more then 3 800KG or even 10 000KG... VGW should not have much problem getting big quantities of weed to process...
For now Labs says they are producing on average 10KG of oil per day, this will be interesting to see if VGW is producing more then that and will be a good indication for us...
Anyhow, good financials for Labs, good company, just don't see they being the leader long term, this is my opinion and I can be wrong...
Exited to see what VGW holds for Q1
Cheers
GLTA
TBM