RE:Just a questionSanctified wrote: Why does LABS/Medifarm trade so high? They are a fraction of the company vgw is. Less contracts, less production, less capacity. Shouldn't vgw be higher than labs? Am I missing something?
Per GMP report of Apr 9:
"MediPharm Labs trades at an attractive valuation of
9x our 2020 EBITDA estimates, a significant discount to Canadian LPs which trade
at ~20x 2020 EBITDA. In our view the discount vs peers comes from the
relatively short history of LABS, combined with its recent pre-revenue status
and the extraction market being relatively new to investors compared with
cultivators which have been public since 2014. We believe that the valuation
discount will narrow as the company executes on its growth initiatives.
Our target price is derived by applying a 15x multiple to our 2020 EBITDA
forecasts. Given the significant growth potential of LABS combined with its high
margin and strong cash flow generation, we feel this multiple is warranted."
Versus ...
"Valens trades at
4.9x our CY2020 EBITDA estimate, a
significant discount to the cannabis sector which trades at ~20x CY20 EBITDA.
The valuation discount can be explained by Valens’ limited track record given it
is still in a pre-revenue stage. However, we expect to see a valuation re-rating
as the company executes on its growth strategy and as investors become more
familiar with extraction companies."