New price target $6.50 !!Flower One Holdings has a 117 per cent upside, says Mackie Research MAY 23, 2019 BY JAYSON MACLEAN US cannabis company Flower One Holdings (Flower One Holdings Stock Quote, Chart CSE:FONE) just got a target raise from Mackie Researchs Greg McLeish, who, after touring facilities, says the companys Nevada build-out is progressing smoothly. Vertically-integrated cannabis company Flower One has now completed conversion of its commercial greenhouse in North Las Vegas, making it capable of producing more than 62,500 kg of dried flower per year, by far the largest cannabis cultivation operation in the state. In a client update Thursday, McLeish says Nevadas climate, with its 290 days of sunlight per year and more than ten hours of sunlight per day, plus its dry heat and low humidity, is ideal for growing cannabis in a greenhouse environment. A dollar per gram for Flower One Holdings The analyst says the scale of FONEs operations should result in an all-in cash cost per gram of less than $1.00, which he says compares very favourably to competitors that operate smaller-scale greenhouses and indoor operations. Once Flower One reaches scale, McLeish says that it should be generating EBITDA margins above 30 per cent. (All figures in US dollars unless noted otherwise.) We had been applying a 10x EV/EBITDA multiple to value Flower One to take into account the execution risk associated with building out a successful large scale greenhouse operation. However, this execution risk has been mitigated as evidenced by our recent tour of the NLV Greenhouse. Additionally, the closing of the C$57.5 million convertible debenture financing and the recently announced licensing agreements and brand partnerships will help to underpin our financial forecasts through 2020. As a result, we are increasing our EV/EBITDA target multiple to 11x from 10x, says McLeish. The analyst is calling for fiscal 2019 revenue and EBITDA of $134.9 million and $45.1 million, respectively, and fiscal 2020 revenue and EBITDA of $251.1 million and $90.6 million, respectively. McLeish is maintaining his Buy rating and moving his target price from C$5.50 to C$6.50, which represented a projected return of 117 per cent at the time of publication. FLOWER ONE HOLDINGS COMPANY PROFILE VIA MACKIE RESEARCH CAPITAL FLOWER ONE HOLDINGS INC. IS A VERTICALLY INTEGRATED CANNABIS COMPANY THAT IS TARGETING THE MEDICAL AND RECREATIONAL CANNABIS MARKETS IN THE STATE OF NEVADA. THE COMPANY IS CURRENTLY IN THE PROCESS OF RETROFITTING ITS 455,000 FT NLV GREENHOUSE INTO A CANNABIS CULTIVATION AND PRODUCTION FACILITY. THE CONVERSION OF THE GREENHOUSE IS NOW COMPLETE AND ONCE THE FACILITY IS FULLY OPERATIONAL, IT WILL BE CAPABLE OF PRODUCING MORE THAN 140,000 POUNDS (62,500 KILOGRAMS) OF DRY FLOWER PER YEAR.