N00bInvesT0R wrote: Hi everyone, it's been a long time since my last post. Hope everyone is doing good :)
You know the drill, all the links to backup the numbers I mention will be at the end of my post.
According to Stats Canada, they recorded in total during the months of december 2019, january 2020, february 2020 453,892 M $
This period covers exactly the same period that Aphria Q3 covers.
For the recreational cannabis revenues, they reported 55,761 M $
For the medical cannabis revenues, they reported 8,663 M $
Distribution revenues 88,308 M $
55,761 M $ / 453,892 = 12.3% , meaning Aphria has 12,3% of Canada's recreational market.
They did 6,154 M$ revenue with vapes, it's included in the recreational cannabis revenues just for your information.
In case you didn't know, here is what Carl Merton (Aphria CFO) said during the Q3 call :
"During the second and third quarters, we purchased almost CAD30 million of dried flower on the wholesale market, of which approximately half was sold during Q3. The sale resulted in approximately CAD20 million in net revenue with a gross profit of over CAD5 million. If we were able to produce the product ourselves, we believe, we could have recorded an additional CAD7.6 million of gross profit and adjusted EBITDA in the third quarter and an incremental 1,360 basis points on our adjusted cannabis margin. These figures are based on assumptions set out in the MD&A, including an all-in cost of sales of dry cannabis per gram of CAD1.69. At the end of the quarter, we maintained almost CAD14 million of purchased dried flower in our inventory, all of which, we anticipate selling in Q4. "
They had to resort to his because Aphria Double Diamond Liscence came in late.
Aphria sold 11,037 M$ in wholesale which is also included in the 55,761 M$ recreational cannabis revenues.
That will be an argument later for my bullish scenario but for your information again.
If you didn't know, Aphria will report their results for the 4th quarter on July 29th, I assume the results will be pre market since the conference call is the same day at 9 AM.
The period the Q4 will cover will be the months of March, April and May 2020.
According to Stats Canada, they recorded during those 3 months 545,506 M $ .
Neutral scenario and Bullish Scenario (the one I am rooting for) will follow. I won't do a bearish scenario, I will let you do the maths on your own if you are bearish ;)
Conservative/Neutral Scenario
Medical cannabis revenues and distribution revenues remain the same and our recreational cannabis market share remains the same, 12.3% like I calculated previously.
- Medical cannabis revenues 8,663 M $
- Distribution revenues 88,308 M $
- Recreational Cannabis revenues 12,3% * 545,506 M$ = 67,097 M$
This comes up to a total of 164,068 M $
Bullish Scenario
In the bullish scenario I don't think we will see an increase for the medical cannabis revenues even if Carl Merton said : " Additionally, our medical sales are up 18% since COVID-19 restrictions came into place, although, we proactively decreased selling prices 10% to help patients manage current cash flow concerns. There are many variables related to this global health crisis, and we will continue to monitor them closely and react where and when needed appropriately."
Which can attract new patient but I will keep it at 8,663 M $
I expect an increase in the CC Pharma revenues because Irwin Simond said :
" In Germany, as many of you know, CC Pharma is an important distributor of pharmaceutical products, and as you would expect, we have seen such increase in consumer demand for our medicines. We experienced solid growth in Q3 for the month of March. CC Pharma has experienced a 50% sales increase. Our team has taken steps to secure supply and is closely monitoring the situation, should any countries in the EU change their border policy as a result of COVID-19."
I will throw a conservative 10% so that would make distributions revenue go from 88,308 to
97,139 M$
Irwin also said during the Q3 : "We have compelling brands for patients and consumers across broad demographics with five high-quality brands including Solei, RIFF, Good Supply, Broken Coast and of course our Aphria medical brand. We are increasingly connecting with consumers through our medical and adult-use brand's positioning and innovation to drive growth. We added 100 basis points to our market share in Ontario during Q3. We added 400 basis point to our share in Alberta. Aphria maintain a 77% share across all brands on vapes in Ontario. We increased our national share in each of our last four quarters. We continue to make progress in Ontario. For the month of March, Aphria had number 3 -- had three of the top-5 brands. Good Supply was number 1, Solei was number 2 and RIFF, number 4 according to OCS."
Then an analyst called Pablo Zuanic asked this question to Irwin Simon : "Understood. And just a follow-up on 2.0, just to be clear, remind us of -- in the February quarter, you have your full line-up there in terms of vapes or was it rolled out through the quarter? I'm just trying to -- I understand most of the launches won't be until June, as you just said, but is there a difference in terms of how much product you will have out there in the May quarter versus the February quarter? Thanks."
Irwin Simon Answered : "Well, so far it was minimal, and really didn't start till January and some in February, but the quarter -- the April -- the March, April, May quarters are the big quarters that we're going to be rolling out product and that's where the majority of our vapes will be in the next six months. But this will be a good sized quarter for vapes."
Now if you don't follow the other companies like Canopy Growth that has been losing market share, I assume that Aphria is picking up some of their shares.
So because of Irwin's comments regarding the vapes and the compelling brands, I will say that we will have our market share go from 12,3% to 15%.
0,15 * 545,506 = 81,83M$
- Medical cannabis revenue 8,663 M $
- Distribution revenue 97,139M$
- Recreational cannabis revenue 81,83M$
That's a total of 187,632 M$
Yes I have nothing to back up the % raise, it's my opinion because I'm bullish.
Hexo and Aurora Cannabis also reported their financials and increased their cannabis revenues even if OGI and Canopy Growth had bad quarters, I think Aphria will improve like Aurora and Hexo.
Will history repeat or be better than History (Canadian Chart)? One day before Q4 2019 (august 1st 2019) we closed at 6.90$
We reported the next day, august 2nd 2019), we closed at 9,67$
That's a 46% rally :)
The day after (august 3rd 2019) we touched our current 52 week High,10.05$
If we can deliver again strong numbers , like the bullish scenario I propose, history may repeat but hopefully this time the gains don't go away hehe ;)
Thank you for reading my post, stay safe and always do your due dilligence.
Links are below and I will post after the Q results, enjoy your weekend :)
All the Links
Link to Q4 announcement :
https://aphriainc.com/fourth-quarter-and-fiscal-2020-financial-results/
Link for Stats collected by Canada :
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=2010000801#timeframe
In case my link doesn't display the good options, here is how you can get the numbers
Please note that the numbers are in millions or else all the cannabis companies would of been bankrupt already.
- Click on the "Reference Period" Tab
- Pick from December 2019 to 2020 May
- Click on the "North American Industry Classification System (NAICS)" tab
- All the way to the bottom, under Miscellaneous store retailers, check "cannabis "stores. Make sure this is the only thing you check
- Click on the Adjustments Tabs and only have "unadjusted" checked
Link to official numbers reported by Aphria during Q3 :
https://aphriainc.com/wp-content/uploads/2020/04/Aphria-Inc_Q3-2020_Management-Discussion-and-Analysis.pdf
Page 25 for the medical and recreational cannabis revenue
Page 26 Cannabis vapes revenue
Page 27 Distribution revenue
Quotes about Irwin Simon and Carl Merton during Q3 call :
https://www.fool.com/earnings/call-transcripts/2020/04/15/aphria-inc-apha-q3-2020-earnings-call-transcript.aspx