Q1 2021 Prediction Q1 2021 will cover the period starting June 1st ending August 31th
My post will be divided in many sections
- Disclaimer (boring part but important)
- How to pull information on the Cannabis Stats Website
- Q1 2020 numbers I expect
- Aleafia Settlement
Disclaimer (boring part but important)
I'm not a CPA, financial advisor or fortune teller. I do my own due diligence and do interpretation
to the best of my ability, which means my understanding of reading financial statements or any
other document related to my due diligence. I personally got surprised last quarter Q4 2020.
Surprise #1 was the non-operating income loss of 23,032 M $
Suprise #2 was the 63,971 M $ Impairment.
I always put disclaimers because the last thing I want is someone to follow me blindly.
Fortunately I implemented risk management so I didn't give back all the gains from the run up
the share price experienced headiing into earnings. So far the exact same thing is happening,
share price is going up but hopefully this time earnings are good (no bad surprises).
Risk management and having a plan personally helped me, no one sees in thee future.
How to pull information on the Cannabis Stats Website
This was very useful in my due diligence so figured it's important and helpful if I can
show you how it works. Government website is where you find the raw data.
Step #1, click on the link below. Latest data is for the month of July 2020.
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=2010000801#timeframe
Step #2 Click on the North American Industry Classification tab
Step #3 Uncheck the Retail Trade checkbox and expand it
Step #4 Expand Miscellaneous store retailers
Step #5 Check the cannabis stores option that appears and click on apply
This is what you should get , link : https://i.imgur.com/BjZkIu1.png
Step #6 Click on the Adjustments Tab
Step #7 Uncheck the box called Adjusted
Step #8 Check the box called Unajusted and press apply
This is exactly what you should see (scroll down on your page) link below
https://i.imgur.com/jkqw0Yh.png
We don't have August 2020 data but if we compare last Quarter so :
March + April + May VS June + July + August (we don't have August so let's just compare
March + April VS June + July : 181,180 + 178,429 VS 201,105 + 231,608
March + April ( 359,609) VS June + July ( 432.713)
So far we can see that we have a 20% increase.
To keep that increase of 20% August sales would have to be equal to May (186,353)
If August Sales are higher than May we are looking at more than 20% increase.
I'm bullish but I'm gonna be conservative and go with 20%.
Now that you know where I got that 20%, I will assume that Aphria Cannabis
Recreational sales will be up by 20% because Aphria is the market leader.
I think that it will be more than 20% because we saw ACB and WEED rec sales go down.
This means that someone called APHA probably picked up market share.
I will stay conservative 20% but wouldn't be surprised if it was more.
If you didn't know about ACB and WEED , I invite to read their financial statements :)
Q1 2020 numbers I expect
My favorite document, MD&A Q4 2020 link below
https://aphriainc.com/wp-content/uploads/2020/07/3a.-aphria-Q4-2020-management-discussion-and-analysis-v2.pdf
I invite you to go on page 23.
I don't expect any changes for the Revenues from medical cannabis products 8,447 M $
I prefer to ignore the Wholesale cannabis revenue part so this time 0$
Now we apply my 20% to Revenue from Adult-use cannabis products = 68,024 M $
For the Distribution Revenue I expect no change also 99,137 M $ like disclosed page 25
Excise taxes page 25 ( -12,395 M $) I don't expect them to change, since it's only assumed for patients like all other cannabis companies do.
Net revenue = 8,477 + 68,024 + 99,137 - 12,395 = 163,243 M $
Now remember the 2 surprises I talked about in my disclaimer?
Bottom of Page 31 before the Net income (Loss) paragraph they talk about the 23,032 M$ surprise, I quote :
For the three months ended May 31, 2020, the Company recognized a loss of $4,424 and $27,016 primarily related to the change in fair value of long-term investments and fair value of the convertible debentures. These changes in fair value result from a decline in the trading prices of participants in the cannabis market. Furthermore, the Company recognized a loss of $10,824, $1,000, and $4,345 resulting from the disposal of capital assets, loss on promissory notes receivable and the legal settlement respectively. These losses were offset by a gain on settlement of convertible debentures of $12,452 and foreignexchange gain of $11,897.
So like I said in my disclaimer, from my understanding, we won't see that 23,032 M$
suprise and we won't see another impairment surprise because it's not recurrent,
from my experience and from what I read on investopedia , link below.
https://www.investopedia.com/terms/i/impairment.asp
Now before I go to my next point, I would like to remind you that when a company
releases it's Q4, it includes the yearly performance, key words are : For the year ended
This is why you can use the MD&A that isolates the 3 months covered by Q4.
I invite you to go on page 33 of the MD&A .
When you look at the last part, it says we did :
Net Revenue 152,503 M $ (top of the page)
Loss of 97,263 M $ after all the maths, mainly due to both surprises that cost us
63,971 + 23,032 = 87 M$
If we take my Net Revenue projection 163,243M$ instead of the 152M,503 $ of Q4 2020
and assume there won't be 2 surprises , it means we will turn a profit.
Here are the mathematics : 97,263 M offset by no 87 M$ surprise = -10.263M$ Loss
That -10.263 M $ Loss is offset by my projection that represents a 10.74 M$ increase in revenue
-10.263 + 10.74 = 0.477 M $
0.477 M profits/ Outstanding shares 289,5 M (page 36) = not even a penny per share
Aleafia Settlement
I emailed Aphria Investors and got an answer personally by Carl Merton the CFO
My question :
His answer :
Thank you for reading and have a nice day