I wasn't going to respond to Lotus33's question - but seeing as how quinlash has posted some misinformation - thought I'd try to clarify.
I believe what Lotus33 is asking - is more along the lines of if there's a value of the facilities built into a share price. For example, if you own a $50 million greenhouse - is there a calculation to determine if that is reflected in the share price, for instance for every $1 million of greenhosue valuation, should there be .02 cents value in a share price?
If you had a $10 million faciity - then 10 x .02 cents or .20 cents should be reflected in the total share price of $ 3.25. If you have a $20 million greenhouse then the stock should be higher - as it would include 20 x .02 cents or .40 cents so theoritcally, the share price should be $ 3.45.
To answer your question Lotus33
- there is no direct calculation like that - it's simply not possible, however - there can be an indirect value reflected in the share price.
If both company A and B had greenhouse valued at $100 million - but company A had a $60 million mortgage and company B only owed $10 million - then company B's Balance Sheet would represent a company in a stronger financial position - and investors generally reconize that a company in a stronger financial postion is generally more favorable as an investment.
For example, if you had $10,000 to invest would you likely take into consideration a company with strong assets - and a smaller debt load, or a company with strong assets - but a very highdebt load that they're struggling to service (Medmen is an example of that)
But there are just too many other factors involved in the Balance Sheet - and as the facility is commercial property - valuation of similar buildings, would be valued based on the market of the particular part of the country it's located in - just like houses.
If the same company had two 100,000 sq ft facilties - but one on the west coats and one in the bush country near Kirkland Lake in northern Ontario - my guess is that the BC location would have a higher valuation
Yes, a facility is a long term capital asset - however, quinlash is in error associating it with 'goodwill' and write off impairments - goodwill has nothing to do with the valuation of your greenhouse. Both assets are amortized over a period of time - and shown as a depreciation expense or a contra asset.
'Goodwill' is referred to as blue sky. If you acquire a company for $900,000 - but in recognition ofthat companies establsihed client base, product knowedge, market share etc you pay an additonal amount of $100,000 - for a total price of $1 million - the $100,000 is recorded as an asset 'Goodwill' and again, depreciated over time. If it's recognized that the $100,000 was an overpayment, like in Hexo's case - then the Goodwill is further is reduced by $50,000 with an Impairement Expense and the remaining $50,000 continues to be depreciated over the course of time.
The $50,000 impairment entry itself is non-cash - however the cash lost was recorded at the original time of purchase - and one way or anotehr - it's a recognition that there was an overpayment - and the cash was spent.
A write off or impairment is what Tilray did in the case of Medmen. Tilray paid $225 million to acquire the debt owed by Medmen - debentures that lost value in the two years since they were acquired. Today, instead of $225 million, let's say they're worth $125 million - Tilray 'wrote off' $100 miilion to reduce the receivable they could collect from Medmen - and recorded a $100 million Impairment Expense,
While the accounting entry to record the impairment was 'non-cash' - it was recognition by Tilray that they had to write or had lost $100 million of the original amount invested. At the end of the day, Tilray had $225 million in August of 2021 when they acquired the debt - they now have a $125 miilion receivable asset. A loss of $100 million CASH.
Yer welcome
Comment by
quinlashon Dec 14, 2023 5:34pm 
56 Views
Post# 35785619
RE:TLRY Greenhouse Ops
Lotus33 wrote:Gentlemen:
Does anyone do any analysis to determine if the value of the Greenhouses / Real Estate might not be recognized in the SP...?
best regards,
L-33
Value of the greenhouses etc are part of the assets held and listed under Capitial Assets in the report.
I will point out that the value of growing facilities has dropped off since Cannabis was legalized in Canada and that drop in value was part of earlier goodwill write downs on the part of the company (all Cannabis Companies had to do the same). These were non-cash expenses.
Once we see the US Legalize, or demand ramps up for European Cannabis Sales, it is reasonable to speculate that the value of the greenhouses will increase again and therefore the assets held by the company will gain in value.
I will admit, if you are taking into account the fluxuations in the value of buildings etc over time then you are getting pretty detailed.
No harm in doing so but a Solid A+ on DD IMHO