Quite strong quarter for Creso (some might be tempted to say at least). I still can't quite get my head around whether there's going to be a decent recurring market for these marijuana stocks. I have small holdings in AC8 and CPH - toes in the water - which have been underwhelming (worse than underwhelming in the case of AC8) and there will no doubt be some consolidation and shaking out. But maybe there's a little glimmer in CPH...
Chief Executive Officer and Managing Director, William Lay said:
“Revenues from all operating divisions continue to increase, and with several key growth and product development initiatives materialising this quarter we are set to see continuing progress throughout the calendar year.
“We have remained active on the M&A front with the acquisition of Sierra Sage Herbs and their leading Green Goo and Southern Butter product ranges. The acquisition not only provides us with an instant footprint in the large US market, but access to strong brands, distribution relationships manufacturing partnerships, and an excellent management team who have scaled the business impressively since beginning operations in 2008. We have already begun extensive product development discussions and are working on various ways to accelerate the market penetration for all our CBD products. We have noticed an increase in the number of opportunistic, strategic M&A possibilities in the market over the quarter, and continue to carefully assess additional opportunities for accretive transactions.
“Considerable progress has also been made on all our other operating divisions. Mernova has achieved a significant market share milestone whilst also expanding into new provinces in Canada all whilst moving forward with product development initiatives. Likewise, product development continues with our Nutraceutical division and new relationships are being built in LATAM. And lastly, Halucenex continues to hit significant milestones on the way to commencing its phase II clinical trial.
“I am excited to continue to witness the growth of the Company as we move into the next phase of execution. We look forward to bringing additional news to our shareholders over the coming weeks and months.”
Creso issued options this week on a 1 for 3 shares held basis ( November 2024 @$0.25). Today the shares have been trading @ $0.135 and the options are currently trading @ $0.069. Interesting market.
Disc: I hold RL and SM
Creso’s wholly owned Canadian subsidiary Mernova Medicinal Inc. secures four new purchase orders (POs) totalling C$494,131 (A$502,199)1
~ Purchase orders (POs) received for Ritual Green products highlight significant demand
~ C$343,331 ($348,7261) in POs from the Ontario Cannabis Store mark Mernova’s entry into Canada’s largest recreational cannabis market
~ Additional POs from Cannabis NB in New Brunswick and Nova Scotia Liquor Corporation highlight a shift towards recurring revenue model
~Launch of new Black Mamba strain and pre-roll joint range expected to grow revenues
~Additional POs for Ritual Green products to materialise in the coming months
~ Mernova is on track to deliver a record quarter of POs
~ Continued repeat orders and customer uptake is highlighting Mernova to be a strong revenue generator
~ The shortened interval between receiving new POs and the growing value of each PO is extremely encouraging – outlook for remainder for financial year is extremely positive.
1 Based on the CADAUD exchange rate of ~$1.02.
DISC: I Hold
Distribution Agreement secured for innovative hemp derived therapeutic products in Pakistan, Philippines and other new markets
Up to CHF1.71m (AUD2.48m1) minimum order quantity across CannaQix 10, Cannaqix 50 and CannaDOL product lines
~`Creso enters into Distribution Agreement with Route2 Pharm Pvt Ltd in Pakistan, for the exclusive distribution of Creso Pharma’s products into Pakistan and Philippines, as well as non-exclusive distribution into other potential target markets (‘Agreement’)
~ Agreement contemplates combined minimum order quantities for the first contractual year of up to CHF1.71 million (AUD$2.48 million1) across CannaQix 10, Cannaqix 50 and CannaDOL product lines, pro-rata subject to timing of product registrations.
~ Agreement follows a landmark decision by the Government of Pakistan allowing Pakistan to enter the billion-dollar Cannabidiol (CBD) market2
~ Pakistan has a population of over 216 Million people and a wide range of unmet needs that can be addressed by a targeted portfolio of products
~ Other potential target markets include Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam (‘Potential Target Markets’)– takes potential addressable market to 750 Million people3
1 Based on the CHF/AUD exchange rate of $1.45, as calculated per the table on page 2 of this release.
2 https://www.hindustantimes.com/world-news/in-landmark-decision-pakistan- approves-industrial-use-of-cannabisand-hemp/story- BNWRpToqe0eMKBASrnqq8O.html
Disc: I hold
Creso brings cannaQIX® sales inhouse to unlock further sales growth in Switzerland
~Creso has taken over the marketing & sales of cannaQIX® which were outsourced to Doetsch Grether in the Swiss market over the last 3 years
~Creso’s cannaQIX is listed with key wholesalers reaching over 2,100 pharmacies and drugstores as point of sales to the consumer
~ The re-integration of marketing & sales of cannaQIX® will provide an improved profit margin and set the stage for further new product launches
DISC: I HOLD
Creso Pharma welcomes OTC sale of CBD products in Australia Highlights:
~ Low-dose CBD products can now be sold over-the-counter in Australian pharmacies as of today (1 Feb 2021)
~ Follows TGA’s decision to down schedule low-dose CBD products from Schedule 4 (Prescription Medicine) to Schedule 3 (Pharmacist Only)
~ Creso is well placed to capitalise through agreement with Martin & Pleasance which provides access to over 4,000 pharmacies across Australia
~ Collaboration with Martin & Pleasance progressing well, with both parties working to define regulatory pathways and business cases to grow Creso’s Australian footprint
~ Creso anticipated this legislation and regulatory approval and is in a strong position to capture the Australian Market.
~ TGA regulatory approval is demonstrative of a growing global trend towards relaxation of legislation, making Creso products much more easily accessible to patients.
~ Creso is also pre-empting further relaxations of cannabis regulations in other jurisdictions globally, including the US, and is advancing discussions with potential distribution and channel partners to position itself as a first mover in the US and other markets, at the appropriate time.
DISC: I hold
Regulatory shifts and broadened global footprint underpin growth
740% increase in customer receipts on previous quarter
• Cash receipts from customers of A$709,000 highlight a 740% increase on the prior quarter
• Board & Management extremely pleased with the purchase orders received during the quarter – on track to deliver increased POs in Q1 2021
• Cash receipts in Q1 2021 expected to exceed previous quarter receipts
• Recent regulatory shifts around cannabis continue to unlock significant opportunities
Mernova Medicinal Inc. (100% CPH):
• Supply agreement with Ontario Cannabis Retail Corporation marked entry into Canada’s largest recreational cannabis market
• Recurring revenue profile continues to build – repeat POs secured and delivered
• Discussions with several world-leading distributors and resellers are well progressed – potential agreements are expected to considerably bolster sales
Nutraceutical product line - cannaQIX®:
• Second purchase order from Pharma Dynamics valued at CHF220,000 (~A$320,0001) secured – now delivered and booked as sales
• Heads of Agreement with Martin & Pleasance unlocks Australia and New Zealand markets
Animal Health Product Line - anibidiol®:
• anibidiol® becomes the first approved CBD hemp-based complementary feed for pets in Latin America
• Retail demand in Europe continues to grow - four purchase orders secured
• Product portfolio expansion initiatives underway to grow sector footprint
• Leading cannabis executive and Canopy Growth Corporation founder Bruce Linton appointed as strategic advisor
• Successful capital raising of A$8.992 million from institutional, professional, and sophisticated investors
• All convertible note structures have been completely extinguished, cleaning a significant part of the balance sheet and capital structure
• Cash at bank at quarter end totalled $6 million with a further $2.2m received from the exercise of share options post the quarter end
Disc: I hold
Second shipment of cannaQIX® successfully delivered to Pharma Dynamics in South Africa - $320k AUD revenues
? Delivery allows Creso Pharma to bank CHF220,000 (~A$320,000) purchase order (‘PO’) for cannaQIX® products
? Pharma Dynamics is a subsidiary of leading global pharmaceutical company Lupin International (NYSE: LUPIN) and sell cannaQIX® under the Cannamics brand in SA
? Repeat order highlights growth opportunity for Creso Pharma in Africa – additional POs are expected
? Creso Pharma retained ~A$6m cash at bank as of 31 December 2020 – with a further $1.7m received from the exercise of options, allowing financial flexibility to pursue further near term growth opportunities as well as carry out the groups successful global revenue generation strategy.
Shares in creso have gone from 8c to 23.5c in the past 8 sessions, boosting the company's value by almost 200% or just over $100m.
In essence, because of a regulatory change in the EU that removes the 'narcotic' classification of CBD and allows it to be freely sold in the EU. And because (today) the US House of Reps passed the 'MORE' act which paves the way for decriminalistaion on a national level.
This is good news for sure, and should provide a favourable tailwind for Creso -- BUT, there's a long way to go before the company capitalises on these opportunities. It's also good news for every other player in this space, and there are a LOT of them.
And let's not forget that this is essentially a commodity product (although they will disagree).
The business generated $95k in customer reciepts last quarter and has an operating cash burn of ~$7.6m per annum (annualised). It has roughly $8m in cash left in the bank after a recent raise. (get used to that -- shares on issue have increased 10x since it listed...)
I dont know the company well, there could well be some important insights that would justify these gains. But i suspect that there is a huge speculative element here.
Super early stage, far from proven, and trading on a price to sales ratio of AT LEAST 30 (on a forward basis assuming strong second half sales growth).
Good luck to holders, but waaaay too spicey for me.