Cannabis Professional’s daily roundup of industry news. View archive here.
Wrapping up the week with Eight Capital saying it will begin coverage of Valens GroWorks Corp., MediPharm announcing it will soon begin trading on the TSX, and Organigram broadening it relationship with 1812 Hemp in a prepaid supply deal.
– Rob Gilroy
Eight Capital initiates Valens coverage, gives ‘buy’ rating
Eight Capital said this week it initiated coverage on Canadian cannabis extractor Valens GroWorks Corp. with a “buy” rating due to its sales commitments, expectations for high product demand, and the company’s steep discount to licensed producers in the country. The investment dealer placed its target price at $8.25 per share, more than double its current trading price.
“Extraction will be in high demand as additional cultivation comes online, with Valens poised to be a leading player,” Eight Capital said in a note.
Valens’ annual capacity is pegged at 425,000 kilograms of dried cannabis and hemp biomass with plans to more than double this to 1 million kg of biomass input each year.
“We believe Valens is well-positioned to be a leader in extraction and white-label product formulation,” Eight Capital said.
The company’s expected biomass extraction commitments of roughly 240,000 kg provide revenue visibility through agreements with ten companies. At roughly 60 cents per gram, this equates to around $144 in revenue.
Additionally, Valens’ five extraction methods means it can offer a wide array of product types, differentiating the company’s offerings from its competitors that operate with one or two, Eight Capital said.
Demand for Valens’ products was also viewed as positive, with consumer preference for CBD products combined with large-scale hemp production expected to increase in Canada. Currently, however, a stock price of around $3.65 per share, the value of the extractor’s white-labelling opportunities have not been accounted for and its valuation gap below Canadian licensed producers should narrow as the company’s extraction agreements on delivered.
– Marcy Nicholson
MediPharm shares set to begin trading on TSX
MediPharm Labs Corp., which specializes in cannabis extraction, distillation, purification and cannabinoid isolation, has announced that its common shares are expected to begin trading on the Toronto Stock Exchange (TSX) on Monday, July 29, under the symbol “LABS”. At that time, MediPharm Labs’ common shares will be voluntarily delisted from the TSX Venture Exchange.
– Staff
Organigram inks prepayment deal with 1812 Hemp
Organigram Inc. said Friday it has entered into an advance payment and purchase agreement with 1812 Hemp under which the Organigram will pre-und hemp purchases to receive access to as much as 60,000 kg of dried hemp flower to be harvested this year for extraction into cannabidiol (CBD) isolate. Organigram noted that it is already a party to a purchase agreement entered into in January, 2019 with 1812 Hemp in which Organigram was granted a right of first refusal on 1812 Hemp’s production of certain hemp cultivars. As part of the latest agreement, Organigram will advance funds to 1812 Hemp for the purchase of specialized large-scale hemp harvesting and processing equipment.
– Staff