January 13th, 2020 | 11:33 CET
Agrios Global Holdings LTD - still on track
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"[...] We are a producer and distributor of medicinal products and thus cover a crucial step in the value chain, especially within the cannabis industry. [...]" Philip Schetter, CEO, Cantourage Group SE
Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.
Update to the cannabis market
Agrios Global Holdings (Agrios) is still a young company with high growth potential, according to the experts at GBC Research. The company currently owns a state-of-the-art production facility in Washington State, which is leased to a licensed cannabis producer and processor. Agrios also leases data-driven aeroponics cultivation systems and cultivation services to cannabis producers. The company's technology can also be used for any type of indoor cultivation.
The US Indoor Aeroponics market is expected to reach USD 40 billion annually by 2022. In addition, the US cannabis market is estimated to reach USD 75 billion annually by 2030. The market in the state of Washington was still around USD 1.37 billion in 2017 and is expected to grow to USD 2.28 billion by 2020.
Sales increase compared to the previous year
Agrios Holdings recorded an increase in its product and service revenues and a slight increase in rental / IP revenues in the second quarter of fiscal 2019/2020, which ends March 31, 2020, representing a total increase of 8.54% over the previous quarter to USD 1.093 million compared to USD 1.007 million in the previous quarter.
Revenues must increase significantly in Q3 and Q4 of the current 2019/2020 financial year in order to meet GBC Research's overall year guidance.
Still on track
For the current financial year 2019/2020e, analysts at GBC had previously forecast a small negative after-tax result of USD 1.5 million. They had expected the company to report negative cash flows in the first two quarters of the current 2019/2020 financial year. Only from the third quarter onwards should the operating cash flow turn positive. The company is well on the way to meeting these expectations.
In the second quarter of 2019, EBITDA was USD -0.524 million, a significant improvement on the previous year's USD -1.789 million. EBIT also showed significant improvements and amounted to USD -0.615 million, which is significantly above the previous year's level of USD -1.843 million. The experts at GBC have raised their price target from CAD 1.38 to CAD 1.64 and confirmed the BUY rating.
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