Ayurcann, Novavax, Covestro - The stragglers are coming!

Ayurcann - Fast growing service provider

During the first cannabis boom, the industry stars were Tilray, Canopy Growth and Aurora Cannabis, some of whose stock market values exceeded USD 1 billion in 2018. Yet all of these companies have one thing in common: none are making a profit yet. In contrast, Ayurcann Holdings, founded in 2018, is in a steep and, in comparison to the peer group, profitable growth phase.

Ayurcann's fiscal year ended June 30. The Canadians reported an increase in revenue to more than CAD 7 million. That is up 1,149% from fiscal 2020, and operating income also grew 440% to about CAD 2 million. The latest quarterly figures for the period ending September 30 confirmed the positive trend, with revenues of CAD 1.9 million, up from CAD 0.8 million for the same period last year.

"We are excited that our revenues are growing consistently. Our margins are robust and we are increasingly profitable. We are proud to be one of the few companies in our peer group to show increasing revenues and positive operating income while maintaining profitability," said Igal Sudman, CEO of Ayurcann.

The Toronto-based company is a leading post-harvest solutions provider focused on providing and developing custom pharmaceutical-grade processes and products for the edible and medical cannabis industries in Canada. In doing so, Ayurcann continues to focus on growth with the expansion of the Pickering facility up to 300,000kg of input biomass to accommodate the growing customer base of over 40 international brands licensed in Canada, including XPlor from the UK as well as Green Bee, Her Highness from the US and Innocan Pharma from Israel.

Marketplace was also launched as another direct sales channel, allowing qualified patients to access various products in the portfolio. With a market capitalization of only CAD 22 million, a significant increase in sales while maintaining profitability is not unlikely as the overall market continues to explode. The Canadian cannabis market is expected to grow to around CAD 10 billion by 2025.

Novavax - Starting signal for the share?

The share price performance of the vaccine producer Novavax resembles a rollercoaster ride. After jumping from USD 3.86 at the beginning of 2020 to USD 331.68 within 12 months, the protein vaccine manufacturer has corrected to currently USD 110.82. In the area around USD 100, the share may have found a bottom to start a renewed run to the upside.

Fundamentally, the course has been set. The drug became the fifth vaccine to be approved by the European Medicines Agency (EMA) at the end of last year. Novavax CEO Stanley Erck announced at the JP Morgan Healthcare Conference that the first doses of the vaccine would be delivered soon.

So far, the Company has signed supply contracts for two billion vaccine doses, some of which still have to be produced and delivered. The EU had already signed contracts with Novavax last August and expect to receive around 69 million doses in the first two quarters. The German health minister expects the first delivery of 1.75 million doses to be available from February 21. Much of the supply is likely to go to poorer nations secured by the Gavi and COVAX vaccine initiatives.

Covestro - Green hydrogen from Down Under

Hydrogen is seen as the missing piece of the puzzle in the climate turnaround. Especially when used in the transportation sector, green hydrogen is considered the fuel of the future. However, prices are still too high for the gas to be used as the future energy source and as a substitute for fossil fuels. However, experts believe that the price could fall by around 80%, making green hydrogen as affordable as diesel.

The chemical group is already making provisions for the future. In its plants in Asia, North America and Europe, Covestro plans to use environmentally friendly hydrogen produced in Australia in the future. A long-term supply agreement is planned with the Australian manufacturer Fortescue Future Industries. Covestro CEO Markus Steilemann described the transition to using green hydrogen and its derivatives as a "significant step" in the effort to offer more sustainable products.

Despite a cannabis market that continues to grow strongly, shares in the sector are in a three-year correction phase. Ayurcann, founded in 2018 with a current market capitalization of CAD 22 million, is profitable in contrast to its peer group and continues to grow dynamically. At Novavax, the delivery of the first vaccine doses could give the share price a renewed boost. Covestro's prospects remain good with the course set for future growth.