December 2nd, 2021 | 11:02 CET
Bayer, Ayurcann, JinkoSolar - Excellent prospects
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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
Ayurcann - Growth confirmed
The legalization of cannabis could become a billion-dollar business and bring enormous additional revenue into the state coffers. The "German Cannabis Report" by the British analysis firm Prohibition Partners calculates a market volume for medical cannabis in Germany of EUR 350 million in 2021 and EUR 7.7 billion by 2028. Germany is therefore already in the top one-third but still far from the global leaders. According to Stats Canada and Equity Research, the legal Canadian cannabis market volume of USD 3.1 billion in 2020 puts the North American country in second place, with only the market in the United States being significantly more powerful. Cannabis has already been legal in Canada since 2018.
Analysts calculate a tripling of the market to about USD 10.1 billion due to the cannabis 3.0 wave, which includes the production of health and wellness products. The business with ointments, lotions, oils, and creams is expected to boost the cannabis industry significantly. The production of such products is handled by one of the leading B2B post-harvest solution providers, Ayurcann. The Company focuses on providing scalable custom processes and pharmaceutical-grade products to Canada's recreational and medical cannabis industries. In doing so, customers can choose from 40 products ranging from creams to vape pens to balms developed by Ayurcann and bring them to market under their respective brands. Customers include global brands such as Green Bee, Her Highness from the USA and Innocan Pharma from Israel.
The third-quarter figures, the third consecutive quarter with positive operating results, confirm the emerging trend. Ayurcann reported net sales of CAD1.9 million for the three months ended Sept. 30, 2021, compared with CAD0.8 million for the three months ended Sept. 30, 2020 - a 137% year-over-year increase. Operating income was CAD931,000, up more than six-fold from the same period last year, with a gross margin at a strong 49%. Operationally, the Phase 2 expansion of the Pickering facility was completed, increasing extraction capacity to up to 300,000 kg of input biomass and 2 to 3 million cannabis 2.0 and 3.0 products filled and packaged.
Igal Sudman, CEO of Ayurcann, said, "This quarter has once again proven Ayurcann's ability to achieve profitability and expand its market share. Ayurcann continues to serve its customers and grow its revenues without losing sight of net profit, and acts responsibly to its shareholders and other stakeholders." The Ayurcann share, which also trades in Frankfurt, is worth a closer look ahead of another cannabis hype.
JinkoSolar - Share turns
Solar module manufacturer JinkoSolar exited trading with a 6% loss after announcing its third-quarter numbers. With sales of USD 1.33 billion, the Company achieved its internally set targets but remained below the consensus of analysts' estimates. For the period, total solar module shipments were 4671 megawatts, along with 322 megawatts of cells and wafers. Net income was USD 30.1 million, up +193.2% from the second quarter. Earnings were USD 0.16 per share.
The outlook for the full year caused disappointment. The solar producer expects total shipments, including solar modules, solar cells and solar wafers of 22.8 to 24.3 gigawatts. Previously, 25 to 30 GW had been forecast by the Company. Revenue is expected to be between USD 1.8 million and USD 2.2 million. Again, analysts were expecting higher revenues of around USD 2.29 billion. Of note yesterday was the stock's rebound after testing support at USD 52.50. If this remains in place, there is an interesting trading opportunity despite the rather sobering figures.
Bayer - Investing in the future
The share chart of the chemical and agricultural Company indeed looks anything but promising. A further break of the EUR 45.00 mark could result in a test of the ten-year low at EUR 39.91. If the share price also slips below this level, the saying applies: "Save yourself, if you can!". As long as the glyphosate issue still hovers over everything, a sustained recovery is unlikely to be possible.
Nevertheless, the Leverkusen-based Company continues to prepare for the future and is investing around EUR 100 million in sustainable health products. The Company aims to further promote innovation, production and consumption of its consumer health products, which include global brands such as Aspirin, Bepanthen, Claritin and Elevit. The investment represents 2% of the Consumer Health division's sales, a company statement said.
The legalization of cannabis opens the door to a billion-dollar market. Canadian company Ayurcann makes products for international partners and has shown relentless growth in recent quarters. In contrast, JinkoSolar disappointed with their results, and extreme caution is advised for Bayer.
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