25. February 2021 | 09:24 CET
TAAT, GS Holdings, Aphria - lifestyle and wellness stocks with powerful upside potential
What does lifestyle and wellness encompass for you? Being active? Being pampered? Or a good meal followed by an espresso or a cigarette? The latter has become much less popular with Germans in recent years; the smoking rate has more than halved since 1980. Instead, the trend is toward greater health awareness: light and healthy food, natural supplements and gentle medicine. This trend can be observed worldwide and is continuing successively without any dependence on the economic situation. Because one thing is clear: people are saving money on their health last. Ideal conditions to now look at the securities of the following three companies.
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ISIN: SG1CF0000001 , CA03765K1049 , CA87320L1031
TAAT LIFESTYLE & WELLNESS LTD - The revolution in the EUR 700 billion tobacco market
Although the sales volume of tobacco and tobacco products has been declining for years and the number of smokers is also falling, albeit slowly but steadily, sales of tobacco products continue to grow worldwide and will break through the EUR 700 billion mark this year. The most dynamic development in 2021 will be in e-cigarettes, which are expected to grow by around +12%, but their market share will be just 2.6% at the end of the year.
Despite all the health debates, most smokers seem to find it challenging to switch to the supposedly "healthier alternative." Here is where TAAT Lifestyle & Wellness comes in: Their Beyond Tobacco product is a tobacco alternative that looks like tobacco, smells like tobacco and is consumed like tobacco - but without the harmful nicotine. And people seem to have been clamoring for such a product: within 1 week of the recent live launch of its new online store for the US, the Company had sold more than CAD 100,000 worth of products.
Investors also seem to see the small Canadian Company's potential and are sending the stock on a high. Since the beginning of the year, the share price has risen by around 100%. The Company is currently valued at approximately CAD 500 million. Although the addressable market is huge at around EUR 700 billion, the stock market value already contains some advance praise. In any case, the stock is exciting.
GS HOLDINGS LIMITED - Lifestyle & Wellness has many faces
One of the most famous Singalese dishes is Hainan Chicken Rice, consisting of poached chicken breast and seasoned rice with chili sauce and a cucumber garnish. One can find this popular dish at Sing Swee Kee, one of the five food locations of the Food & Beverage arm of GS Holdings. In addition, a halal restaurant and three food courts with various restaurants and coffee shops are part of the operational business. New brand development and franchising are among the areas of responsibility.
The first Rasa Chicken by Sing Swee Kee was opened in the Sultanate of Brunei in November 2019. To further expand the Food & Beverage sector, specifically for the Chinese market, the Company has established Raffle Brands Pte. Ltd. The holding Company is committed to the food sector but is also involved in the healthcare sector. A few days ago, Raffles Brands announced that it had signed an agreement with the Chinese Company Kaifeng Jufeel for the distribution rights to aloe vera-based dietary supplements for China, ASEAN, and some African markets. The Chinese nutritional supplement market alone is expected to grow to over USD 40 billion by 2023.
The holding Company's second pillar is the delivery of Branding, Operation & Procurement (BOP) services provided to Chinese companies through its subsidiary Wish Hospitality Holdings Pte. Ltd. BOP is to be understood as a unique form of business process outsourcing. Wish Hospitality currently manages 14 food & beverage locations in China. According to Statista, a CAGR of 12.6% is expected for China's BPO sector over the next five years.
With its strengths in two absolute future industries, GS Holding currently appears to be a favorably valued growth candidate with a market capitalization of just under EUR 60 million.
APHRIA INC - Merger with Tilray makes it the world's No.1 medical cannabis company
Like black & white, like heaven & earth or like Daisy & Donald - diseases are unfortunately part of life. But in the treatment of diseases, new trends can be recognized in recent years. One of the most important is "gentle medicine". Where once the latest tablets from the pharmaceutical giants were diligently prescribed with almost no hesitation, attempts are now being made to use more natural therapies. But this is not always so easy. Especially in chronic pain therapy, the use of strong opioids was unthinkable for a long time.
Although the pain-relieving effects of cannabis had been known for a very long time, the perception of it as an (illegal) "intoxicant" ensured, and for a long time, its medical effects were ignored. But for some time now, this has finally come to an end. The medical cannabis market has become a global growth engine, although it has yet to consolidate. Leading the way, thanks to very liberal legislation, are mainly Canadian companies. Two of them recently announced their merger plans: Aphria and Tilray. The merger will create the world's largest cannabis company, leaving behind the current market leader, Canopy (also from Canada).
Given that so far only Aphria has been able to report a small profit, while Tilray has had to report a loss - albeit smaller than analysts expected - it is natural to note that the companies' current valuations involve a big bet on the future. On the other hand, putting these valuations in relation to the size of the total addressable market, estimated at just under USD 150 billion in 2027, which corresponds to an annual growth rate of 30%, puts the picture into perspective.