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Is Cannabis The New Greener Frontier?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

THC Global Group Limited (ASX: THCis a global bio-pharma group with subsidiaries in Hong Kong, New Zealand, Canada, and Australia. Half of these subsidiaries are based in Australia where the group holds 3 major licences that allow the research, medicinal cultivation, and manufacturing of cannabis assets. With a market cap of A$61.37M THC and a share price of A$0.465 THC has been performing in-line with other sector peers If you’d like more to write, you could compare the market sizes of cannabis companies on the ASX.


Recent THC Announcements

In Early September, THC announced procurement of a new lease for hydroponic open-field cultivation where this will increase THC’s capacity. Although, the CEO suspect it will take years for the site to be operational this is promising for the THC’s development.

In their half-yearly reports and accounts for end June 30, 2019. Despite THC reporting a heavier loss for the period due to heavy expenses for compliance and asset impairment. THC still presents a healthy cash flow of A$5.69M (This is total cash at end of the period. Plus they had $2.9m in cash proceeds from cash issues.) on top of a reserve of A$26.13M in NET assets (31.4m in total assets).

What is the future of THC and their Market?

With new passing legislation allowing marijuana possession in the ACT (There is no implication for recreational cannabis sales but does show a relaxation in regulatory attitude towards cannabis), it would not be surprising if the Sydney based company may be considering possible new additions to their various operating network. The only thing in the way of THC’s commercial reach across Australia are the restrictive commercial operations of the sale of cannabis despite Canberra lowering the recreational restrictions of cannabis (from memory THC is currently focused on recreational sales in Canada and medicinal cannabis in Australia).

Regardless of the possibility of commercialization of cannabis; THC’s licences, strategic operations and partnerships put THC is in a good position to supply and provide services to patients around the world. Optimistic investors and entrepreneurs may foresee an emerging industry, where THC has already firmly planted their roots into.

As of 3:55 PM AEST 30/09/19, THC’s shares have been on a decline for the past 6 months, however, for the past 5 days share prices of THC have recovered back to their 5-day-peak of A$0.455, just A$0.020 shy of their September peak.

With the relaxing Canberra legislations, a new operational site and healthy reserves; could THC Global Group Limited experience another higher share price high of A$1.080 (166.67%) from a possible commercial market?




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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