The cannabis wave has finally hit Next Green Wave Holdings Inc (CNSX:NGW).
The firm which has previously operated within the United States within the real estate sector by providing financial advisory services has now opted into the Canadian market, allowing it to tap into an ever-growing industry whose fundamentals have continued to rock the world.
Since the firm begun trading, the performance of its share has been towards the green zone. Its continued exemplary performance has been a statement to investors on their continued ability to bring value to them. As such, over the past one month, since trading begun, the firm’s share price has risen drastically, rising from a price of $.34 by the end of October 2018 to $.46 by 8th November 2018. During this period, moreover, a total of over 57,000 shares have been traded. This 35% increase, as well as share turnover, speaks both to the aforementioned value proposition as well as the continued growth in the firm’s current operations.
The above price action can be seen in the chart below:
Given the above, we opted to take a look at the business outlook and evaluate its long-term objectives to assess whether they support the above share price. The report presents a synopsis of our findings.
NGW: An Outlook
Next Green Wave Holdings Inc was founded back in the early 2000s as Crossgate Partners LLC. Back then, their operations were centered around providing advisory services for firms operating within the real estate sector. Their operations were centered around building their real estate portfolio on behalf of its partners, ensuring that they not only made financial benefits but also earned a superb brand through their track record. Their track record was achieved through both owning and managing property across different states in the United States.
The firm, however, underwent significant morphosis which led them to change their operations and strategic orientation. This led them first to rebrand and finally to change the sector in which they operated. Currently, the firm operates within the healthcare industry, specifically within the cannabis sector.
Having raised over CAD $21 million, the firm has been operating within California – the world’s largest cannabis market – specifically in Coalinga where it has received permits for developing both premium seeds and plants across the state. Moreover, their over 15 acres of development land as well as facility – near completion – enables the firm to further develop their product within the state. The firm expects to get into a revenue position over the course of 2019.
As previously mentioned, the firm began trading on the Canadian Securities Exchange earlier last month. The firm which trades under the ticker symbol “NGW” eyed this listing as it marked a major step towards their goal of making significant capital raises going forward as they grow their business within California.
In addition to this, NGW has also brought to market their new strategy, successfully completed their new facility as well as begun their acquisition process. This is all discussed in the next section.
NGW has adopted a particularly different strategy: becoming a vertically integrated cannabis company.
Vertical integration allows for a firm to take advantage of their entire value chain. Through this, the firm injects significant capital into the cannabis venture so as to ensure they cultivate, produce and distribute to their end clients. Such a firm is able to operate under higher efficiency thus boosting their margins – eventually boosting their profit margin. This model also sees such firms benefit from higher control of both their operations as well as pricing power.
Upon this backdrop, the firm will implement this strategy by ensuring that they can be in each of the business segments. In doing this, the firm has come up with a number of options.
First is the acquisition of 15 acres of cannabis-zoned farms as well as two facilities for the production of their hybrid seeds as well as supply clone, seeds, and seedlings for distribution to their clients. The firm will further develop their premium flower from which they can extract oils, waxes and other cannabis extracts for sale to their clients.
Upon achieving this, they expect to build a network of distributors who will assist with the sale of their high-quality branded products to the market. The seed-to-customer model will be a major factor in ensuring that the controls remain tightly maintained so as to ensure the quality is maintained while continued innovation drives the firm. NGW expects to venture into all price points and grow their business from that level. As such, their revenue capacity will continue to grow for each new venture they opt into, thus allowing them to scale their product line given their growing market share over time.
Currently, the first phase of their execution has already begun taking shape as the firm’s $8 million facility nears completion – currently at 90% completion. The 35,000 square foot facility is built to ensure climate-controlled rooms to ensure cannabis growth throughout the cycle. The facility will accommodate the product all the way from the nursery to the eventual transportation to the clients.
This major step was acknowledged by the firm’s Chairman, Leigh Hughes who stated:
“We are laying a strong foundation for the company and our stakeholders, it has only been two weeks since NGW was publicly listed, and we are hitting all our benchmarks completing the groundwork and facility so that we can get into revenue as quickly as possible,”
All in all, with the above milestone having been hit, the firm continues to lay the foundation for the growth in their revenue base thus for their increased valuation. Their continued investment in the Californian cannabis market opens them up to over $5.4 billion in sales which, through their model, will soon be tapped into. We, therefore, remain bullish about the stock price of NGW.
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Disclosure: We have no position in NGW and have not been compensated for this article.