The past three months have seen the share price of CANNABIS WHEATON I (OTCMKTS:CBWTF) soar with an over 50% jump in prices for the period between September and November.
The share price action for these three months can be described below:
The company, which is currently trading at $0.7571, has made significant moves over this period as they work towards going back to its former glory when its valuation stood at $2.25. This is courtesy of the bear run that had rocked the company during the period between May and September as can be seen in the chart below:
With such a dip in their valuation, management has had to find diverse methods of proving value addition to their shareholders most which include but aren’t limited to cost cutting in a bid to turn profits, finding projects that seek to boost their have significant inflows and engaging in acquisitions and strategic alliances meant to get them well positioned within the industry.
Their short and long-term growth potential given the latter has been significantly boosted and so has their future outlook in the view of investors, a factor which has led to their increase in recent valuation.
Over the course of this piece, we will assess the activities that have driven their valuation in addition to their fundamentals before concluding by giving our view on these prospects.
However, let us first learn who CBWTF are.
Founded in 1987, Cannabis Wheaton Income is a collection of entrepreneurs with a passion for the cannabis industry past, present and future.
The company’s mandate is to facilitate growth for its partners by providing them with financial support and sharing our collective industry experience. Currently, they are invested heavily in the cannabis industry with the company consolidating different players through their acquisitions.
Over the years, the company has built a strong brand and equally strong portfolio of companies and cannabis products which they readily avail to the market. This has elevated them to heights they knew not, but they haven’t stopped there.
Releases That Impacted Them
First, like many long-time market players may have notices, the company’s ticker symbol changed from KWFLF to CBWTF.
The company, in line with the above, has altered their methods while maintaining the vision and outlook they initially had mainly through diversification. It has made significant moves in both aligning themselves within the cannabis space as well as increasing their financial muscle.
Though continuing, this began in late October with the strategic alliance they formulated with Convenience Store Group, believed to be the first of its kind in Canada.
Convenience Store Group operates over 350 convenience stores and convenience kiosks across Canada in high-traffic locations such as transit stations and commercial office buildings around Canada.
According to the deal, they were meant to be a front through which they distributed their drugs throughout Canada; given that this partner is already established with an already strong market, the move served only to grow the company through increasing their outreach. Moreover, their already strong technological base and client profiles will enable them target their client base more efficiently, maximizing revenues.
The latter is exemplified by the words of The Chairman and CEO of Cannabis Wheaton, Chuck Rifici who was quoted saying:
“With over 27,000 locations in Canada, convenience stores offer un-paralleled access for consumers and are well equipped to deal with age-restricted products, a category which recreational cannabis will fall squarely into. We are excited to add another strategic partner to our platform and work together to create advanced age verification technologies and explore distribution and retail opportunities for our streaming partners as we continue to grow through diversity.”
In addition to the above, they also announced the closing of the deal to acquire RockGarden Medicinal Inc, a company which now has a cultivation and production license under the Access to Cannabis for Medical Purposes Regulations (ACMPR).
The move which was dubbed by the CEO of Wheaton Income as ‘platform drives Growth by Diversity’ also speaks to the company’s futuristic outlook through diversifying their portfolio while maintaining the industry focus they have stuck to so far.
In line with this acquisition, shareholders of RockGarden are entitled to receive aggregate consideration of 27,499,912 common shares in the capital of CBWTF.
Finally, in line with their investment proposition, CBWTF have invested over $5 million non-dilutive financing in Beleave Inc in a venture which is to be paid through product equivalents. The amount is mean to fund expansion of their facility that’s based outside Hamilton, Ontario.
The company has made no revenues for the period ending June 2017. They, however, stand to make significant revenues with the legalization of marijuana in Canada given their investment in the sector. Looking forward, given their investments, they are poised for success.
However, the rest of their financials seem to be doing well.
The company’s assets grew by 1820% from $2.1 million to $48.2 million over 1Q2017 and 2Q2017 courtesy of the growth in cash to $46 million. This was mainly driven by the cash obtained from issuing convertible debt over this period which raised over $35 million.
The debt was issued through private issuing of 35,000 units at $1,000 each, 80% of which was acquired by MMCAP International Inc.
In line with the above, total shareholder equity rose to $23 million, a 2140% growth from $1.6 million in the previous quarter.
The legalization of marijuana in Canada brings with it a lot of future prospects for Cannabis Wheaton Income Corp. Their investment in the sector coupled with the strategic alliances and acquisitions will play a huge role in ensuring that the company grows into the future.
It is therefore our take that CBWTF is bound for growth and given that the managers have taken the set steps to ensure they capitalize on the legalization of cannabis, the company will be a strong asset in anyone investor’s portfolio.
CBWTF has invested heavily in the cannabis sector in Canada. This is bound to pay off quite soon given the legalization of cannabis in the country. It is upon this backdrop that we believe that investors will benefit highly from having this as an asset in their portfolio.
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Disclosure: We have no position in CBWTF and have not been compensated for this article.