x min read

IANTHUS CAPITAL HO (OTCMKTS:ITHUF) Oversold With Many Catalysts Ahead

IANTHUS CAPITAL HO (OTCMKTS:ITHUF) Oversold With Many Catalysts Ahead
Written by
Jim Bloom
Published on
November 1, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

The recent past has seen a massive decline in the share prices of IANTHUS CAPITAL HO (OTCMKTS:ITHUF) which has led to the price closing at $1.47, down from $2.7 back in July as can be seen in the chart below.Investors in the company may currently feel short-changed given that the stock had been a bullish stock for quite some time, however, this piece will take a different turn. ITHUF Daily ChartWe, however, are proposing a different narrative.In our view, the stock has been oversold and is therefore due for a comeback. This is backed up by the fact that their future prospects are of much significance therefore demanding a much higher valuation for the company than is currently given to them.We will therefore review the above stated prospects that accredit such a valuation as we are proposing as well as the current value addition based on their financials as we tell a tale of hope as opposed to the grim story shown by the share action.Who is ITHUF?iAnthus Capital Holdings, Inc. (“ICH” or the “Company”) was incorporated in British Columbia, Canada, on November 15, 2013.They, in August 2016 completed the acquisition of all issued and outstanding shares of a private entity then known as iAnthus Capital Management, LLC through a reverse takeover after which the shareholders of iAnthus Capital Management, LLC obtained consolidated control of the company.They have since then been greatly involved in the provision of diversified exposure to best-in-class licensed cannabis cultivators, processors and dispensaries throughout the United States. Their goal has always been ensuring that their shareholders benefit the most from their value-add to the clients’ expectations that necessitates more revenues.New DevelopmentsTwo months ago, ITHUF announced that they would be acquiring Citiva, a company which holds one of the ten vertically integrated medical marijuana licenses in New York State and Citiva, LLC, the owner of their intellectual property. This was done through a $500,000 promissory note advanced to Citiva during this period.The acquisition of Citive, a company which takes home about $50 million in annual revenues, was meant to ensure that their market within the marijuana space was well defined as was their power within the industry.This move was followed shortly by news that they have further purchased preferred shares in GrowHealthy Holdings totaling $3 million, about 6.1% of the issued equity of the company. This, however, is not the best part yet.GrowHealthy’s subsidiary, McCrory's Sunny Hill Nursery, is one of the twelve current Florida Medical Marijuana Treatment Centers ("MMTCs") licensed to provide medical cannabis under Florida's medical marijuana law. Florida, whose population stands at over 20 million has over 40,000 patients enrolled in the medical marijuana program and are currently enrolling people at over 200 people per day.The Ianthus President Randy Maslow was quoted saying:

"We continue to be impressed with the progress that the GrowHealthy team has made in its cultivation and processing buildout and in preparing to begin retail operations in the Florida market… As we continue our discussions about a further strategic relationship, we wanted to ensure that the company has sufficient capital to execute its business plan."

Source:Upon this backdrop, GrowHealthy is bound to rise significantly while riding on the wave of success of their subsidiary with the biggest beneficiary being ITHUF.The above is but a snippet to the most recent news that has been released to the market by ITHUF. They have also brought in a new CFO who, according to them, has vast experience which he will use to see the company grow.As such, the company is well positioned for growth and their management seems to be making the right decisions to ensure they are on track for financial success and industrial dominance.Financial PositionThe great strides above are, however, overridden by their financial position which brings with it some negative connotation.Despite their revenues rising by over $10,000 from 1Q2017 to close 2Q2017 at $34,000, these figures were quite low when compared to their operating expenses which stood at $1.9 million over the second quarter. This therefore led to an operating loss of over $2.2 million in the second quarter, an increase of over $0.3 million over this quarter.The loss was further exacerbated by the interest income which stood at $326,000, pushing the company further into losses of over $2.5 million during the same quarter.Such a significant downturn will usually be punished by the market quite severely and this must have been the case for ITHUF whose share price began plummeting shortly after the above announcement.This, however, does not tell the whole story and the untold story may change your mind about investing in ITHUF.The company has been beefing up its working capital as they work towards financing their short-term needs. Their working capital base stood at over $15 million over 2Q2017 which signified the strong stance taken by management to ensure that they do not fail to meet their financing needs as well as meet certain financial ratios; a clause which we expect their loan contract should have.Moreover, their investment and interest income which they had factored in their revenues, had grown over the two periods, rising to $521,130 from $55,948 in 2Q2017 and 1Q2017 respectively. This not only signifies higher incomes but also that they have done a lot in ensuring that their shareholders benefit the most from investing with them. As such, our value for money narrative holds water.Given the above, our position that the company is doing a lot to ensure its shareholders benefit from them has been proven to be strong. Despite their poor performance in some areas, their vision is quite clear and it is clear that they are working towards this.Over time, the management’s stand on revenue generation and investment optimization will go a long way in ensuring that they stand the test of time.ConclusionITHUF seems to be ensuring that its shareholders reap the benefits of investing in them through value addition that arises from consolidation. Their acquisitions will prove beneficial and makes ITHUF a smart play for the long run.We will be updating our subscribers as soon as we know more. For the latest updates on ITHUF, sign up below!Disclosure: We have no position in ITHUF and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.