Chemesis International Inc (OTCMKTS: CADMF) poor run in the market, after a meteoric rise to record highs, should not arouse concerns. Amidst the price slump, the stock is still a fundamentally attractive investment given the solid underlying fundamentals.
Chemesis Price Analysis
For starters, the company is fresh from securing three additional cultivation licenses supporting an aggressive expansion drive into Colombia in pursuit of opportunities for growth. In addition to Colombia, the Company has also set sights on Puerto Rico whereby it is undertaking cultivation and manufacturing operations.
In the U.S, Chemesis International has embarked on a multi-state expansion drive as part of an effort of establishing operations in some of the biggest marketplaces with vast opportunities for growth. Accelerating inorganic growth is also top on the agenda, the Company having completed the acquisition of extraction and manufacturing facility as it seeks to strengthen cannabis production capacity.
Access to a $33.3 million drawdown equity facility leaves the Company in a stable financial position to pursue strategic initiatives that have the potential to accelerate growth. The stock edging lower thus does not paint an accurate picture of the Company’s long-term prospect.
In our view, the pullback provides an opportunity to buy the stock at a discount as Chemesis International remains well positioned to spike higher once the correction phase comes to a halt. Immediate support as part of the ongoing correction is seen at the $1 mark,
The stock stabilizing above the $1 support level should open the door for bulls to come into the fold and push the stock higher, in continuation of the long-term uptrend. However, a breach of the support level would leave the stock vulnerable to further drops probably back to this year lows.
What Does Chemesis International Do?
Together with its subsidiaries, Chemesis International is engaged in the cultivation, manufacturing, and distribution of cannabis products in the U.S, Puerto Rico, and Colombia. The Company also offers various types of extractions formulations.
Chemesis International has embarked on an aggressive expansion drive as it seeks to strengthen its growth metrics in the cannabis sector. In Colombia, the Company has secured three new cultivation licenses from the Ministry of Justice.
The licenses were secured through the Company’s wholly-owned subsidiary La Finca Interacviva-Arachna Med SAS (“La Finca”) and will go a long way in enhancing cultivation and production efforts. Chemesis International already has 5 acres planted for spring harvest. Plans are underway to plant an additional 100 acres.
In Puerto, Rico, Chemesis is expanding its cultivation and manufacturing operations as it seeks to take advantage of the growing demand for cannabis in the Island. The Company has since partnered VividGro a leader in Agricultural technology to increase the cultivation area. The Company is targeting an annualized capacity of 30,000lbs by the end of the year.
“Our partnership with VividGro brings energy-efficient lighting and automated environmental controls that increase yields and grow quality. These upgrades allow the Company to fulfill previously announced purchase orders, meet increased demand for our Natural Ventures line of products, and bring on additional large contracts as the Island’s patient base continues to grow,” said CEO of Chemesis, Edgar Montero.
Strengthening U.S Operations
In the U.S Chemesis international has set sights on Michigan, Wisconsin, Missouri, and Illinois where it plans to launch cannabis operations. The Company is currently in the application stage as it seeks to launch cultivation extraction and distribution operations.
The expansion drive coincides with the acquisition of a 100% stake in operational, extraction, and manufacturing facility in California. With the acquisition, Chemesis international is poised to expand the Company’s processing ability to over 500,000kg.
The state-of-the-art manufacturing facility is fully licensed, expected to enhance Chemesis international ability to extract THC CBD and other cannabinoid products. The acquisition comes at a time when the Company’s operations in California are gaining traction.
“The state is moving to a regulated market that requires high-quality facilities and extraction processes, and we believe the Company has positioned itself to gain significant traction in a compliant marketplace,” said CEO of Chemesis, Edgar Montero.
Chemesis International looks set to recover from the ongoing correction. The stock should continue its solid performance on investors taking note of the Company’s tremendous potential, given the aggressive expansion drive into CBD markets with vast opportunities for growth. The pullback as it stands appears to be a minor correction from where Chemesis International is likely to bounce and record another phenomenal run to the upside.
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Disclosure: We have no position in CADMF and have not been compensated for this article.