ASX Cannabis Stocks Wrap: MGC, BDA Elixinol News
At time of writing, there are varying fortunes for three different ASX-listed cannabis stocks. These include Elixinol Global Ltd [ASX:EXL], MGC Pharmaceuticals Ltd [ASX:MXC] and BOD Australia Ltd [ASX:BDA].
If you had invested in these three marijuana companies a year ago, today you would have been looking at a 52% return on Elixinol, a 17% loss on BOD, and a 27% loss on MGC.
But after a significant surge, Elixinol has been locked in a slide since mid-May.
You can see how the last 12 months have played out for the three below:
In previous coverage, we pointed out that Elixinol’s revenue growth was slowing. Today, we look at the latest Elixinol news, along with recent announcements out of MGC and BOD. We conclude that Elixinol could encounter support in the coming weeks or months. Meanwhile, MGC and BOD remain exciting but more speculative cannabis plays.
Elixinol share price is down from a top, but could be approaching support
After more than tripling and hitting a 52-week high of $5.93 on 8 April, the Elixinol share price has shed over 60% of its value over the last five months.
But it is possible its slide may be halted over the next few months as support is encountered in the $1.60–$2.00 range.
The reasoning here is that all the investors who grabbed shares in a 12-month window as the good news filtered through, would have had a chance to exit the trade at a significant profit.
This would then leave room for new investors to come in who believe in Elixinol’s potential.
It is worth underlying that despite slowing revenue growth, the company still has a significant amount of cash available to fund progress towards profitability.
As of last month’s results, they had $48.1 in cash — so they have no need to go for a capital raise anytime soon.
And although revenues were only up 19% in the same period last year, they continue to ink distribution deals, with the most recent one setting them up to expand in Belgium and Luxembourg.
With last month’s cash figures representing more than a third of its current market cap ($131 million), Elixinol is potentially cheap at the moment.
We preached caution after their institutional placement, but if the downwards momentum is halted in the coming weeks or months, Elixinol could be worth a re-evaluation.
MGC does placement and study, BOD Australia sees 95% increase in sales
BOD and MGC are yet to see significant share price growth this year, but are steadily laying the foundations for it.
We flagged a potential cap raise for MGC, and it subsequently went into a trading halt six days later, and emerged on 21 August with news of a $4.75 placement.
After this, they released their results and a $1 million dollar Priority Offer.
MGC’s results revealed 121% revenue growth to just over $650,000, while reducing their net loss 72% to $2.3 million.
So they’ve topped up on cash and are now focused on an expansion into Europe via their proposed new GMP facility in Malta.
Establishing new facilities is capital intensive, and with limited revenue proportional to a market cap of nearly $52 million, it could be wise to see how their sales progress in the coming months before making a move.
Meanwhile, BOD has just announced 95% month-on-month growth in its medical cannabis prescriptions in Australia. This brings their August number up to 329.
Over a short period of time, the chart of their prescriptions looks exponential:
The BOD share price spiked in mid-July after they announced a strategic investment by NewH2.
NewH2 is the investment arm of Health & Happiness Group Ltd (H&H Group, HKSE:1112), a nutrition giant that has access to the European and US markets.
BOD investors clearly liked this vote of confidence, but the share price has since slipped to 49 cents at time of writing (up around 7% today).
The share price took a further hit following their results release, which on first glance, could have appeared negative.
Some investors may have seen the $7.6 million loss for its cash and cash equivalents of $2.8 million FY19 and blinked.
These results however did not include the $5.5 million NewH2 tipped in, so the company is actually in decent shape with regards to cash at the moment.
They’ve spent $2.8 million beefing up their board and management team, and similar to Althea Group Holdings Ltd [ASX:AGH], their entrance into the UK market could be a catalyst for future share price growth.
If you enjoyed our analysis, make sure to check out our free report on ASX-listed cannabis stocks. It details the prospects of three unique Australia marijuana companies. The final stock we analyse is a genuine left-field play that doesn’t even grow the product.
For Money Morning