Synbiotic
New research conducted by analysts at NuWays has given German buy-and-build cannabis brand Synbiotic an updated ‘buy’ recommendation.
According to NuWay’s projections, Synbiotic’s revenues are expected to skyrocket over the next three years, jumping from €3.9m in 2023 to €40.8m by 2027, equating to a compound annual growth rate of 80%.
This is largely due to the projected growth in Germany’s medical cannabis market following to passage of CanG and the removal of cannabis from the list of narcotics.
As such, medical cannabis is expected to contribute the bulk of revenue growth for the company, hitting €29m by 2027.
Since being appointed CEO around a year ago, cannabis industry veteran Daniel Kruse has overseen structural reforms aimed at streamlining operations and cutting costs.
These initiatives, which include a significant reduction in staffing expenses, have laid the groundwork for profitability by 2025 and double digit EBIT margins by 2027.
Synbiotic’s flagship ‘buy-and-build’ strategy is also expected to be a major growth factor, helping diversify the company’s offering.
In light of this analysis, NuWays has reinitiated coverage of the stock with a ‘buy’ rating and a price target of €12.40, up from €9.
ECS Botanics
Australian medical cannabis producer ECS Botanics has signed an exclusive eight-year licence deal enabling it to expand into Germany.
The ASX-listed company has entered into a licencing agreement with US cannabis brand Terphogz to manufacture and distribute its proprietary cannabis strains in Germany, Australis and New Zealand.
ECS will now introduce Terphogz’s EU-GMP-certified products in Germany through a B2B model, with a view to capitalising on the country’s recent law change and booming medical market.
According to a market update, the deal will see strains like The Original Z made available to medical cannabis patients for the first time, having previously only been available to recreational customers in California.
Managing director Nan-Maree Schoerie said: “We are delighted to partner with Terphogz to bring The Original Z and other unique Terphogz products to a global market.
“The recent regulatory change in Germany provides a great opportunity to introduce the Terphogz GMP-certified products to patients, providing them access to one of the world’s most iconic cannabis brands, with the assurance that it is produced under stringent quality standards.
Terphogz managing director Jon Orantes added: “We are so thrilled to have organically found a partner in ECS, who also cultivate organically to the highest standards, with living soil, just as our patients and followers have come to expect from us stateside.”
Intercure
Israel’s largest medical cannabis company, Intercure, is facing significant financial difficulties after one of its facilities was severely damaged by Hamas.
In October last year, just weeks after Hammas’s initial attack on Israel, Business of Cannabis reported that Intercure’s main facility was hit hard during the attack, seeing two of its employees kidnapped by militants.
The site is located in Nir Oz, just 2km away from the border with Gaza, which was initially designated as a ‘closed military area’ by the Israeli Defense Forces.
Intercure is understood to have invested around NIS 200m (€47m) into the facility, which is responsible for over 50% of its cannabis production.
Damage to the factory has in turn severely impacted Intercure’s balance sheet, which prior to the war was one of the healthiest in the European cannabis market, seeing consistent growth and profits.
Funds initially set aside to expand Intercure’s operations into the flourishing German market have now been diverted into restoration efforts.
As such, revenues for the first half of the year dropped by 40% to NIS 126m, while its profits also fell sharply from NIS 5.1m in the first half of 2023 to just NIS 1.4m in the first six months of this year.
Furthermore, the company has seen its cash reserves fall from NIS 103m at the end of 2023 to just NIS 20m. According to its latest financial report, Intercure now also has debts in excess of NIS 100m.
The company says it has now resumed production at its facility, but that it is still in the process of stabalising production and restoring the quality of its product.
Intercure also states it is hopeful for a recovery, expecting to see a double-digit revenue increase in the second half of 2024 as it focuses on the German market through its partnership with Cookies.
The post Synbiotic’s CAGR Forecast at 80%, ECS Botanics to Break into Germany, & More from Intercure appeared first on Business of Cannabis.
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