Overlooked ASX Cannabis Stock with a Global Revenue Footprint
The latest addition to our investment portfolio is an ASX medicinal cannabis stock with an established business and product distribution in place.
Whilst some cannabis stocks can trade on hype and future earnings potential, this particular stock has:
- A growing revenue base;
- An impressive Founder/CEO, who has a large shareholding,
- A deep pocketed global distribution partner, and;
- Still has a modest market cap.
We spend a lot of time doing due diligence on stocks before we make an investment, including multiple meetings with management.
We like to invest in stocks that have been somewhat overlooked by the market, and we think we have found one here.
The company is Bod Australia (ASX: BDA) - a medicinal cannabis stock that has an exclusive global partnership with H&H Group, a multi-billion dollar Hong Kong listed company, that owns a number of powerful consumer brands in the health and wellness space.
BDA’s partner H&H Group primarily sells vitamins and supplements, and owns the iconic Australian brand Swisse:
BDA has signed an exclusive global partnership with H&H Group, with nine hemp seed products under the Swisse brand being sold in over 2,000 outlets across the globe.
In Australia, BDA products being sold under the Swisse partnership can be found in retailers such as Chemist Warehouse, Coles and Priceline pharmacies.
Beyond Australia, BDA products are being sold in the UK, Netherlands, and Italy, with further expansion in Europe and the US to come, as a result of the partnership.
We have invested in BDA for the long term, and we intend to keep you informed of company progress over the coming months.
Our 2020 track record of initiations are as follows at 16 March 2021 :
- Vulcan Energy Resources at 36c now up 1,706%.
- Elixir Energy at 3.6c now up 761%.
- WhiteHawk at 5.8c now up 452%.
- Euro Manganese Inc at 20.5c now up 222%.
In 2021, so far we have initiated coverage on the following companies:
- Province Resources at $0.026 now up 342%.
- European Metals Holdings at $1.40 now up 37%.
- Food Revolution Group at $0.029 now up 24%.
So why did we choose to invest in BDA?
Out of all of the medicinal cannabis stocks trading on the ASX, we were drawn to BDA for the following reasons:
- Modest market cap: BDA has a current market cap of $50M, which is a fraction of other ASX medicinal cannabis stocks, including the $166.8M Cann Group, the $124.4M capped Althea Group Holdings and the $430M capped Ecofibre Ltd.
- Attractive entry price: BDA recently raised $8M at 55 cents. The stock is currently trading at less than 50c, providing an opportunity to take a position less than the 55c price sophisticated investors recently paid.
- Relatively Cheap Enterprise Value: The company held $10.6M in cash at Dec 31st 2020, giving an Enterprise Value of circa $40M.
- Global product distribution in place: Exclusive global distribution partnership with Swisse brand owner H&H Group gives BDA significant muscle, and can help accelerate BDA’s growth.
- Founder and CEO Jo Patterson has a high % ownership: We met with Ms Patterson a number of times and were impressed by her skills and experience. She is the company founder and is the third largest shareholder of BDA - we like it when management has significant ‘skin in the game’, as there is additional motivation to succeed.
- Aiming to be cash flow positive by end of 2021: BDA has solid revenues, costs are being managed well, and is on track to deliver on this target.
We invested in BDA with a multi-year time horizon. We think the company is going to build from a stable base, and continue to deliver on its financial performance.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
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