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Technology Bio Tech

Althea Group’s Results Show the Cannabis Boom Is Building Momentum

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By Lachlann Tierney, Thursday, 25 February 2021

The share price of cannabis products producer and distributor Althea Group Holding Ltd [ASX:AGH] has surged as its first-half revenue nearly triples. At time of writing AGH shares are up 5.66% to trade at 56 cent per share...

The share price of cannabis products producer and distributor Althea Group Holding Ltd [ASX:AGH] has surged as its first-half revenue nearly triples.

At time of writing AGH shares are up 5.66% to trade at 56 cent per share.

ASX AGH Share Price Chart

Source: Trading View

We’ve seen great upwards momentum from AGH this month, with shares spurred on by a string of positive announcements relating to commercial product shipments.

And with global trade looking like it could improve throughout the year, we could see sustained growth in the AGH share price.

Bumper revenue as sales explode

The standout result in AGH’s half-year results today is their impressive growth in revenue — coming close to tripling from the previous corresponding period.

Revenue ballooned to $5.098 million in the half, representing growth of 175.3% as AGH cut itself a significant share of the growing Australian and UK medicinal cannabis markets.

Aussie cannabis boom — discover why the Aussie cannabis market is ready again for long-term growth and how you can capitalise. Click here to learn more.

AGH also managed to cut its losses during the period, despite incurring increased distribution and foreign exchange expenses.

The net loss for the half came in at $8.27 million, representing a slight fall of 0.9%.

AGH said it experienced solid growth in the sale of its medicinal cannabis products in Australia, underpinned by developing the Healthcare Professional prescribing community.

Through their proprietary medical device — Althea Concierge — prescribing numbers skyrocketed in the half with 12,273 patients in Australia, more than triple than at the end of the previous year.

In the UK, AGH’s ‘first-mover’ strategy is paying dividends.

December saw sales of $209,706, an increase of 90% from November 2020.

However, it is Canada and Germany which could be the breadwinners for AGH in the future.

AGH’s wholly-owned Canadian subsidiary Peak Processing Solutions obtained its Standard Processing Licence in September allowing it to start producing and selling cannabis products.

Peak also has already signed contracts with a total forecasted revenue of up to CA$4.65 million.

In Germany, AGH shipped an initial order of 2,000 Althea products valued at approximately $1 million, with sales planning still underway.

What to expect next for the AGH share price

How sales perform in Germany is likely to be closely followed and will be a key determinant as to whether AGH’s ‘first-mover’ strategy can find success outside of the UK.

Having completed a $6 million institutional share placement in December and a subsequent $3.78 capital raising in January, AGH’s cash balance is looking healthy to fuel expansion.

And with their recent foray into the South African market — expected to make revenues of $650,000 over the next 2.5 years — AGH has the means to generate decent cash flow.

Meaning they have cash to fund some serious growth as the next cannabis boom kicks off.

If you’re thinking about making a play into pot stocks, we have a great resource for you; it’s our 2021 pot stocks report which profiles three different options in the growing cannabis market after a consolidation period.

You can download that for free, right here.

Regards,

Lachlann Tierney,
For Money Morning

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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