CannTrust Holdings Inc.

(TRST-C: c$4.49)

October 18, 2017

 

BUY

Target: C$7.00

Daniel Pearlstein / (647) 253-1160

dpearlstein@viiicapital.com 

Anthony Sutton / (514) 396-0323

asutton@viiicapital.com 

Pre-Releases Impressive FQ3 Sales Growth

 

cid:636439040455722990image002.jpg

TRST: Price/Volume Chart

cid:636439040455879235image003.gif

Source: Factset

 

Company Description

CannTrust is led by a management team with more than 40 years of pharmacy and healthcare experience. The company has an exclusive partnership with Apotex, the largest producer of generic drugs in Canada, for the development of new medical cannabis formulations and products.

Yesterday, TRST pre-released Q3/18 sales (ended September 30) recording revenue of $6.1 MM, above our $5.2 MM estimate. Full financials are expected to be available in late November. This is the 3rd largest quarterly revenue ever recorded among public LPs, tied with Aphria (TSX:APH, BUY, $9.00 target).   

CannTrust reported revenue of $6.1 MM in Q1/18, showing 35% QoQ and 680% YoY revenue growth with oils accounting for 61% of total sales. The current run rate of sales is $2.1 MM per month. CannTrust currently has over 32,500 active patients compared to 20,000 in the prior quarter.  

Figure1: Mkt Cap vs Most Recent Quarter Sales (top) & kg(eq) sold (bottom)

cid:636439040455879235image004.gif

cid:636439040455879235image005.gif

Source: Company Reports, FactSet, Eight Capital

Maintaining our BUY rating and $7.00 target based on 8.0x FY2021 estimated EBITDA of $87 MM. The 8.0x multiple is in the high end of our peer group range of 4.0x - 10.0x, due to the company's quality of operations and pharmaceutical partnership. TRST trades at 4.6x our FY2021E EBITDA of $87MM (in line with peers at 4.4x).

……………………………………………………………………. Continued on Page 2

 

 

 

 

 

 

Please click on the following link to open the full multi-page report and printable version. Full Report

 

Please click on the following link for all disclosures and disclaimers. Disclosures