Village Farms reports.
They are executing well.
The numbers look horrible.
The conference call recording should be available soon.
I will listen.
I expect that the three day rule applies.
4 ish seems to be support, but a wild bid at 3 or 3.50 might catch a share or two.
Wondering if you have any further thoughts after listening to the call. If you have taken the time to listen as of yet.
Sorry to clutter the board with a question and zero analysis. Not my style but busy lately.
I listened to the call. They are executing on time no problems.
The delay for reporting was due to the complexity of the Pure Sun Farms partnership. They are planning to accelerate some growing.
I expect worse numbers next quarter than this one. I sold most at 5 or so, but will probably start adding soon.
I do not know, or even have a solid clue what the stock will do in the short term.
But, the company knows how to grow stuff cheap, and cannibus is a high margin crop.
Here is what I see.
The company is executing well in all aspects of its business, including its vegatable business.
It has borrowed money and taken significant assets out of production. They will sell no cannibus product until July. They report late in the reporting cycle. The first quarter has already ended and they will report the results in late June. There will be no sales of cannibus in that report. There will be more losses due to the transition costs.
In July they will sell their first Cannibus but they will report the results for the second quarter in late September, the results will show more losses, even though they will have made significant cash through September, those results will not be posted until late December.
In other words, we have two more windows of opportunity to add shares when the computers see losses and trade the stock prices down.
However, the December numbers will be very postive.
You mention beginning to start selling in July, but it sounds like there is a risk that may not start until August or September. Apparently they are beginning to plant in May. I suppose it is feasible for them to completely sell out of all dried product they have produced in short order as I imagine demand won’t be a problem. Just saying there may be a risk there, but it certainly isn’t a long term risk.
I wonder how their anticipated cost to produce lines up against competitors. They claim less than $1/gram and that we should assume product is sold for $2/gram (50% margin) on the low end. Of course the proceed are split 50/50 with their JV partner.
IN addition to how this compares to others, I also wonder whether they will be able to hit their cost target. They are experienced in greenhouse cultivation as you state though.
Right now I see a company that is selling at a P/S of 1 roughly, albeit with very small margins and minimal growth with their establish veggie biz.
I should probably dig into a few of the other publicaly traded pot companies.
Appreciate you sharing your thoughts, Qazu.
Their existing business is a plus in terms of existing infrastructure that can be switched to cannabis. HOwever, it will also hold back the valuation. The 1.1M square feet being converted to cannabis by 2021 is about 10% of their total square footage. They will be losing around $15M in veggie sales to gain $150M in pot sales (good plan). But they only see 50% of the sales and profits in the pot biz. So annual sales would be around $220M. But they would also be much more profitable. EBITDA is currently around 6% of sales. If the pot biz yields a 40% EBITDA (total guess), the overall EBITDA for the company would be 17.5%.
If one puts a 10x multiple on EBITDA, it yields a share price of about $8.50.
Anyway, that is all back of the envelope stuff and feel free to ask questions. Again, I need to look at the other competitors.