Emerald Health Therapeutics, Inc. (OTCQX: EMHTF) is a licensed Canadian producer of cannabis. Its 50%-owned Pure Sunfarms joint venture in BC is completing a sophisticated 1.1 million square feet greenhouse; its Agro-Biotech operation in Québec is completing a 75,000 square feet indoor facility. Commercial production is expanding in both facilities. It secured approximately 500 acres of hemp harvest in 2018 and had contracted for approximately 1000 acres in 2019 to 2022 with the goal of extracting low-cost cannabidiol (CBD).
The company’ shares continuous to strengthen due to a string of positive developments in its business and operating profile.
Strategic networks of EMHTF:
Key growth drivers:
- Large-scale, sophisticated extraction
- Branded new product launches
- Animal and clinical studies
- Significantly increasing production 2018-20
- IP and product development
- Distribution agreements/partnerships
Industry Perspective: From an industry perspective, the recent legalization of cannabis sales for adult recreational use in Canada was a watershed moment for the entire industry and the Company. On October 17, 2018, Canada became the first G7 country and the second country in the world to legalize cannabis sales for adult recreational use. The opportunities for the Company extend across the globe as regulations evolve and markets open.
Taking all that into consideration, analysts tracking the stock believes that EMHTF is now well positioned to trade higher. Furthermore, driven by the accelerated interest of the market, EMHTF has become an attractive play in the legalization of recreational cannabis.
About the company: Emerald Health Therapeutics, Inc. is part of the Emerald Health group, which is broadly focused on developing pharmaceutical, botanical, and nutraceutical products that may provide wellness and medical benefits by interacting with the human body’s endocannabinoid system. It secured approximately 500 acres of hemp harvest in 2018 and had contracted for about 1000 acres in 2019 to 2022 with the goal of extracting low-cost cannabidiol (CBD). Emerald’s team is highly experienced in life sciences, product development, large-scale agri-business, and marketing, and is focused on developing proprietary, value-added cannabis products for medical and adult-use customers
About Pure Sunfarms: British Columbia: Pure Sunfarms Joint Venture, Delta
- Combines industry-leading cannabis and greenhouse growing expertise
- Existing infrastructure plus sophisticated greenhouse processes & new systems
- Rapid scaling with reduced execution risk
Recent Business and Operational Highlights:
- November 19, 2018-, Emerald Health Therapeutics Receives TSX Venture Conditional Approval of Emerald Health Naturals Joint Venture
- November 7, 2018– Emerald Health Therapeutics Fulfilling Supply Commitments with Provincial Adult-Use Cannabis Shipments
- October 16, 2018-, Emerald Health Therapeutics Files 17 Patent Applications Covering Defined Dose™ Cannabis Products
- October 10, 2018-, Emerald Health Therapeutics’ Subsidiary Northern Vine Receives International Government Approvals and Completes Import and Export of Cannabis Oils for Research & Development
- October 3, 2018-, Emerald Health Therapeutics Enters Research Agreement with VivaCell Biotechnologies to Evaluate Proprietary Cannabis Products
- September 26, 2018– , Emerald Health Therapeutics Secures Long-term Supply of Hemp for CBD Extraction
- Nov 28, 2018 – Cowen Cannabis Conference
- Jan 10, 2019 – Lift & Co. Vancouver
- Feb 1, 2019 – 2019 World Outlook Financial Conference
- Feb 7, 2019 – The Money Show Orlando
Selected Financial Results
- In January, February and May 2018, the Company completed financings that resulted in total gross proceeds from unit issuances and warrant exercises of $67.8 million (net proceeds – $67.5 million) and has the potential to a raise an additional $41.8 million if the remaining outstanding warrants from these financings are exercised prior to expiry. The Company intends to use the proceeds of the financings to fund the completion of capital projects and potential future expansion and acquisitions, including partnership transactions, for research and development, to expand the Company’s existing extraction capabilities, and for working capital and general corporate purposes.
Key risk factors and potential stock drivers:
- Notwithstanding Emerald’ unique and differentiating factors, the company is still exposed to risk related to competition and peer pressure. There are other highly diversified cannabis companies in the industry. Additionally, there’s a cannabis ETF that recently launched for even more diversification.
- Company’ ability to grow revenue while significantly improving its profitability will continue to remain a critical price sensitivity for the company
- Company’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements. Since cannabis is still illegal at the federal level, it is not easy for Emerald to access capital on agreeable terms.
- The cannabis industry is, in many respects, still in the early stages of its development and only time would differentiate between real winners and laggards. As far as choosing an option with a relative advantage is concerned, EMHTF is preferred choice with upside potential.
- On Friday, November 23rd, 2018, EMHTF closed at $2.82, on an average volume of 586,365 shares exchanging hands. Market capitalization is $384.056 million. The current RSI is 43.24
- In the past 52 weeks, shares of EMHTF have traded as low as $1.85 and as high as $7.77
- At $2.82, shares of EMHTF are trading below its 50-day moving average (MA) at $3.39 and below its 200-day moving average (MA) at $3.38
- The present support and resistance levels for the stock are at $2.66 & $2.95 respectively.
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