Intercure and Ten More: What's left of the cannabis stock after the smoke has dissipated?
A review of the shares of cannabis companies in Israel shows that what was once considered the greenest field on the stock exchange has been painted bright red.
Only the intercourse of former Prime Minister Ehud Barak, which is also traded on the Nasdaq at the same time, alone is worth about 60% of the value of all 11 companies traded on the Tel Aviv Stock Exchange.
Roast Greenberg
14/04/2022
Thursday, 14 April 2022, 08:32 Updated: 08:47
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The medical cannabis sector is failing to rise, and some of the public companies to which cannabis activity has been poured have begun to look for better alternatives in activities that will bring value to their investors.
One of them,
Intlicana
, reported in the middle of the previous week that it was considering introducing additional activities to the company, apparently as an alternative to its current activities in the field of medical cannabis.
This is after its share has crashed by 91.21% since the peak value the company reached at the beginning of April 2019, which then stood at about NIS 374.1 million.
At the time of its peak, its share price was NIS 11.5, compared with NIS 1 at the beginning of trading this week, which represents a value of NIS 47.5 million.
Its financial statements for 2021 showed relatively low revenues of NIS 3.4 million, along with an operating loss of NIS 13 million and a total loss of NIS 14.6 million.
Particularly unfavorable lines are also in the cash section of the company, which presented a cash balance of only NIS 574,000 as of the end of 2021, when management and general expenses alone required to function in that year amounted to NIS 3.9 million.
The company also noted that its breeding farm only began operating fully last June, raising its production production expenses to NIS 14.7 million, while noting that it needed NIS 15.3 million for its current operations.
According to these data, some are wondering if the company will survive without raising additional funds for its coffers.
Recall that about two months ago Intelica published a shelf prospectus in which it stated the differences between its forecasts in valuation with the procedure for entering the stock exchange, and reality.
But it is not the only company required to differentiate between forecasts sold to investors and reality.
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To the full article
And the green today is very red: shares of cannabis companies on the Tel Aviv Stock Exchange (Photo: Walla !, no)
Togder Pharma
, whose share price has fallen by 87.51% since the peak value it reached in early February 2019 until the beginning of the week, is also facing reality.
The price of Togder's share at the beginning of trading last Sunday was 92 agorot, which led it to trading worth NIS 69.5 million, compared to about NIS 7.4 per share when it reached its peak value, which then stood at NIS 350.2 million.
Togdar's revenues have hardly changed in 2021 compared to 2020, and stood at about NIS 11.5 million, along with an operating loss of NIS 10.79 million, and a total loss of about NIS 15 million.
This is in contrast to the expected income it published regarding 2020 - in which its aggregate income will be no less than NIS 226 million, from its farms in Israel and Uganda.
Another stock that presented a crash is that of the
Pharmocene company
, Which has almost been forgotten by some of the investors in the local sector.
The company was traded at the beginning of the week at a value of NIS 30.2 million, after its share has fallen 87.57% since the end of June 2019 - when it reached a record value of about NIS 236.5 million.
The company's share was then traded at a price of NIS 3.58, and at the beginning of the week at a price of 44 agorot.
Pharmoken, which was previously one of the only two profitable companies on the Tel Aviv Stock Exchange, has failed to maintain its profitability, and has been showing losses for the past two years.
Its revenues amounted to NIS 29 million in the last fiscal year, along with an operating loss of NIS 22.3 million and a total loss of NIS 19.3 million.
Neutralizing a decrease of NIS 14 million presented by the company in changes in the fair value of the biological assets it realized, also does not help the transition to operating profitability, in light of sales and marketing and management and general expenses, which together stood at NIS 15.5 million against a gross profit of NIS 7 million.
Prof. Zeev Rothstein.
Replaced Danny Gillerman as chairman of Pharmoken, investors were not impressed (Photo: Flash 90, Yonatan Zindel)
Rothstein did not help
The entry of Prof. Zeev Rothstein last November as chairman of the company's board of directors, replacing Danny Gillerman
, apparently did not make enough of an impression on investors, and has not yet made a visible turnaround in the company's operations.
VAT, along with options for about 2 million of the company's shares, which will be fully settled in three equal installments within 3 years, at an exercise price of approximately NIS 1.07 per option (higher than their current price).
The second company to show profitability since it began trading on the Tel Aviv Stock Exchange is
Sheikh Medical
, whose share price has fallen by 67.72% since reaching a record value of NIS 321 million at the beginning of November 2019.
Its share price at the time was NIS 10.28, compared with NIS 3.3 at the beginning of trading this week, which led it to be traded on the Tel Aviv Stock Exchange at a value of NIS 112.8 million.
Discussion's financial results have already been described by Walla!
Money in a separate article, but then the gaps in the valuation assumptions she presented with the procedure for entering the stock exchange were not mentioned.
The company notes in its latest financial statements that as part of the valuation then assumed that in 2021 it will start sales in Greece, which will stand at 15 million euros, along with an operating profit of 3.8 million euros.
These revenues were not generated, and the company explained that during 2020 there has been a delay in obtaining building permits in Greece, which have not yet been received as of the end of March this year, and that it has no estimate when it will be received.
She further noted that in light of the delay in receiving them, it has suspended its investments in Greece, and is unable to assess the expected start of operations there.
Ehud Barak.
Intercure, led by him, is worth about 60% of the total value of the cannabis companies traded in Tel Aviv (Photo: PR)
Will the small cannabis companies fall into the hands of the deep pockets?
It should be noted that even before the outbreak of the green wave, the Securities Authority expected information regarding the reports of cannabis companies seeking to enter the Tel Aviv Stock Exchange through the back door.
The information touched, among other things, on the regulatory uncertainty of the field, and also referred to the forecasts presented in the companies' valuations.
The Authority also issued a kind of 'do's and don'ts' document to companies in favor of the accuracy of their reports, and even demanded, several times, changes concerning valuations, along with many corrections to reports.
The buzz created by the medical cannabis field on the Tel Aviv Stock Exchange led about 30 companies to the doorstep of Ahuzat Beit, of which only about 11 who are fully active in the medical cannabis field (see table) survived.
The aggregate value of all the companies that launched at the local stock exchange was then about NIS 5.4 billion, but today the aggregate value of the 11 survivors is only about NIS 1.6 billion - of which about 60% is attributed to one company - Intercure (led by chairman Ehud Barak and CEO Alexander Rabinovich), which is also traded on the Nasdaq US Stock Exchange.
The total write-off from the aggregate value at the time of the buzz is about NIS 3.8 billion, and the total write-off among the surviving traded companies is about NIS 2.2 billion.
The cannabis industry estimates that most companies will not be able to survive the cash bleed, and their rivals who have managed to keep deep pockets from previous acquisitions are waiting to collect the corpses at bargain prices.
Of money
consumption
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Tags
Cannabis
Ehud Barak
Medical Cannabis
The Tel Aviv Stock Exchange
