Original-Research: Cantourage Group SE (von NuWays AG): Kaufen

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Original-Research: Cantourage Group SE - from NuWays AG

Classification of NuWays AG to Cantourage Group SE

Company Name: Cantourage Group SE

ISIN: DE000A3DSV01

Reason for the research: Update

Recommendation: Kaufen

from: 17.05.2024

Target price: EUR 10.00

Target price on sight of: 12 months

Last rating change:

Analyst: Christian Sandherr

Solid FY23 and Q1'24 prelims // accelerating growth in April; chg.

Topic: Cantourage issued solid FY23 and Q1 2024 prelims, which were

impacted by slower patient growth amid the looming (at that time)

regulatory changes. Sales figures for April (following legalization light)

show a significant acceleration.

FY23 sales grew by 67% yoy to EUR 23.6m (preliminary figures), slightly below

our estimate of EUR 24.7m as Q4 grew 'only' 30% yoy to EUR 6.4m vs the expected

50% to EUR 7.5m. To a large degree, this can be explained by a slower patient

growth in anticipation of the at that time looming Cannabis Act. FY23

EBITDA came in at EUR - 0.5m following a roughly EUR 400k loss after the first

nine months. The implied EUR 100k loss in Q4 is despite the slowed growth.

Management guided for high double-digit percentage sales growth and and at

least break-even EBITDA.

Legalization light tailwinds kicking in. While Q1 (on preliminary basis)

started out with "only" 26% yoy sales growth to EUR 6.2m, April (the first

month following the changes from the Cannabis Act) has already shown a

significant acceleration to 160%, which can be traced back to cannabis no

longer being considered a narcotic, notably simplifying dispensing by

pharmacies and prescriptions by doctors. Receiving a prescription for

medical cannabis has become as easy as for ibuprofen 600. While it is

difficult to reliably access the detailed impact on FY growth, we feel

comfortable with our estimated growth acceleration carried by Cantourage's

broad global supplier network with more than 60 grower partners and its own

recently launched telemedicine platform, telecan°.

Accordingly, we expect sequential growth during the coming quarters as the

number of medical cannabis patients is seen to surge. Mind you, in Canada,

the number of medial cannabis patients grew from 24k in 2015 to 330k in

2018, the year of the full legalization and Germany had roughly 4m cannabis

users in 2021 with the majority buying from black markets.

While management has not issued a FY24 guidance yet, we expect them to do

so once the company is able to better assess the sustainable impact from

the Cannabis Act, likely with H2 figures, in our view.

We confirm our BUY rating with a EUR 10 PT (old: EUR 11), based on DCF.

You can download the research here:

http://www.more-ir.de/d/29797.pdf

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www.nuways-ag.com/research.

Contact for questions

NuWays AG - Equity Research

Web: www.nuways-ag.com

Email: research@nuways-ag.com

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