Aphria Incorporated continues to pursue global expansion rapidly. Last month, the company partnered with Danish company Schroll Medical. This collaboration will concentrate on growing and global distribution of legitimate organic medical marijuana products.
Aphria versus Aurora
Stocks of Aphria Germany and Aurora Cannabis surged. However, levels remain lower compared to the first few months of 2018. Aphria shares performed better compared to its main competitor. Which should be the investors’ pick? Primary considerations include the following:
- Company’s position in the recreational weed market
- Performance in the international medical cannabis industry
- Comparison of stock appraisal
Stakeholders identify two factors that will determine success or failure in Canada’s recreational pot market. These two are capacity and supply or distribution. Aphria can produce 35,000 kilograms annually. Projections starting next year are bolder at 220,000 kilograms each year. Aurora expects to deliver 140,000 kilograms by the end of this year and increase to 570,000 kilograms in 2019. Look at the difference intently.
For supply channels, Aphria works with an affiliate of Southern Glazer, the biggest distributor of wines and spirits in North America. Great North will serve as an exclusive supplier of Aphria’s recreational weed products. The latter also completed supply pacts with eight territories and regions in Canada.
Partnerships and Market Caps
Constellation Brands, the producer of Guinness Beer and Canadian Royal Whiskey, invested $4 billion in Canopy Growth recently. It is supposedly discussing a partnership with several pot growers in Canada. Aphria could be one of these companies. Aphria acquired Ontario-based Nuuverra Incorporated in January of 2018 for $670 million cash and stocks. Many perceive the deal as part of the effort to merge the cannabis industry in this country.
Aphria also purchased Broken Coast Cannabis in Vancouver for $230 million cash and shares. The breakdown is $10 million cash and $15.09 for each share of the balance. Broken Coast runs an indoor cultivation center that is currently expanding its operations.
The market limit of Aphria is roughly $3.2 billion. It is smaller compared to Aurora’s ceiling of $5.9 billion. Aphria has more enticing value compared to Aurora based on the price to sales ratio of each share. Both stocks look very costly in terms of frequently-used valuation benchmarks.
Company Balance Sheet
Aphria’s statement of financial position remains strong. The company owns $335 million (net cash), It no longer needs to raise extra capital. Aphria looks forward to achieving positive cash flow this month. In record, Aphria ranks fourth among the most expensive marijuana firms.
The present year on year production of Aphria stands at 35 Kilograms every year. It intends to boost that capacity to around 255 kilograms annually by next year. When this happens, Aphria will come next to Canopy Growth and Aurora (in terms of cannabis production volume) in the whole of Canada.
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