OTCPK:CNGG.F

Stock Analysis Report

Executive Summary

Cann Group Limited engages in research and development, cultivation and production, manufacturing, clinical evaluation, processing, packaging, and distribution/supply of medicinal cannabis for a range of diseases and medical conditions in Australia.

Rewards

Trading at 87% below its fair value

Earnings are forecast to grow 63.03% per year

Risk Analysis

Has less than 1 year of cash runway

Shareholders have been diluted in the past year

Does not have meaningful revenue (A$3M)



Snowflake Analysis

Exceptional growth potential with excellent balance sheet.

Share Price & News

How has Cann Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CNGG.F has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

11.3%

CNGG.F

-2.2%

US Pharmaceuticals

-1.2%

US Market


1 Year Return

-35.1%

CNGG.F

13.1%

US Pharmaceuticals

22.3%

US Market

Return vs Industry: CNGG.F underperformed the US Pharmaceuticals industry which returned 12.6% over the past year.

Return vs Market: CNGG.F underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

CNGG.FIndustryMarket
7 Day11.3%-2.2%-1.2%
30 Day193.2%0.4%1.6%
90 Day36.2%11.9%8.8%
1 Year-35.1%-35.1%16.0%13.1%25.0%22.3%
3 Yearn/a39.2%29.2%49.9%40.3%
5 Yearn/a30.0%16.3%77.6%58.0%

Price Volatility Vs. Market

How volatile is Cann Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Cann Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CNGG.F ($0.74) is trading below our estimate of fair value ($5.71)

Significantly Below Fair Value: CNGG.F is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: CNGG.F is unprofitable, so we can't compare its PE Ratio to the Pharmaceuticals industry average.

PE vs Market: CNGG.F is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate CNGG.F's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: CNGG.F is good value based on its PB Ratio (2x) compared to the US Pharmaceuticals industry average (3.3x).


Next Steps

Future Growth

How is Cann Group forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

63.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CNGG.F is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.7%).

Earnings vs Market: CNGG.F is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: CNGG.F's is expected to become profitable in the next 3 years.

Revenue vs Market: CNGG.F's revenue (47.6% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: CNGG.F's revenue (47.6% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CNGG.F's Return on Equity is forecast to be high in 3 years time (31.7%)


Next Steps

Past Performance

How has Cann Group performed over the past 5 years?

-35.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CNGG.F is currently unprofitable.

Growing Profit Margin: CNGG.F is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: CNGG.F is unprofitable, and losses have increased over the past 5 years at a rate of -35.9% per year.

Accelerating Growth: Unable to compare CNGG.F's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: CNGG.F is unprofitable, making it difficult to compare its past year earnings growth to the Pharmaceuticals industry (36.8%).


Return on Equity

High ROE: CNGG.F has a negative Return on Equity (-14.14%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cann Group's financial position?


Financial Position Analysis

Short Term Liabilities: CNGG.F's short term assets (A$51.7M) exceed its short term liabilities (A$4.8M).

Long Term Liabilities: CNGG.F has no long term liabilities.


Debt to Equity History and Analysis

Debt Level: CNGG.F is debt free.

Reducing Debt: CNGG.F has not had any debt for past 5 years.


Balance Sheet

Inventory Level: CNGG.F has a high level of physical assets or inventory.

Debt Coverage by Assets: CNGG.F's debt is not covered by short term assets (assets are -2799.7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: CNGG.F has sufficient cash runway for more than a year based on its current free cash flow.

Forecast Cash Runway: CNGG.F has less than a year of cash runway if free cash flow continues to reduce at historical rates of -83.7% each year


Next Steps

Dividend

What is Cann Group's current dividend yield, its reliability and sustainability?

1.73%

Forecast Dividend Yield


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage2.7%forecastin3Years1.7%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate CNGG.F's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate CNGG.F's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CNGG.F's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CNGG.F's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CNGG.F's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Cann Group's salary, the management and board of directors tenure and is there insider trading?

1.1yrs

Average management tenure


CEO

Peter Crock 0

3.7yrs

Tenure

AU$1,591,786

Compensation

Mr. Peter Crock, B.Ag.Sci (Hons), MBA has been Chief Executive Officer at CANN Group Limited since May 23, 2016. Mr. Crock is an experienced public company senior manager with strong skills in marketing an ...


CEO Compensation Analysis

Compensation vs Market: Peter's total compensation ($USD1.09M) is above average for companies of similar size in the US market ($USD514.71K).

Compensation vs Earnings: Peter's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

1.1yrs

Average Tenure

Experienced Management: CNGG.F's management team is not considered experienced ( 1.1 years average tenure), which suggests a new team.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$178,15731 Jul 19
Tribeca Investment Partners Pty Ltd.
EntityCompany
Shares117,314
Max PriceUS$1.55
SellUS$12,95322 Jul 19
Tribeca Investment Partners Pty Ltd.
EntityCompany
Shares8,879
Max PriceUS$1.46
BuyUS$756,95922 Jul 19
Tribeca Investment Partners Pty Ltd.
EntityCompany
Shares500,000
Max PriceUS$1.63

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 11.5%.


Management Team

  • Geraldine Farrell (49yo)

    Company Secretary

    • Tenure: 0.08yrs
  • Shane Duncan

    General Manager of Commercial

    • Tenure: 1.1yrs
    • Compensation: AU$235.45k
  • Peter Crock

    Chief Executive Officer

    • Tenure: 3.7yrs
    • Compensation: AU$1.59m
  • Steven Notaro

    Head of Legal

    • Compensation: AU$204.01k
  • Neil Gripper

    General Manager of Operations

    • Tenure: 1.5yrs
    • Compensation: AU$210.65k
  • Reena Dahiya

    Acting Chief Financial Officer

    • Tenure: 0.08yrs
  • Clive Fanning

    Head of Investor Relations


    Board Members

    • Allan McCallum

      Non-Executive Chairman

      • Compensation: AU$90.95k
    • Doug Rathbone (73yo)

      Independent Non-Executive Director

      • Tenure: 4.8yrs
      • Compensation: AU$47.30k
    • Philip Robert Jacobsen

      Deputy Chairman

      • Compensation: AU$47.30k
    • Geoff Pearce

      Independent Non-Executive Director

      • Tenure: 3.8yrs
      • Compensation: AU$47.30k

    Company Information

    Cann Group Limited's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Cann Group Limited
    • Ticker: CNGG.F
    • Exchange: OTCPK
    • Founded: 2014
    • Industry: Pharmaceuticals
    • Sector: Pharmaceuticals & Biotech
    • Market Cap: AU$215.769m
    • Listing Market Cap: AU$147.273m
    • Shares outstanding: 142.42m
    • Website: https://www.canngrouplimited.com

    Location

    • Cann Group Limited
    • Walter and Eliza Hall Institute of Medical Research
    • 4 Research Avenue
    • Bundoora
    • Victoria
    • 3083
    • Australia

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    CANASX (Australian Securities Exchange)YesOrdinary SharesAUAUDMay 2017
    CANCHIA (Chi-X Australia)YesOrdinary SharesAUAUDMay 2017
    CVJDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2017
    CNGG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 2017

    Biography

    Cann Group Limited engages in research and development, cultivation and production, manufacturing, clinical evaluation, processing, packaging, and distribution/supply of medicinal cannabis for a range of diseases and medical conditions in Australia. The company was founded in 2014 and is based in Bundoora, Australia. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/27 01:17
    End of Day Share Price2020/01/24 00:00
    Earnings2019/06/30
    Annual Earnings2019/06/30


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.