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Founded by two veterans operating in greenhouses in the farming town of Leamington, Ontario, Aphria Inc. has grown to a market with more than $ 6 billion in value through the production of better-priced cannabis.
Until here, Aphria
APH -6.08%
has been active in the medical cannabis market. But, like rivals such as Canopy Growth Corp.
GSC -6.82%
CANNABIS, -6.85%
and Aurora Cannabis Inc.
ACBFF, -7.45%
,
CBA -7.23%
In the months following Canada's decision to legalize the drug as of Wednesday, the company has made significant efforts to increase the production of its recreational products.
Read first: A guide to jar stocks: What you need to know to invest in cannabis companies
Aphria ended the quarter with a strong cash position of C $ 314 million and marketable securities and a quarterly sales of C $ 13 million. Like other producing companies such as Aurora, Aphria's net earnings benefited from its investments in other Group securities, generating gains of $ 33 million on its investment portfolio in the first quarter. quarter of the fiscal year, mainly gains from Liberty Health Sciences
LHSIF, + 0.88%
and Hiku brands.
Chief Executive Officer Vic Neufeld is from Leamington and his goal is to produce cannabis at a lower cost than his competitors.
What is Aphria: medical or recreational?
Aphria is present in the medical and recreational cannabis markets. Although the company has been selling cannabis for medical purposes since its launch, executives said when calling the first-quarter results that the company was investing heavily in marijuana for recreational purposes for adults. In addition to expanding the company's facilities, including acquiring the necessary licenses, Aphria has recruited staff, particularly in the areas of sales and marketing, and is expanding its brand portfolio. Neufeld says the company's brands separate Aphria from its competitors.
More marijuana stocks to watch for: Canopy Growth is the $ 4 billion gorilla of the cannabis industry.
How much grass does it grow and at what price?
During its first fiscal quarter, Aphria sold the equivalent of 1,778.2 kilograms of marijuana. The company sold its pot at an average price of 8.99 Canadian dollars per gram, instead of 9.25 Canadian dollars per gram in the fourth quarter. The increase in bulk orders partly explains the difference in price. To produce cannabis, Aphria's "all-in" costs were $ 1.83 per gram, up from $ 1.60 in the previous quarter, and its cash costs to produce one gram of pot powder were 1, 30 dollar, instead of 90 cents.
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According to Neufeld, it is the company's strategy for greenhouse gas production, as opposed to indoor or outdoor pot growing, that will allow it to produce potent cannabis. high quality at low cost.
At present, Aphria says that she can produce about 32,500 kilograms of pot per year.
How much cannabis can he possibly grow?
Aphria however hopes to develop a lot, a lot more pot. Leaders said in the company's first quarter earnings call that it was set to produce 255,000 kilograms per year as more facilities become operational. Based on regulatory approvals and other factors, Aphria said it expects to reach this volume in January or February of next year.
Supply contracts
Aphria has entered into supply contracts with all Canadian provinces and the Yukon Territory.
Like many Canadian cannabis companies, Aphria has global ambitions. At present, the company does not hold certification of good manufacturing practice of the European Union – an obligation to export medicinal herb in this region – but several weeks have passed since it was obtained. The company operates in Argentina, Colombia and Jamaica and has an option to enter Brazil. Beyond Latin America, Aphria made a strategic investment in an Australian company and obtained a cannabis license in Malta.
More marijuana stocks to watch for: GW Pharma is a drug manufacturer that cultivates its own cannabis plants
In the past, Aphria held significant holdings in the United States. TMX, the operator of the Toronto Stock Exchange, forced the company to divest these holdings because, although the pot remains illegal under US federal law, it was removed from the list.
Aphria has also signed an agreement with Southern Glazer Wine and Spirits Inc. for the distribution of its recreational products in Canada.
Intellectual property
The company has an internal research and development center, dubbed Aphria Innovation Hub, which it uses to design and test new products. In addition, Aphria has established clinical research partnerships with more than 10 Canadian universities.
Related: All potential red flags for investors in IGC, the pot stock that jumped 1,000% in three months
Neufeld says Aphria does not hold patents itself, but rather has access to intellectual property through its investments and partnerships.
Aphria shares rose 79% in the last three months, while the S & P 500
SPX, + 2.15%
decreased by 0.3% and the Dow Jones Industrial Average
DJIA, + 2.17%
won 25.
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