Flora Growth Corp. (NASDAQ: FLGC) has recognized this Colombian opportunity and to put it quite simply, has pounced to create a low-cost cultivation operation that could provide them with a global footprint in the years to come.
Flora is a cann-a-bis company that will leverage natural, cost-effective cultivation practices to supply cann-a-bis derivatives to its diverse business divisions of cosmetics, he-mp textiles, and food and beverage.
As the operator of one of the largest outdoor cultivation facilities, Flora strives to market a higher-quality premium product at below market prices. By prioritizing natural ingredients and value-chain sustainability across its portfolio, Flora creates premium products that help consumers restore and thrive.
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7 Potential Reasons Why FLGC Could Be A Breakout Target
#1. Colombian regulation provides FLGC with a unique revenue opportunity.
#2. At least one analyst believes that Flora Growth Corp. (NASDAQ: FLGC) could be surprisingly undervalued with a 5x upside potential from Friday's closing valuation.
#3. The company believes revenue growth could be significant in 2022.
#4. Flora just signed a new agreement with Artos Ltd. to send high TH-C cann-a-bis flower to Israel.
#5. Flora completes successful first cann-a-bis extraction through new facility.
#6. With product expansion through Walmart(dot)com and Coppel, Flora Growth Corp. (NASDAQ: FLGC) is in prime position to potentially make itself a household name in the years to come.
#7. The company boasts the world’s lowest production costs for dried flower creating a much broader cushion for excellent pro-fit margins.
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New Colombian Regulation Further Increases Revenue Potential
The President of Colombia has accepted and signed into effect some exciting revisions related to the existing Colombian cann-a-bis laws which allow for the:
- Sale and export of raw cann-a-bis materials, namely dried flower, to international markets
- Manufacturing, sale, and export of ingestible cann-a-binoid products in Colombia
- Promotion and advertising of cann-a-bis brands and products in Colombia
These new regulations are expected to allow Flora to increase near-term and long-term revenue, optimize its product supply chain both domestically and abroad.(6)
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$11.50 Price Target From MKM Partners
Highlights from the report:
1H21 Recap: Flora reported 1H21 revenue of $2mn with a 60% gross margin, generating a net loss of -$4mn (-$1mn adjusted for one-time expenses). Flora guided to 2H21 revenue of $9mn-$11mn exclusive of announced M&A (Heimat and Vessel with combined trailing 12 mo revenue of $14mn) and exclusive of dried flower shipments.
This organic guidance is a sharp acceleration led by Kasa Wholefoods/Tropi and Flora Lab/Flora Beauty. Importantly, these organic numbers ($9mn-$11mn) were above our initial estimates ($7.6mn in 2H). When we launched on Flora, our numbers did not include any changes to Colombian legislation, nor did they include contributions from M&A.
The deals, which could close shortly, and shipments of dried CB flower provide further upside to guidance (and our former numbers), setting the stage for run-rate annual revenue of >$40mn as Flora exits 2021. Importantly, it will take very little revenue growth for Flora to become profitable. At a 60% gross margin, Flora would need to generate just another $2mn in organic revenue to become profitable (assuming organic revenue doesn't carry much additional SG&A).
We are raising our 2H21 and FY22 estimates for better than expected organic growth (2H21 and FY22) and legislative changes (FY22 forward). We are now modeling $12mn (from $7.6mn) in 2H21 net sales and +$1.8mn in adjusted EBITDA (from $0.7mn).
With the higher estimates (incl. legislative changes) our price target is now $11.50 (from $6).
Find the full report here.
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2022 Could Be A MONSTER Year For Revenue
Here's why...
In December the company released this news: Flora Growth Provides 2022 Revenue Guidance of US$35-45Mn; Sets Date for Year End Review Webinar
This incorporates revenue contributions from its various operating divisions, including recently acquired Vessel Brand and wholesale cann-a-bis revenues from Cosechemos.
It also didn't hurt that the FLGC has followed it up with a couple of bombshell announcements to kick-off 2022.
Check them out:
Flora Growth Signs Agreement with Artos Ltd. to Send High-TH-C Cann-a-bis Flower to Israel
- Flora signs distribution agreement with Israel-based Artos Ltd. to sell approximately 3,600 kg of high-TH-C cann-a-bis flower for the Israeli market
- Artos Ltd. is a consumer products distribution company with a network of over 4,000 distribution points across the country
MIAMI & TORONTO, February 16, 2022--(BUSINESS WIRE)--Flora Growth Corp. (NASDAQ: FLGC) ("Flora'' or the "Company"), [...], announced today that the Company has signed an agreement with Artos Ltd. ("Artos") to sell approximately 3,600 kg of dried high-TH-C cann-a-bis flower to Israel from its Cosechemos cultivation facility.
Through this agreement, Flora Growth seeks to establish a partnership with the Artos team to expand their offering of cann-a-bis products for the Israeli market to also include oils and, when regulations permit, finished TH-C and CB consumer products. The export of the high-TH-C product is pending the dried-flower checklist from the Colombian government from the 2021 update to the cann-a-bis law.
"As Cosechemos continues to reach full-scale commercial production, our team remains focused on increasing our presence in international cann-a-bis markets through distribution agreements that will serve as a gateway into the markets," said Luis Merchan, CEO of Flora Growth. "With Artos’ extensive distribution network, this agreement will ensure that safe, high-quality cann-a-bis products are provided to the Israeli cann-a-bis market and offer a valuable source of health and wellness products to the country."
[...]
Read the full article here.
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Flora Growth Completes Successful First Cann-a-bis Extraction Through New Facility, Initiates EU-GMP Certification Process
- Flora’s cultivation and extraction division, Cosechemos, completed construction of a 10,500 ft2 state-of-the-art post-harvest and extraction facility with annual capacity of 15,000 L of distillate
- The first batch of crude oil has been extracted, where the product was submitted to the Colombian Government to obtain Flora’s 2022 quota for High-TH-C derivatives, building on Flora’s existing quota of 7,900 kg of dried High-TH-C flower
- Cosechemos has initiated the pre-audit process for EU-GMP certification, which will enable export of medical-grade cann-a-bis derivatives to international markets when paired with its existing GACP certification
MIAMI & TORONTO, January 11, 2022--(BUSINESS WIRE)--Flora Growth Corp. (NASDAQ: FLGC) ("Flora" or the "Company"), [...], announced today that its wholly owned subsidiary, Cosechemos, has produced the first batch of crude oil through its newly constructed extraction facility. Further, Cosechemos has initiated the process to become EU-GMP certified. The completed facility will serve as the Company’s primary processing hub, facilitating the drying and processing of Flora’s all-outdoor cultivated flower into finished, packaged dry flower and extracted material for domestic production and export to wholesale cann-a-bis markets.
[...]
"Global cann-a-bis markets are growing at an incredible rate, and Flora is ready to meet that demand for cann-a-bis-derivatives with the completion of our new EU-GMP compliant extraction facility in Colombia," said Luis Merchan, President and CEO of Flora Growth. "This is another major step for Flora Growth, as we are now in a position to seek EU-GMP certification, with the ultimate goal of disrupting the global cann-a-bis derivatives market with our low-cost product. Further, the completion of the facility immediately allows us to supply extracts and derivatives to our CPG portfolio, including Flora Beauty and Kasa brands, unlocking additional cost efficiencies."
[...]
Read the full article here.
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Flora Growth Expands Product Distribution Through Walmart(dot)com and Coppel in Mexico
MIAMI & TORONTO, January 04, 2022--(BUSINESS WIRE)--Flora Growth Corp. (NASDAQ: FLGC) ("Flora" or the "Company"), a leading all-outdoor cultivator and manufacturer of global cann-a-bis products, announced today that its Mind Naturals skincare brand has launched sales through Walmart(dot)com and Coppel, a nationwide department store in Mexico. The launch includes 12 products from the Mind Naturals portfolio, initially on e-commerce with subsequent plans to sell in brick and mortar retail locations.
This launch expands upon last month’s initial orders for Mind Naturals to Mexico and Spain. Walmart is one of the leading retail chains in Central America, while Coppel has 1,253 stores in Mexico. It is estimated that the global market for cann-a-bis and its derivatives will generate sales of $102Bn by 2026, and Mexico is expected to be one of the countries with the highest commercialization of CB products.
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Read the full article here.
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Let's switch gears for a second and focus on what makes FLGC truly unique.
Colombia: A Potential Game-changer In The Global Cann-a-bis Industry (And How Flora Growth Corp. Could Benefit Greatly)
Long known for its illicit drug trade, Colombia is also a hotbed for agricultural businesses which include everything from coffee to bananas and cut flowers.
These commodities have made Colombia a force in the global market and cann-a-bis could be the next big economic breakout for this developing country.
Roughly 5 years ago, the Colombian government signed the 1787 bill into law. Law 1787 was created to regulate the use of medicinal cann-a-bis and its trade in the country.(4)
By doing this, Colombia joined a slew of other countries looking to explore the potential advantages of using cann-a-bis as an alternative to pharmaceuticals.
Legislators soon saw to create a legal framework allowing for cultivation, extraction, product manufacturing, and exporting of cann-a-bis-related products.
This is where Flora Growth Corp. (NASDAQ: FLGC) comes into play.
"Given its cost advantages, we believe Colombia is positioned to become a major global export hub for cann-a-bis, particularly if producers pursue EU GMP-compliant operating practices." - Canaccord Genuity(1)
The Cosechemos cultivation farm, Flora’s core division, is located in Bucaramanga, Colombia, and is licensed to cultivate 247 acres (100 hectares) of cann-a-bis.
With Cosechemos' demonstrated low production costs, Flora is ready to sell high-quality cann-a-bis at competitive prices.
