TWEED (TSXV:TWD) DD
On the 4th of April, 2014, Tweed (TSXV:TWD) entered the TSX venture exchange through a reverse takeover of LW Capital Pool Inc. (TSXV: LWI.H), and became the first company in history to produce and sell medical marijuana, while being traded on a major exchange.
Being the first to be traded on a major exchange certainly has its advantages and of course gives Tweed an upper hand over any possible competitors; however, they have a lot more going for them than being first out of the gate. As seen in the overview below, Tweed has the facilities, capital, experience and knowledge to maintain a crown in the medical marijuana sector.
Financials summary:
As of December 31, 2013, Tweed had total assets of $5,153,439 (or $17,095,580 after including private placements made between December 27, 2013 and March 07, 2014) and total long term liabilities of $35,099.
As of closing price on April 10, 2014, the current market cap for Tweed sits at approximately $129.76M
Projections summary:
Tweed is licensed to grow 15,000 kilograms (33,069.3lbs); although they are confident they can get permission from Health Canada to exceed that amount if demands are greater than expected. Tweed recently stated that demands are higher than previously projected.
At a conservative estimated average cost of $7.00 per gram, that is approximately $104.99M in revenue.
The company has stated that they are projecting revenues of $100M and according to CEO Bruce Linton, can expect pre-tax profit margins as high as 80% when operating at full efficiency. Even if you were to assume that they will not operate at full efficiency and only achieve a 65% margin; that would give Tweed a profit of $65M. At a conservative estimate of 10 a multiple, that would translate to a $650M market cap or a PPS of $17.50, which is 5 x the current price.
