Kaival Brands Innovations Group Inc (KAVL)

[BuyNStonks]

What do we know?

Q2 Revenue's of $22,506,154
Q2 Cost of Rev of $19,900,000(18.3 but I added in $1.6M discrepancy)

Q3 Revenue's of $32,375,309
Q3 Cost of Rev of $27,976,013

31% increase in revenue Q over Q

Q2 Gross Profit Margin of ~11.6%
Q3 Gross Profit Margin of ~13.6%

MSRP of BIDI Stick is $15.99. Has anyone gotten their hands on a stick and can comment on retail price?

A lot of assumptions to follow

Wholesale price on BIDIVAPOR.com is $7.50/stick when purchasing as few as 90.

Retailers are going to do better than $7.50 from their distributors otherwise they would just purchase from BIDIVAPOR.com. Unless of course it is purely convenience buying from the same vendor that provides all of their other supplies. Let's assume it's another 10% off to get price to $6.25.

If the distributors are making ~20% margin that would mean the price from KAVL is ~$5.40/stick.

If my assumptions are in the right zipcode I am estimating that approximately 6.1 million BIDI sticks were sold in Q3.

Subtracting KAVL's 13.6% margin has $4.61/stick going to BIDI.

If BIDI is targeting a 20% margin does $3.68/unit seem like a reasonable figure to build the stick and package it or is it too high?

What does the future hold?

As the product line continues to grow KAVL will likely receive more favorable terms reflecting the increased volume of sales. There is going to be a point of diminishing returns for BIDI so I can't imagine KAVL will realize greater than 20-25% gross margins.

My prediction for KAVL would be the following:

42M in revenue = $6.5M "Gross Profit," $3.99M Net Income, $0.014 EPS
52M in revenue = $8.9M "Gross Profit," $5.33M Net Income, $0.019 EPS

If you were to annualize the above EPS I would expect to see ~$1.50 within the next 3 quarters assuming revenues were stagnant at $42M. If the revenues continues to show great growth and/or obtains a higher multiple than my modest 30x it could happen sooner.

Anyway - it's late and I'm rambling but my prediction has been memorialized.