Shares flying under the radar? Another revenue surge locks in ECS Botanics as Australia’s top cannabis supplier
Health & Biotech
Health & Biotech
If you’ve been a student of the fertile cannabis space, this morning’s latest revenue surge is textbook ECS Botanics.
Underpinned by sensible management, consistently reliable execution and a unique B2B business model, the premium medicinal cannabis and hemp supplier ECS Botanics (ASX:ECS) continues to step it up, following another strong revenue update this morning.
The company flagged revenues for the December quarter are expected to come in at another new record high of ~$1.5m.
Demonstrating the company’s strong recent momentum, those numbers represent a gain of more than 60% from the September quarter, and a surge of more than 250% from the June quarter.
Shares in ECS rose in morning trade as it positions itself as a leader in domestic and international supply, as the broader cannabis market continues to mature.
Along with its top-line revenue growth, ECS also provided new data which demonstrates the strength of its client base – both domestically and internationally.
During Q4, the company highlighted two major new supply deals, including an agreement to supply medicinal cannabis biomass for Sun Pharma – the fourth largest specialty generic pharmaceutical company in the world with revenues of more than $US4.5bn.
That was followed by a near $5 million deal to supply cannabis medicinal cannabis resin to Australian cannabis company Cannvalate.
And the near-term outlook is even sunnier.
After selling 13,200 units of cannabis oil products in Q4, ECS says it’s on track to sell more than 20,000 units in the March quarter of 2022.
ECS Botanics CEO Alex Keach said the strong momentum was a by-product of the company’s strategic focus on B2B customer channels.
“Our business model is proving to be exactly what the market desires, as well as providing us with a larger addressable market than our competitors,” Keach said.
“This B2B strategy and being able to take a seed all the way through to a GMP product is why we continue to attract new customers and deliver quarter on quarter growth.”
As a GMP-accredited producer, ECS’ cannabis products are also in demand across international markets, where it has a number of exciting opportunities ahead in 2022.
Adding to that demand outlook is the fact that ECS Australia’s health regulator, the TGA (Therapeutic Goods Administration) recently approved a number of the company’s oil and flower products for ARTG (Australian Register of Therapeutic Goods) export listings.
An export purchase order of more than $400,000 is currently being fulfilled, the company said.
In addition, ECS has finalised plans for additional processing facilities at its central manufacturing hub to be constructed in March – in order to meet the rapidly accelerating levels of demand.
Adding it all up, the company’s current momentum is the by-product of lots of development work over the last 18 months to establish itself as a regulatory-approved premium supplier in the domestic market.
While ECS’ growth trajectory continues to skyrocket, the company’s current market capitalisation represents a material discount to some ASX-listed peers.
For a business with quarterly revenue growth of more than $1.5m (and growing), ECS’ current market cap is just over $30m – leaving it as a prime candidate for further growth.
And having consolidated its leading position in the Australian cannabis market, ECS is now poised to benefit from the next phase of growth in the global medicinal cannabis market – underpinned by the highest quality manufacturing standards and Australia’s reputation as a producer of premium products in the international market.
This article was developed in collaboration with ECS Botanics, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.