- Canaccord
Genuity initiates coverage of TGOD with C$7.00 price target
- TGOD
expands international footprint to 17 countries with joint venture In
Mexico
- Appoints
new CFO, strengthens marketing and compliance with senior appointments
Canaccord Genuity has turned bullish on The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF), and its reasons are set out
in an initiation report. The Canadian producer of organic cannabis is set for
international expansion, say analysts from the investment bank’s research
division. They have initiated coverage with a “Speculative Buy” rating and a
price target of C$7.00 ($5.40), which is almost double the present value of the
company’s shares (http://ibn.fm/WeK3D).
TGOD, they say, has enough cash “to achieve annual capacity of approximately
195,000 kg (excluding hemp production).” Some of that production may make its
way to Mexico under a joint venture agreement, as the company continues to
expand its international footprint. To run the show, TGOD is bringing in new
talent. It now has a new CFO and has made appointments, at a senior level, in
compliance and marketing.
The Canaccord Genuity analysts believe that a major
differentiating factor for TGOD is its focus on organic cannabis, which is
preferred, according to a recent survey, by “43 percent of Canadian
recreational cannabis consumers.” They “expect the negative impact of consuming
cannabis containing pesticides will continue to generate strong demand for
organic product.” As a result, they “estimate that Green Organic Dutchman’s
fully funded production capacity translates to approximately $1.1-1.4 billion
in annual revenue. While TGOD’s current focus is on increasing production
capacity in Ontario and Quebec, (they) expect the company to be free cash flow
positive in 2020 as it plans to build a portfolio of organic cannabis brands
that will serve legal recreational and medical markets around the world.” TGOD
now has operations in 17 countries spanning two continents and revolving around
CBD oil, which, unlike THC, is generally legal in those countries. In Mexico,
for instance, pharmacological derivatives of cannabis have been legal since
June 19, 2017.
In October 2018, TGOD announced that it had entered into a
strategic joint venture with LLACA Grupo Empresarial to create a 50/50-owned
company to enter the medicinal cannabis market in Mexico (http://ibn.fm/kF7nC). LLACA will
facilitate the importation, registration and distribution of TGOD-branded
organic cannabis and hemp-derived medical products into the Mexican market.
LLACA brings formidable capability to the partnership. Through its distribution
network, TGOD will have access to 4,500 pharmacies and 3,100 supermarkets
throughout Mexico.
To tackle the challenges from international expansion, TGOD
is boosting its organizational capabilities. In October 2018, the company
announced the appointment of Sean Bovingdon as its new chief financial
officer (http://ibn.fm/BTczl).
Bovingdon is an accomplished executive with almost 30 years’ experience in a
variety of private and public companies. Most recently, he served as CFO of
Toronto Hydro Corporation, a utility company with $3.5 billion in
annual revenue. Before that, he served as president and CFO of a number of
public and private oil and gas companies; as CFO and VP, finance for TSX-listed
technology and manufacturing companies; and as controller for a major
TSX-listed oil sands company. Bovingdon has been involved in $1.1
billion of public equity and debt financings and $2 billion of
syndicated credit facilities, including three IPOs.
TGOD further strengthened its senior management team with
two new appointments: Emily Demeo as its marketing brand director
and Terry Reid as its director, legal and compliance. Demeo has
joined from Molson Coors Canada (MCC), where she led MCC’s foray into
non-alcoholic beverages, gaining valuable marketing experience in a regulated
industry. Before her stint at MCC, Demeo worked at L’Oreal as senior product
manager for Garnier Fructis.
Reid joins TGOD following a successful career at Teva
Pharmaceuticals, where he was a key member of both the legal and compliance
teams, most recently as head of compliance for Canada. Prior to his role at
Teva, Reid had a successful commercial litigation practice at a
reputable Toronto law firm.
For more information, visit the company’s website at www.TGOD.ca
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