Company: Indiva Limited
President and CEO: Niel Marotta
Market(s): TSX Venture (NDVA) and OTCQX (NDVAF)
Mkt cap (07/24/19): C$30.7M
Share price (07/24/19): C$0.37
52-week high/low: C$1.00/$0.32
Indiva is a licensed producer of medical grade cannabis products. The company’s focus is the production of cannabis and cannabis-based products at its 40,000 square foot facility in London, Ontario, where it commenced operations in July 2017. It is currently on track to completing a 70-tonne extraction facility in the second half of 2019, which is fully funded and expected to produce over 4 million grams of distillate (i.e. concentrate). Indiva’s business objective is to produce and distribute cannabis products, including dried flowers, oils and, when Canadian law permits, edible products; Indiva expects to enter the edibles and extracts business in 2020, with edibles, derivatives and extraction/formulation services representing 90% of its revenue post 2020.
“Indiva has an attractive revenue growth profile, which will recognize cash flows from the company’s OSC supply agreement, SQDC deliveries and extraction facility in 2019 and from edibles and extracts in 2020 and beyond,” comments Richmond Club Senior Analyst and Chartered Investment Manager, Greg Beckett.
Sales and Expansion Success
Indiva has achieved a number of sales milestones in the past 12 months. In August 2018, the company received a sales license from Health Canada to sell dried cannabis flowers. By February 2019, Indiva signed a supply agreement to sell cannabis products in Ontario through the Ontario Cannabis Store (OCS). Subsequently in July 2019, Indiva signed an LOI to supply cannabis products to the SQDC to serve customers in the province of Quebec by Q4 2019.
“Indiva is moving full steam ahead and will begin selling gel capsules as early as Q3 2019, through the Ontario Cannabis Store, once the oil sales license is received. The sale of edible products from the company’s strong platform of globally recognized consumer cannabis brands, including Bhang Chocolate and Ruby Sugar, is where Indiva anticipates it will generate most of its revenues, starting in 2020, pending approval from Health Canada”.
Beckett picks stocks for the Richmond Club Index. Over the last decade and a half, his picks have averaged a return of 20.4% per year. He believes now is the time to invest in Indiva for these four reasons:
- Indiva has an attractive revenue growth profile and expects to experience aggressive growth in the next 12-18 months. The company’s pre-roll products are currently being distributed through the Ontario Cannabis Store and make up 7% of the market share. According to Niel Marotta, the company’s CEO, Indiva is expected to sign two to three additional provincial distribution agreements in 2019 and cover 70-90% of the Canadian adult population.
- Indiva has signed deals with premium, award winning edibles and extracts companies in the US including Bhang Chocolates and Ruby Sugar and Salt. With edibles becoming legal in Canada in mid-December, Indiva is positioned to hit the ground running in this emerging cannabis market segment. The company anticipates that 90% of its revenues will be driven by edibles, extracts and extraction services in 2020 and beyond.
- Indiva is fully funded to complete its 70-tonne extraction facility, which will produce over 4 million grams of distillate. License agreements are in place giving Indiva exclusive rights to produce products including chocolates, sugars and salts targeting Canadian and international markets. According to Marotta, there are limitless product options in the extracts and edibles arena.
- Indiva is led by a top-notch management team with decades of experience in mature consumer packaged goods (CPG) companies. This highly experienced management team has a range of experience in finance and corporate development, food manufacturing, branding, cultivation, packaging, operations and distribution and quality assurance and compliance, which ensures Indiva produces safe, consistent and high-quality products for its customers.