Proactive Investors website reports..

Botanical Holdings is an investment holding company focused on selective investments across all verticals of the legal medicinal cannabis industry.

The firm said it has worked to establish a unique portfolio of assets, products, services and capabilities across the aggregated cannabis value chain and that its strategic priority is to “partner with industry leaders on investments which provide near-term cash flow and potential for capital growth”.

Botanical has two major cultivation and processing projects.

In Portugal Botanical Holdings’ subsidiary company owns a 31-hectare site in the district of Santarem. At full-rate production, we estimate that there is the capacity for 7600 kilograms (kg) per year of dried flower from the current footprint, with headroom to expand. Early-stage development of the site is underway, and we expect the site to be completed in 2021 and first harvest from Portugal in 2022.

In Lesotho Botanical Holdings’ subsidiary company operates a 16-hectare site located 40 kilometres (km) from Maseru. At full-rate production, we estimate that there is the capacity for 2,600kg per year of dried flower from the current footprint, with headroom to expand. Development of the site is well advanced and we expect significant production from Lesotho in 2021.

Meanwhile, the firm addresses the cannabidiol (CBD) market through two distinct business lines:

Southern African Hemp, a company that will cultivate hemp for CBD production from a 600-hectare site in Zimbabwe

Unearthed Brands, a consumer products business that has developed and will market tinctures, skincare products and other consumer goods, under the brands “Unearthed” and “Le’Sutu”

How it’s doing

In July, the company said its medicinal cannabis-focused subsidiary EuroCan has completed the purchase of land in Portugal where it will start its European growing operations.

The 23-hectare site is in the municipality of Mação, a proven agricultural area around two hours north-east of Lisbon.

“Completion of this land purchase represents a significant step forwards for our operations in Portugal,” said chief executive Carl Esprey in a statement.

The company said local engineering firm TechnoEdif Engenharia has been hired to carry out pre-construction architectural, engineering and procurement work to prepare for construction, which is targeted by the end of the year.

Botanical Holdings added that it is now “moving swiftly” towards the start of phase-one construction of greenhouse and processing facilities.

In May, the company, which also has an operation in Lesotho, was granted a pre-licence, which allows it to begin growing Portugal.

The firm has also agreed offtake arrangements in principle with an unnamed, licensed German buyer which means Botanical Holdings has a route to market for its product.

Meanwhile, the firm has also said it is targeting an IPO on the London Stock Exchange in 2021.

What the boss says – CEO Carl Esprey

“Our vision for Botanical Holdings is to achieve a public listing on the London Stock Exchange during 2021 and thereafter to deliver consistent returns and capital growth for shareholders through a range of investments in the legal medicinal cannabis industry.”

“By ensuring the efficient application of our operational management, capital and other resources Botanical Holdings aims to create a diversified and risk adjusted portfolio of group companies across the sector and value chain.”


What the analyst says – Proactive’s Ed Stacey

“Botanical Holdings’ businesses are capable of ramping up production and revenues over a short timeframe, and we are forecasting strong profitability from 2021 onward. The operations are configured to a low operating cost base and modest capital requirements.”

“The low-cost base will help Botanical Holdings to remain profitable through future variation in the wholesale legal cannabis price, and we argue that this is an important feature of the investment case. We provide a sensitivity analysis on p10 calibrating Botanical Holdings’ future profitability against various wholesale price scenarios. Furthermore, we examine valuation scenarios with a central valuation range €40-100mln on 2023e multiples based on the current assets.”

Read the full research report here