Topic: Following the regulatory changes in April, sales growth has been stellar throughout the remainder of FY24. Thanks to various de-bottlenecking measures and unbroken demand, Cantourage looks poised for new operational highs.
Based on preliminary figures, Cantourage ended FY24 with € 51.4m sales, a 118% yoy increase, beating the guidance that the company raised to € 46-50m at the beginning of December. The fourth quarter alone accounted for € 21.4m, 185% above previous year's level of € 7.5 and only slightly less than to the whole year 2023. With € 8.5m sales, December beat the previous monthly high of € 7.5m. The strong sequential increases throughout the year were carried by successful de-bottlenecking efforts at processing sites and an increase of supplier depth.
Importantly, with a scaling top-line, we also expect Cantourage to have reached EBITDA profitability for the first time; eNuW: 7.5% margin. The expected gross margin of above 37% underpins the margin potential with growing sales volumes.
What to expect from FY25: In light of the favorable market dynamics, notably increased processing capacities (>14t annually), the Polish market entry at the end of last year and the relaunch of its own telemedicine platform, telecan°, strong growth is out of the question. We currently model a 67% yoy increase to roughly € 86m despite an FY run rate of slightly more than € 100m, based on the December sales figure to account for weaker summer months and a margin of safety. With this, the EBITDA margin is seen to further increase to 10%, in our view.
Threats from political uncertainties limited. As more conservative parties are likely to gain power in the upcoming election in Germany (end of Feb.), which have historically opposed a broader cannabis legalization, we see the potential of re-regulation on the recreational side, i.e. cannabis clubs and growing own plants. Importantly, Cantourage is only active in the medical space, we hence regard the risks to its business model as limited.
Taking into account the strong growth during recent years and the prospects stemming from growing patient numbers at its "home-turf" Germany and the ongoing regional expansion, the current valuation seems undemanding at 6.3x EV/EBITDA FY25e. BUY with a new € 12.50 PT (old: € 12) based on DCF.
ISIN: DE000A3DSV01
