Chemesis International Inc. (CSE:CSI) (OTCQB:CADMF) (FRA:CWAA) is a multi-state cannabis operator that is flying under the radar and we believe that it is an opportunity to be aware of. So far this year, the company has reported several substantial developments and we believe that it has a favorable risk-reward profile.
We are of the opinion that Chemesis is in the early innings of a major growth cycle and are bullish on the structure of the business. The company is levered to strategic cannabis markets in North and South America and we are favorable on the geographic diversity of the business. Chemesis is one of the few companies to be levered to both of these markets and we will monitor how the management team continues to capitalize on these opportunities.
Revenues Ramp Up Higher Despite the COVID Crisis
Earlier this month, Chemesis reported third quarter financial results and recorded strong growth when compared to the same period last year. During the quarter, the company generated more than $4.5 million of revenue and recorded an 11% improvement in gross margin when compared to the same period last year.
One of the reasons we are excited about Chemesis is due to its response to the impact of COVID-19. In early February, the company was granted an injunction to resume operations and after this, the business noticed a significant spike in demand for its products. We will monitor how Chemesis continues to perform and expect it to report strong fourth quarter financial results.
Another reason we are excited about Chemesis is due to a significant addition to its management team. Earlier this year, the company appointed Josh Rosenberg as President and we are favorable on the experience that he brings to the operation. He is a seasoned corporate executive with a proven track record in global foodservice and other product distribution markets. Josh played a key role in the successful buyout of Accent Food Services and we expect to see him help advance the operation.
Going forward, Chemesis has attractive growth prospects. Through a planned spinout of La Finca, the company will be able to create value for shareholders and we find this to be of significance. La Finca has been highly focused on the Colombian cannabis market and we are bullish on the growth prospects that are associated with the Latin American market.
Positioned for Growth After Completing Two Capital Raises
Last month, Chemesis completed two private placements and raised more than CDN $1.3 million. The capital will be used to help the company execute on previously announced growth initiatives and we will monitor how the management team uses the capital to drive the story forward.
Through a series of investments and acquisitions, Chemesis has been able to enhance growth prospects and become levered to several high growth cannabis markets. The company is highly focused on the cannabis opportunity in California and Puerto Rico in and we are favorable on how the business has penetrated these markets.
In the back half of 2020, we expect Chemesis to provide updates on these markets and its plan to spin out La Finca. During this time, we expect the business to report ramping revenues and are bullish on this aspect of the story. We believe that Chemesis has visible growth prospects and will monitor how the management team is able to execute on these opportunities.
During a time of uncertainty, Chemesis’ management team has been able to advance the operation and we find this to be of significance. Many cannabis businesses had a tough time transitioning the business during COVID-19 and we are impressed with how Chemesis was able to operate in such a challenging market environment.
An Opportunity to be Aware of
Over the course of the last year, Chemesis has been focused on increasing market share in the cannabis markets it has a presence in. When it comes to the US market, we believe that cannabis companies need to be focused on major state markets. Chemesis has followed this strategy and is focused on several strategic markets and regions in the US and we find this to be of importance.
2020 has already proven to be a transformative year for Chemesis and we are bullish on the growth prospects associated with the assets that are owned by the business. We are also impressed with how the company has improved its leverage to both North and South American cannabis markets.
Chemesis has substantial potential catalysts for growth and we believe that the market does not appreciate this aspect of the story. From Colombia to California, the business is focused on increasing market share in burgeoning cannabis markets and we will monitor how the management team is able to execute on this.
If you are interested in learning more about Chemesis International, please send an email to email@example.com and we will add you to our distribution list.
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