Is Emblem Corp.. The Most Undervalued Stock Amongst The Canadian Licensed Producers?

The Most Undervalued Stock Amongst The Canadian Accredited Producers?

In 2018, Emblem Corp. (EMC.V) (EMMBF) has been nothing short of an implementation story and this comes after the company replaced its CEO. We’re positive on the continued implementation and consider Emblem to be among the most undervalued Canadian cannabis companies.

In the last month, emblem has significantly advanced its story and we are positive on the recent developments. From a recreational supply agreement in Alberta to a joint venture in Germany, Emblem has been laser focused on expansion and this is a stock that investors will need to keep an eye on.

Signs Recreational Supply Agreement and Expands to Germany

In early July, Emblem’s subsidiary, Emblem Cannabis Corporation, completed an agreement with the Alberta Gaming, Liquor & Cannabis Commission (AGLC) to supply high quality cannabis products for the state ’s amateur marijuana market.

In late June, Emblem announced the formation of a joint venture with German pharmaceutical wholesaler Acnos Pharma GmbH for the purpose of exporting Emblem branded cannabis products from Canada and importing them into Germany.  The joint venture will operate under the title Emblem Germany and will be 60% owned by Emblem, subject to the completion of definitive agreements.

Subject to the entering into of definitive agreements, Emblem will supply the joint venture with cannabis oil available to German pharmacies, wholesalers and clinical labs for medical purposes.  The firms expect to initiate export sales to Germany in 2019.

This is a substantial relationship and places Emblem branded products in one the most exciting markets. In early 2017, Germany legalized medical marijuana and represents a massive opportunity, with a population north of 80 million. Germany will also provide Emblem with a stepping stone to other European markets and we’re positive on this relationship.

Once Emblem’s new 30,000 square foot Good Manufacturing Practices (GMP)-accredited extraction facility is complete, the Canadian cannabis products will be able to significantly increase its infusion and derivative product output to meet the expected demands of the German market.

An Attractive Concentrate on the Smokeless Product Market

Emblem is an undervalued Canadian cannabis manufacturer that’s in the middle of a significant expansion. We’re bullish on this initiative since it will significantly benefit company fundamentals and are tracking how the team continues to execute.

We’re positive on the focus on the cannabis extract market and see this as a significant value driver for the firm. Requirement for cannabis extracts continues to increase and we expect the trend toward smokeless products to become even more important over the next few decades.

In mid-May, Emblem and Canntab Therapeutics Limited (PILL.CN) received Health Canada approval for research and development activities on oral sustained release formulations of cannabinoids, representing substantial progress in the companies partnership to develop long-acting cannabis formulations.

Canntab brought equipment to Emblem’s Paris, Ontario facility and started making the first batch of the products using its patented technologies and proprietary processes. This initial batch will undergo rigorous testing both internally by Emblem and Canntab and externally by third-party laboratories. Upon achievement of the product‘s target design criteria, the companies intend to submit a full dossier to Health Canada for review and acceptance.

We think the new management team at Emblem has been executing flawlessly and we find the valuation to be quite attractive. As the company continues to execute, fundamentals will continue to improve, and we expect the market to respond favorably to this.

We’re positive on the enhanced distribution through an arrangement with Shoppers Drug Mart in addition to the relationship with firms like Fire and Flower, a retail cannabis-lifestyle brand and shop idea.

In comparison to its peers, Emblem is quite attractively valued, and we think the market underestimates its potential. We’re excited by the recent developments and investors will need to keep an eye on this one.

Published at Fri, 20 Jul 2018 00:37:12 +0000

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