TRST – CannTrust Holdings Inc. Eight Capital Release

CannTrust Holdings Inc.
(TRST-C: C$4.49)
October 18, 2017

BUY
Target: C$7.00

Daniel Pearlstein / (647) 253-1160
dpearlstein@viiicapital.com​​ 
Anthony Sutton / (514) 396-0323
asutton@viiicapital.com​​ 

Pre-Releases Impressive FQ3 Sales Growth

Yesterday, TRST pre-released Q3/18 sales (ended September 30) recording revenue of $6.1 MM, above our $5.2 MM estimate. Full financials are expected to be available in late November. This is the 3rd largest quarterly revenue ever recorded among public LPs, tied with Aphria (TSX:APH, BUY, $9.00 target).  ​​ 
CannTrust reported revenue of $6.1 MM in Q1/18, showing 35% QoQ and 680% YoY revenue growth with oils accounting for 61% of total sales.​​ The current run rate of sales is $2.1 MM per month. CannTrust currently has over 32,500 active patients compared to 20,000 in the prior quarter.  
Figure1: Mkt Cap vs Most Recent Quarter Sales (top) & kg(eq) sold (bottom)

Mkt Cap vs Most Recent Quarter Sales (top) & kg(eq) sold
Mkt Cap vs Most Recent Quarter Sales (top) & kg(eq) sold

Source: Company Reports, FactSet, Eight Capital

Maintaining our BUY rating and $7.00 target​​ based on 8.0x FY2021 estimated EBITDA of $87 MM. The 8.0x multiple is in the high end of our peer group range of 4.0x – 10.0x, due to the company’s quality of operations and pharmaceutical partnership. TRST trades at 4.6x our FY2021E EBITDA of $87MM (in line with peers at 4.4x).

Maintaining our BUY rating and $7.00 target​​ based on 8.0x FY2021 estimated EBITDA of $87 MM. The 8.0x multiple is in the high end of our peer group range of 4.0x - 10.0x, due to the company's quality of operations and pharmaceutical partnership. TRST trades at 4.6x our FY2021E EBITDA of $87MM (in line with peers at 4.4x).

Source: Factset

Maintaining our BUY rating and $7.00 target​​ based on 8.0x FY2021 estimated EBITDA of $87 MM. The 8.0x multiple is in the high end of our peer group range of 4.0x - 10.0x, due to the company's quality of operations and pharmaceutical partnership. TRST trades at 4.6x our FY2021E EBITDA of $87MM (in line with peers at 4.4x).

Company Description
CannTrust​​ is led by a management team with more than 40 years of pharmacy and healthcare experience. The company has an exclusive partnership with Apotex, the largest producer of generic drugs in Canada, for the development of new medical cannabis formulations and​​ products.

Please click on the following link to open the full multi-page report and printable version.​​ Full Report

Please click on the following link for all disclosures and disclaimers.​​ Disclosures

CANNTRUST

Since 2013 CannTrust has been delivering standardized products that enable physicians to provide accurate dosage to patients, similar to pharmaceuticals, all while rapidly building capacity and capability to expand into new categories.

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