Mackie Research initiated coverage of Valens GroWorks Corp (CSE:VGW), a vertically-integrated producer of cannabis products focusing on the development of proprietary extraction processes.
Mackie Research initiated coverage of Valens GroWorks Corp (CSE:VGW), a vertically-integrated producer of cannabis products focusing on the development of proprietary extraction processes. With the help of its three wholly-owned subsidiaries, the company is focused on producing and selling high-margin products from cannabis oil, with a current processing capacity of more than 72,000 kilograms per year. Its revenue streams include cannabis oil, resin and white label products. In its report Mackie forecasts that the majority of the company’s revenue will stem from cannabis extraction tolling agreements with licensed producers under the ACMPR.
The Mackie report covers a variety of facets of the company, including its extraction processes, potential growth through cannabis oils and derivative products, joint venture opportunities and the strength of the company’s balance sheet.
The company has developed proprietary extraction processes using specific extraction parameters to produce high-quality oils and resins. The company is also perpetually evaluating its processes for improvements, ensuring minimal waste and higher efficiencies.
Mackie also identified that as the Canadian market follows the trends of legalized US states, that there is significant opportunity for growth in the cannabis oil and extracts space. Valens has developed a presence in this segment of the industry by installing carbon dioxide and ethanol extraction systems that have been customized to ensure that the product retains valuable compounds that might otherwise be lost in the refining process.
On the cultivation side, Valens is taking part in a joint venture with Kosha Projects Inc. for the development of a 400,000-square-foot hybrid greenhouse that hosts controlled-environment and strain-segregated capabilities. Valens will be responsible for the design, outfitting inputs, budgetary guidance, consulting and advisory services during the construction and development of the facility.
The company currently has $5 million in net cash and its production and processing facility in Kelowna BC is fully funded. Mackie gives Valens a buy rating with a $4.50 share target.
To read the full report, click here.