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Thursday, November 26, 2020

A Fresh Look at Cannabis Wheaton Income Corp (OTCMKTS:CBWTF)

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Cannabis Wheaton Income Corp (OTCMKTS:CBWTF) is battling through a corrective process at the moment, bringing key technical support into the picture this week in the $1.50-1.65 zone. CBWTF has already broken down below the important 20-day exponential moving average and the price shelf that has defined the stock’s lows over the past 3 weeks. Below, we have the early January lows around $1.49/share and the rising 50-day simple moving average now at about $1.29/share.

As for recent catalysts, the company just announced that it has entered into a binding interim agreement with Inverell S.A., pursuant to which Wheaton will purchase 80% of the issued and outstanding common shares on a fully diluted basis of Inverell. This is putting cash to use, which has been viewed favorably in the cannabis space because the ROI is pinned at a high level. It’s also a good move for a company lugging around $26M in cash against no current liabilities, as CBWTF is now, according to the company’s most recent financial data.

Cannabis Wheaton Income Corp (OTCMKTS:CBWTF) trumpets itself as an investment company that seeks to provide investor returns through streams and capital appreciation in the Canadian cannabis industry.

The company operates as a cannabis streaming company. It provides funding for cannabis facility expansions, operations, and initial construction in exchange for minority equity interests and a portion of the cultivation production.

The company was formerly known as Knightswood Financial Corp. and changed its name to Cannabis Wheaton Income Corp. in May 2017. Cannabis Wheaton Income Corp. was incorporated in 1987 and is based in Vancouver, Canada.

According to company materials, “Wheaton Income is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.”

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According to the company’s release on the Inverell deal, “Inverell is a federally licensed “Cannabis Operator” based in Montevideo, Uruguay and was founded by Dr. Raúl Urbina. Dr. Urbina completed his post-graduate studies in Molecular Biology at Princeton University and Agronics at the University of Almeria in Spain and possesses broad experience managing high-tech agricultural projects with a strong innovation component. His experience also includes founding Stevia One where under his leadership as Chief Executive Officer, the company became the lowest cost producer of Stevia in the world, expanded its field under production up to 1000 hectares in 5 years and achieved the highest purity with the highest yields in the market. Pursuant to the Agreement, Dr. Urbina will remain as CEO of Inverell and leader of the Innovation Department of the Company.”

Hugo Alves, President of Wheaton, stated: “We are incredibly excited to work with Dr. Urbina and his team in Uruguay. This transaction helps us secure a significant amount of CBD-rich hemp production that can be exported to other federally legal jurisdictions for further processing into nutritional and pharmaceutical products. We expect to see a significant increase in global CBD demand over the course of the coming years and believe that low-cost jurisdictions with favorable climates for outdoor cultivation will be key sources of CBD supply. As we continue to execute our international strategy, we are thrilled to have identified Inverell as our first international production operation.”

Chuck Rifici, Chief Executive Officer of Wheaton, stated: “This transaction serves as our first entry into Latin America and provides our platform with a diversified source of low-cost CBD production for our international distribution channels. We believe that Dr. Urbina and Inverell’s experience in large-scale commercial cultivation will be a significant competitive advantage for our domestic operations, especially when outdoor cultivation is permitted in Canada.”

Now commanding a market cap of $330.1M, CBWTF has a significant war chest ($26.1M) of cash on the books, which compares with virtually no total current liabilities. CBWTF is pulling in trailing 12-month revenues of $51K. However, the company is seeing steep declines on the top-line on a quarterly y/y basis. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $CBWTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CBWTF, either long or short, and we have not been compensated for this article.

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