Despite surging more than 150% during the past year, shares of Radient Technologies Inc (V:RTI) might have greater upside if its European initiatives bear fruit
SmallCapPower | June 20, 2018: Radient Technologies Inc. is known for its innovative Microwave Assisted Processing (MAP) extraction technology. Notably, in 2016, Radient entered into the fast-growing cannabis market by signing an MOU with Aurora Cannabis Inc (TO:ACB). Since then, Radient Technologies expanded its offerings, utilizing its MAP platform to process and extract cannabinoids, which includes cannabidiol and tetrahydrocannabinol from cannabis biomass.
We initially covered the investment thesis in our initial report on Radient Technologies, released in November 2017 (article). In this article, we discuss the key recent developments in its manufacturing facility expansion, pending ACMPR license, and future growth initiatives in Europe.
Expansion of Manufacturing Capacity
The capacity expansion of Radient’s existing manufacturing facility is now nearing completion, with construction expected to be completed by the end of June 2018. Commissioning of the expanded facility is anticipated through the summer of 2018. As previously announced, Radient Technologies recently acquired two parcels of land adjacent to the facility, providing more than 80,000 sq. ft. of additional real estate for future capacity expansions and additions to Radient’s extraction and product development capabilities.
ACMPR License from Health Canada
The company is in the final review stages of its application to Health Canada’s Office of Medical Cannabis for a production license for the expanded facility under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”). Approval of the ACMPR license is dependent upon, among other things, Health Canada’s review of recorded security footage of the expansion, to be submitted after construction of the expansion is completed. Radient Technologies anticipates receiving its ACMPR license from Health Canada by early Q4 2018. Additionally, the Company’s application to the Office of Controlled Substances for a Dealer’s License for the expanded facility is currently under review. The Company also anticipates receiving its Dealer’s License for the expanded facility from Health Canada by early Q4 2018.
Expansion Initiatives in Europe
With the market value for legal cannabis in Europe forecast at more than US$85 billion (source: Prohibition Partners European Cannabis Report: 2nd Edition), and new medical cannabis laws having been passed recently in Germany, Italy, Poland, Greece, and the Czech Republic, Radient Technologies is finalizing initiatives with respect to expanding its business operations into the European Union. These initiatives include site identification, preliminary design work, detailed capacity planning, technology selection and initial capital costing.
Outlook
Radient Technologies shares have surged more than 150% during the past year, hitting an all-time high of $2.28 on January 9, 2018. With the recent developments mentioned earlier, the Company is well positioned to capitalize on the expected cannabis-sector growth in Canada as well as other European countries. Radient Technologies currently trades at a Price to Book ratio of 10.98x.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.