Record quarter for ECS Botanics

Medicinal cannabis and hemp wholesaler/retailer, ECS Botanics (ASX: ECS) captured the market’s imagination earlier this week when it posted record revenue for second quarter FY22 of $1.5m – a 325% increase on the previous period and a 65% jump on the last quarter.

The stock, which owns farms and medicinal cannabis facilities in Tasmania and Victoria is trading flat today but is up 13.79% since the beginning of the week.

While significant growth was driven by increasing volumes from new and existing domestic customers, the company noted that European export orders are being facilitated this month following ARTG (TGA export) listings for ECS oil and flower products.

Other recent developments

Management also noted that an export purchase order exceeding $0.4m is also currently being fulfilled; while new protected cropping enclosures in production - with additional processing facilities being constructed in March – allows the company to increase capacity to meet growing demand.

Other recent developments noted by management include Cannabidiol the commencement of (CBD)cultivation at the company’s Tasmanian facility with first harvest in February; and a key supply chain partnerships which are expected to provide a strong foundation for future growth.

Supply agreements

Two new deals announced late November include a collaborative supply and toll processing agreement for cannabis biomass extraction with pharmaceutical company Sun Pharma.

Under this deal, Sun Pharma will supply resin to ECS as part of an offset agreement against the purchase of ECS’ wholly owned SepareCo Supercritical carbon dioxide extractor and ancillary equipment, which is being installed at Sun Pharma’s pharmaceutical facility in Port Fairy, Victoria.

The second deal involves supplying the resin produced by ECS’ extractor at Sun Pharma’s facility to Cannvalate, which operates Australia’s largest medical cannabis distribution network.

Larger addressable market

Managing director Alex Keach said the company’s business model is proving to be exactly what the market desires “as well as providing us with a larger addressable market than our competitors.”

“This B2B strategy and being able take a seed all the way through to a GMP product is why we continue to attract new customers and deliver quarter on quarter growth.”

Three month share price table ECS Botanic Holdings