Original-Research: Cantourage Group SE (von NuWays AG): Buy

Classification of NuWays AG to Cantourage Group SE

Company Name:	Cantourage Group SE
ISIN:	DE000A3DSV01
Reason for the research:	Update
Recommendation:	Buy
Target price:	EUR 12.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Christian Sandherr

Cantourage entering the Polish market; PT up

Cantourage entered the Polish medical cannabis market through its first export of high-quality craft cannabis, establishing a long-term partnership with the Polish wholesaler PharmaVitae. PharmaVitae is one of the leading medical cannabis wholesalers in Poland with a strongly growing pharmacy network, which comprises 1,200 locations vs. 400 at the end of last year. The distribution partnership will begin with one of Cantourage’s most popular strains, Mac1, but will be expanded in 2025 to include additional products from its product portfolio (e.g. a larger variety of flowers).

Entering the Polish market through the distribution partnership bodes well with the company’s strategy of expanding to so far underserved markets with high growth potential. While the Polish medical cannabis market is still at an early stage, it is poised for rapid growth during the next few years as regulatory frameworks improve and awareness increases. In 2023, the country recorded roughly 30k patients as well as a market volume of 4.5t. The latter is expected to grow at a ~40% CAGR until 2028, implying a total addressable market of € 200-250m.

While we expect some € 4-5m sales from the Polish market for FY25e, it has the potential to generate more than € 20m sales annually during the next 3-5 years, in our view, becoming the third core market following Germany and the UK.

Cantourage to report a blow-out FY24e. As per its recently raised FY24e guidance and the operational update from November (€ 7.2m sales that month alone), the company is on track to record more than 100% yoy sales growth (to € 49m) while improving the EBITDA margin by some 8.5pp yoy (eNuW) thanks to the favourable regulatory changes in Germany at the beginning of April. This underpins the scalability of the group's business model. In fact, we expect margins to further improve to 12.6% by FY26e as sales continue to grow at a >30% CAGR.

Threats from political uncertainties limited. As more conservative parties are likely to gain power in the upcoming election in Germany (end of Feb.), which have historically opposed a broader cannabis legalization, especially on the recreational side, i.e. cannabis clubs and growing own plants. As Cantourage is only active in the medical space, we regard the risks to its business model as limited.

We confirm our BUY rating with a new € 12.00 PT (old: € 11.50) based on DCF.

You can download the research here: http://www.more-ir.de/d/31581.pdf
For additional information visit our website: https://www.nuways-ag.com/research-feed

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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