First time poster on HotCopper, but as an investor who has taken an interest in QBL since their 55% acquisition of MCL, I’ve had many thoughts regarding the current and future direction of the company. Hoping to discuss these here. Of course, the following is all my opinion.
First off, we’re not dealing with an ASX200 company. That’s why we’re here. We’ve all accepted a certain level of risk, otherwise we wouldn’t be investing in a 2cps stock. We’re all looking to make a big profit. We need to accept that before we get started.
From a big picture view, there are three major arms of the company:
- Bauxite.
- Hemp.
- Medical marijuana.
Firstly, as it stands, the company is currently awaiting the granting of a MDL licence for its South Johnstone project near Mourilyan in North Queensland. A company announcement on 20/01/2017 informed us that we were to expect the MDL in a few weeks – which is irrefutably late. While this is an issue, the fact remains that QBL has been preparing the application for this licence for some time. They are at the crucial point of approval, have revised the MDL program and responded to the Department of Natural Resources and Mines queries. Any news regarding further progression of an MDL at this stage would result in strong investor sentiment.
Secondly, as announced today, the Board of Food Standard for Aus & NZ (FSANZ) has approved the consumption of hemp seed foods in Australia. As Andrew Kavasilas has worked for these changes for years, it comes as big news for one of Australia’s most politically-minded marijuana/hemp activists. AK is well connected throughout agricultural sites in Northern NSW, as well as in the government as secretary of the HEMP party, regular interviewee on ABC News & Landline, and presenter at the Sydney Health & Innovation Expo on 28th May 2017. As a founder of MCL, AK is positioned to steer VitaHemp to become a leader in hemp seed based foods. Further legislation approvals will result in tangible profits in an as yet unexplored nationwide sector.
Thirdly, MCL states that licence applications for medical marijuana are being prepared for submission. The Office of Drug Control (ODC) states that while statutory processing time for application assessment exists, they seek to assess all applications within 20 days; not allowing for further assessments by any relevant law enforcement or state licencing agencies, potentially resulting in an application time of longer than 20 days. With this in mind, it is optimistic to assume that we may have news regarding an initial direction of the MM licence (e.g. conditional approval, review by state authorities, etc) within a month, creating significant potential longer term upside.
In the last week, we’ve seen some pretty dynamic changes in stock price. After a strong finish Monday, we saw a retrace Tuesday, flat finish Wednesday, and a very bumpy ride today as FSANZ approved hemp seed for human consumption – ultimately resulting in a flat finish. Today, we’ve seen a strong consolidation in buy orders from 2.3c upward. It is also worth noting that throughout the week, strong resistance has been met each time SP reached 2.4c, with only fleeting drops to 2.3c, and strong resistance each time. I believe that we are dealing with a strong percentage of current holders of QBL having bought in between 2.4-2.8c looking to hold their profits and accumulate further – thereby providing a very minimal downside to any new stock bought.
QBL’s current market cap at 2.5c is sitting around 31M. Today, information was released regarding the issue of 45,083,379 stocks to a New York-based institutional investor. The most interesting part of this announcement was the options exercisable, at 1.2c, 8c, 10c and 20c on 31/07/17 for the first, and 16/09/17 for all others respectively. Whether this reflects the company’s confidence in its future share price through potential timing of MDL granting; through the Australian government’s approval of legislation of hemp seed food (on April 28, ensuring products are available nation-wide from November 2017 onward); or through the granting of a MM licence, is excellent material for discussion.
Regardless, for the above reasons - for the low downside risk provided by a stakehold of current investors providing strong low range resistance, for the strong diversification covering three broad industries with very large potential markets, and for the imminent forthcoming news regarding the company’s development into any of these three markets, I believe QBL is a strong buy.
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