CGB (ASX) CANNTAB IS GO

Let's get to the bottom of some real numbers here & entertain the discussion on Canntab alone.

To get to this alleged $1bn valuation - some food for thought.

Average Australian MC customer spend is circa $300 per month. Let's assume that the Canntab price is in line with this for a monthly supply. Let's also assume that even though CGB is a middle-man distributor - they have a 50% net profit margin on sales (personally, I think this is overs but i'll work with it).

For scenarios sake, let's apply a 5% capitalization value rate - so they need $50m net profit from Canntab to substantiate that $1bn valuation.

$150/month average net profit per monthly unit sale. They need $4.167m net profit per month. That's 27,777 patients per month, every month.

As of 30 September 2021, there were approximately 170,000 approved MC patients. So they require almost 1 in every 7 approved patients to utilize Canntab that were subscribers at 30/9/21. Obviously this number can grow, but consider the following:

Is this realistic, given the number of competitors in the market?

Will patients revert to this delivery method of dosages, rather than oil or flower?

Can Canntab supply that much?

Do we know enough of the agreement to confirm that Canntab would not look at rescinding the agreement & enter the market standalone if profits were this great?

CGB has Asian distribution rights, but Canntab is yet to receive patent approval in China & other Asian countries. What is the competitive environment in Asia, and who are the competitors? Are there similar patents that were lodged earlier in that jurisdiction?

There is currently no publicly listed Australian company doing these turnover numbers. Do you think that's because patients are waiting for this specific format of dosage delivery, or that they are continuing to rely on black market to a greater extent?

If you are to claw back the market share of the black market, on what basis would you approach this? I would consider bottom dollar to be the driver. How much premium do you believe a pill could truly attract? How much pricing pull does CGB have over Canntab?

If you are Canntab, and you're hearing from CGB that they need lower unit prices in order to increase volume - what do you do if you have someone else willing to pay your existing price? Who do you go with from a business perspective?

If a MC product is approved by the TGA & placed on the ARTG, the black market share may reduce due to subsidies under the PBS and pricing equilibrium becoming closer. How much do you think would need to be invested to get Canntab approved on the ARTG?

Now let's throw a spanner in the works: CGB is a 50|50 joint venture partner with Canntab in Australia & Asia. Double your numbers required to substantiate $1bn market cap. Is this now feasible too?