Ann: Mernova reaches significant market share milestone, page-2

Ah, yes, it's now almost a routine for CPH to have their nothingburger hype to start the week...

What the heck, let's take a quick look...

ABN: 89 609 406 911
Suite 5 CPC, 145 Stirling Highway, | Nedlands, WA, 6009 | Australia
Allmendstrasse 11 | 6310 Steinhausen | Schweiz
CresoPharma.com
(ASX: CPH)
21 March 2022
Creso Pharma’s wholly-owned Canadian subsidiary, Mernova
Medicinal Inc. reaches significant market share milestone and
materially improves plant yields
Highlights:
 Strong sales growth continues in Nova Scotia – 5% market share achieved in the province
across all product formats, market share as high as ~15% in some categories

This is probably the best thing in the announcement, but there is actually no tangible information given (as is par for the CPH course). They've gone from a small and unspecified amount to a small amount. They try to type the figures and misrepresent them as usual. Note that they don't give the previous figure, and they are using contextless cherry picking; 'up to approximately 15% in some categories'. The use of these two figures 5% and 15% gives the illusion of 3x growth, but in reality there is absolutely no scale of growth shown at all, and 5% means you still have 95% of the market being dominated by your competitors which means you're not in a good position.

 New FLUENCE SPYDR lighting installed in two of ten grow rooms at Mernova’s grow facility
alongside improved nutrition products in all rooms; first room harvested with both new
lights and nutrition products indicates an increase in plant yield of approximately 56%

This is pretty comical! 'Hooray, we changed the lights in two of our rooms!' haha!

Now, won't claim to be a high level botanist, but I did study a little botany in first and second year university and have some familiarity with agriculture, and to claim a full 56% increase in plant yield rings alarm bells warning of BS, and when such a red flag is waving over CPH, I know what I'm leaning towards. In agriculture, huge efforts are made to create even 1-2% increases in yield. If you were experimenting with a brand new thing in a brand new climate or soil or something and things were going poorly and you then fixed the problem, sure, you might get a massive increase like 56%, but only after fixing drastic problems. If you have been claiming for years to have things well-optimised and you're doing something which has been done across the globe by countless entities for decades/centuries and then suddenly tweak something to get a 56% increase... well, cool story, bro, but it needs more dragons.

 Remaining grow rooms to be retrofitted with FLUENCE SPYDR lights over course of FY22

Hehe, yes, and the CEO will change from black socks to charcoal socks, and the CFO will go from back trousers to navy. Enjoy your nothingburgers, shareholders!

 Improvements will allow Mernova to increase volumes and decrease cost per gram,
benefiting from operating leverage

Vague statement thrown in as announcement padding.

 Management team strengthened with the appointment of Mrs Micheline MacKay as
Mernova’s managing director

Okay, here we get to the real alarm bells. Most of CPH's money (literally!!!) goes to those on the payroll. This is the real business - raising capital, which is where almost all of the company's money comes from (no, not business operations, but rattling the tin for investors to donate money) and giving it to the people on the payroll. Adding another manager to give more CPH money to is not 'strengthening the team' it is adding another cut to bleed CPH's money (literally the money owned by shareholders to go into the personal ownership of another manager who can then spend it in beer, cars, a new couch or aeroplane while shareholders continue to suffer).

 As a Creso Pharma Executive Director, the appointment of Mrs MacKay will further
consolidate the Creso Pharma board and Mernova senior management team link

Just in case you missed it, they've reiterated the same point again, trying to make a terrible thing for shareholders look like a positive, which in most cases will no doubt be successful.

As always, the announcement is designed into fooling people who aren't going to look too closely into thinking it's all positive and wonderful, but with a small amount of thinking you can see it is something you don't want to be touching.

DYOR, GLTA