SP Discussion, page-19

Cracking close for EXL today on very healthy volume..

This is why the stock is going a lot higher from here..

- US Farm Bill gets debated tonight, if the Bill gets passed it would effectively legalise hemp in the US

- Charlotte’s Web (CWEB), close peer of EXL jumps 70% post IPO to $1.1bn marketcap

- EXL’s US listing up 14% to AUD $1.70 equivalent


The long awaited first meeting of the US Senate/House Committee on the 2018 US Farm Bill will take place tomorrow. This is possibly the most important catalyst for EXL, as if this Bill passes it would permanently establish hemp as an agricultural commodity and remove it from the purview of the Controlled Substances Act – prohibition would effectively be over – and most importantly it would enable Elixinol and all other Hemp producers to advertise, market and promote Hemp and Hemp-based products. EXL and others are already seeing +100% revenue growth in the US, this would supercharge that growth.

So think Facebook advertising, Google Adwords, TV, radio, newspapers etc etc you see my point going from zero to substantial basically overnight.

Also, Charlotte’s Web (CWEB.CN), which is a very close peer of EXL based on revenue, products, but lower margin – which IPO’d at $7 just 5 days ago, now trading at $11.95, up 70%. Marketcap $1.1bn. Revenue of $72.5m in FY18 puts them on 14x EV/Revenue. EXL is on 5x EV/Revenue, putting them on the CWEB.CN multiple gets you to $4.52.

people are obviously taking the view the market is just opening up and this is early days in a new industry and the early adopters/players will end up dominating.

As an aside, Elixinol (US listing, ELLXF US) was up 14% last night on the OTC on 176k shares traded. Closing at approx AUD$1.70.

Importantly revenue growth in the US is substantial at +120% to $12.5m, group revenue rose +110% to $14.9m, analysts expects this to hit $31.5m for all of FY18 (CY end), in my view this could be light on given the growth coming through, tripling of production facilities, legislation changes in their favour in the US and the growth the entire hemp/cannabis space is seeing.