Topic: Cantourage released preliminary Q3 figures, which were marked by >100% yoy sales growth and further sequential improvements thanks to the partial legalization that took place in April. With this, the company is well on track to reach EBITDA profitability this year. In detail:

Q3 sales jumped by 124% yoy to € 13.2m (9M sales +75% yoy to € 30.1m). The significant growth was primarily fuelled by the partial legalization of medical cannabis in Germany, which took effect at the end of April. This change has made obtaining a prescription for medical cannabis as straightforward as getting one for ibuprofen 600. On top, Cantourage is also experiencing a sharp increase in demand at its treatment facility in UK.

Further, Cantourage is well on track to turn profitable despite significant growth investments. In Q3, EBITDA is seen to come in at around € 1m (mid-point of guidance). For the FY, management expects to reach EBITDA break-even (eNuW: € 1.8m).

FY24 guidance specified towards the upper end. The company’s initial FY24 sales guidance stood at € 37-43m (eNuW: € 43m). With € 30m sales after the first nine months and the past two months alone having contributed some € 10m, management specified the guidance towards the upper end, now targeting at least € 40m sales. Taking into account sequentially increasing sales volumes and the strong operational performance during recent months, we regard our estimate as well in reach. With the current run-rate, our sales estimate of € 54m for FY25e (26% yoy growth) already look achievable  

Mid-term to be marked by further strong growth. Assuming a somewhat similar development of the German medical cannabis market as in US states, the market offers a € 1.2-1.4bn opportunity. Over the past two years, Cantourage has laid the foundation to achieve €100 million in sales. With a global network of over 60 growers, Cantourage offers a diverse range of cannabis flowers, minimizing cluster risks. Through its recent partnership with Portocanna, the company can now process approximately 14 tons of flowers annually. Additionally, Cantourage's own telemedicine platform, telecan°, connects the company directly with patients, offering easy access to cannabis therapy consultations and prescriptions.

We confirm our BUY rating with an unchanged € 10 PT based on DCF.