Topic: Following a good start into the year (Q1 sales +95% yoy), Cantourage continues its growth path with 86% yoy growth in Q2. The issued FY23 guidance points towards further sequential growth during the coming quarters. The planed abolishment of the narcotic drug status of medical cannabis is seen to strongly drive the growth of patient numbers going forward.

Growth trajectory intact. Preliminary H1 sales grew 90% yoy to € 11.1m with Q2 sales up 86% yoy and 31% qoq as its “Fast Track Access” platform is quickly gaining traction thanks to a gradually increasing number of fully onboarded cultivators i.e. having a product deployed at pharmacies. YTD., Cantourage introduced eight new cultivators to the German medical cannabis market, four in June alone. Importantly, this was not attained at the expense of profitability, a milestone reached for the first time with Q1.

FY guidance pointing towards further sequential growth. For the first time ever, management issued a FY guidance, expecting to grow FY23 sales at a high double-digit percentage while reaching EBITDA break-even. Whilst this is somewhat below our estimates (sales: +119% yoy, EBITDA: € 0.6m), we continue to regard them as reachable due to the aforementioned ramp up of the platform.

Legislative tailwinds forming. Last week, the Federal Ministry of Health presented a draft bill on the new "Cannabis Act". If approved, medical cannabis would no longer be classified as a narcotic drug (BtM). In our view, this could notably impact the narrative. Access to medical cannabis, while considered a narcotic, is difficult. If this barrier falls, access should become as easy as getting a prescription for ibuprofen 600, which would strongly impact the development of patient numbers going forward.

What's more, besides new cultivators joining its platform on a regular basis, Cantourage started a cooperation with a leading pharmaceutical wholesaler in Austria, Jacoby-GM Pharma,  to supply the market with its dronabinol solutions. This cooperation allows for nationwide distribution to pharmacies and pharmaceutical wholesalers in Austria, the third market next to Germany and Croatia.

In light of potentially changing market dynamics and in order to be able to quickly adapt and utilize those, the company is currently evaluating several financing options including tapping the capital markets.

We reiterate BUY with an unchanged € 12 PT based on DCF.