Topic: While SYNBIOTICs largest holding WEECO performs notably ahead of expectations and the group added two new companies to its portfolio, it also decided to terminate the ongoing integration of CannaCare Health due to delays in the process on the back of missing financial information.

WEECO Pharma exceeding expectations. Since the de-classification of medical cannabis as a narcotic drug at the beginning of April, the number of patients is seen to have doubled to some 0.5-0.6m, strongly impacting the overall demand, which in many cases outgrows supply. This is also visible in the ytd sales development of WEECO. With € 6.75m sales at the end of October, the company already surpassed its initial FY24 target of € 6m. Management now anticipates annual revenues exceeding € 8m (eNuW: € 8.2m), making WEECO the group’s largest contributor (eNuW: 54% in FY24e).

While the integrations of WEECO and greensby are well on track, SYNBIOTIC has announced that the planned contribution of CannaCare Health GmbH into the group will not proceed. The decision stems from delays in finalizing the fairness opinion and CannaCare's inability to provide up-to-date financial information. Despite this, Frank Otto, CannaCare's principal shareholder, will retain his position on SYNBIOTIC's board of directors and as key shareholder. Positively, the lost sales of some € 2m in FY24e should largely be compensated for by the strong operational development of WEECO.

New additions to the group. Through a capital increase, SYNBIOTIC now holds 15.1% of GOC NEXUS GmbH, which specializes in the decontamination of cannabis products using advanced cold plasma technology. The company is also developing international cannabis processing hubs. While this addition has no immediate (material) impact on the group’s P&L, the signed cooperation agreement ensures de-bottlenecking within the medical cannabis supply chain.

Further, SYNBIOTIC acquired 50.2% of greensby, a central platform that connects patients, pharmacies, telemedicine providers and consumers and enables the comparison of cannabis products. Following its integration into SYNBIOTIC, greensby will expand its range to include hemp products and cultivation accessories for recreational cannabis, offering up to 4,000 products. While we expect only a marginal sales contribution for now, it fits well into the group’s strategic objective to grow along the value chain.

We confirm our BUY rating with an unchanged € 12.40 PT based on DCF.