Group 3 Nova Cannabis

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University Canada West *

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625

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Finance

Date

Jun 2, 2024

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pptx

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17

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Prof. Warren Goldblum Group 3 Investment Analysis and Management Nova Cannabis Inc.
Company Assessment based on its Revenue Model and Value Buds Strategies implication Industry analysis based on provincial consumption and Market analysis of the Company Ratio Analysis - P/E, P/B, P/S, EPS Company Valuation based on DFC Model WACC (Weighted Average Cost of Capital) Risk assessment Key Considerations Recommendation Executive Summary
Firm Assessment Business model of Nova Cannabis Inc. Nova Cannabis Inc. is operating business as a national retailer of cannabis and the majorly via its Value Buds Banner. Mission: Deliver compelling value to its customers. Objective: Grow, attract, and retain loyal customers by offering quality cannabis products at lower rates. Revenue Model: Nova generates revenue from the sale of cannabis products in the 92 retail store locations in Saskatchewan, Ontario, and Alberta. They generate 70% of its revenue from the “ Value Buds ” banner. They also have $5544 revenue from proprietary licensing in 2022 and a major $220876 from retail sales. Strategy: They follow the low-cost strategy model to maintain their profitability with growth.
Revenue and Profit of Nova Cannabis during 2022 & 2021 Quarterly Revenue and Gross Margin growth of Nova Cannabis
Strong Execution and growth record from October 2018 to May 2023 Trey Research
Cannabis retail industry analysis The Canadian cannabis market has witnessed a growth trend in double digits since legalization. Industry facts and figures In 2022, the annual sales of cannabis for non-medical purposes by provincial cannabis authorities and other retail outlets were $4.5 billion. An estimated 68% of cannabis users reported obtaining at least some of the cannabis they consumed from a legal source in 2020, higher than before legalization in 2018 (23%) and just after legalization in 2019 (47%). Growing cannabis, either themselves or by someone else, was a supply source for 14% of consumers in 2020, higher than in 2018 (8%) or 2019 (9%). Overall Market Share as per Q4 2023 is 33.4%
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