Why this ASX cannabis share raced 4% higher on Friday

The THC Global Group Ltd (ASX:THC) share price was on a high on Friday. Here's why the cannabis company's shares raced higher…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The THC Global Group Ltd (ASX: THC) share price has just finished the week on a high.

On Friday the medicinal cannabis company's shares climbed as much as 4% higher before ending the day with a gain of 1.5% to 38 cents.

Why did the THC Global share price push higher?

Investors were buying THC Global's shares after the release of its fourth quarter update on Friday.

That update revealed that cash receipts in the fourth quarter came to $1.87 million. This represents a 30% quarter on quarter increase and a 189% increase on the prior corresponding period.

This led to THC Global's FY 2019 unaudited revenue coming to $4.79 million, up 81% on FY 2018's revenue.

The company's hydroponics equipment business, Crystal Mountain, was the main driver of revenue growth in FY 2019. Management advised that this was thanks partly to the broadening of the Crystal Mountain product offering over the last few months.

It was also boosted by the introduction of new value-add service offerings to cannabis cultivator clients and its expansion across Canada from its current west coast base in Vancouver.

Management appears confident the Crystal Mountain business will continue its positive form in FY 2020. It revealed that it expects its revenue to exceed $7 million on a conservative basis next year.

Medicinal cannabis sales.

Management also appears optimistic that its medicinal cannabis sales could grow in FY 2020.

At present THC Global is an exclusive distributor of Endoca cannabidiol (CBD) based medicines to patients in Australia and New Zealand. Sales of the Endoca medicines have been strong, particularly in New Zealand which has a less restrictive medicinal cannabis access scheme.

But from late in the first quarter of FY 2020, the company will be supplying a full range of Canndeo branded medicines in Australia and New Zealand. This product is being sourced from its own production facility as it scales up and initially supplemented by imported European product through a white labelling agreement with MGC Pharmaceuticals (ASX: MXC).

Furthermore, as production of medicinal cannabis from the company's Southport Facility scales up, the company will be able to offer price competitive pharmaceutical GMP medicines to Australian patients and the global export market.

At the end of the period the company had cash in the bank of $3.55 million and no debt.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

a young woman looks happily at her phone in one hand with a selection of shopping bags in her other hand.
BNPL shares

Up 87% since April, why the Zip share price can keep flying higher into 2026

A leading fund manager expects more outsized gains from Zip shares ahead.

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a miserly session for investors today.

Read more »

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A young woman smiles as she rides a zip line high above the trees.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a bountiful session for investors this hump day.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Share Gainers

Why Coronado, DroneShield, Lovisa, and Mayne Pharma shares are racing higher today

These shares are having a good time on hump day. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »