High Tide Inc.

High Tide Inc. (TSXV: HITI) is an Alberta-based, downstream cannabis company, which is engaged on the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products.

Key Highlights:

• In Q3FY21, the company posted a significantly higher topline revenue of CAD 48.069 million, as compared to CAD 24.103 million in pcp. The growth was supported by the acquisition of META Growth Corp, Smoke Cartel, Inc. Fab Nutrition, LLC. and DHC Supply LLC.
• However, the company failed to retain the momentum and registered a net loss of CAD 1.75 million, as compared to a net profit of CAD 3.826 million in pcp. The above was primarily due to increase in the total expense (CAD 23.946 million versus CAD 7.915 million in pcp), due higher Salaries, wages and benefits costs and a surge in General & administration expense.
• The company has a strong presence within the bricks and mortar cannabis market with 93 locations across Canada, as reported at the end of Q3FY21 and is expected to grow to 110 stores in Q4FY21.
• During the third quarter of FY21, the company also launched a new retail value concept, “Cannabis Chop Club”, which will offer exclusive deals and wholesale prices to specifically address value sensitive markets.

Conclusion:

In Q3FY21, HITI reported a negative operating margin of 15.2%, as compared to the industry median of 14.5%. Additionally, the HITI stock corrected ~21% and ~49% in the last three months and nine months, respectively, and currently closed below its 50-days and 100-days, respectively, indicating a weak technical pattern. Hence, considering the aforesaid facts, we give a ‘Watch’ stance on the stock of HITI at the last traded price of CAD 5.54 on January 05, 2022.

One-Year Technical Price Chart (as on January 05, 2022). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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