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PlantX Life (VEGA.CN) might look, with a first glance, a disappointing stock as the company was IPOd last year on August, 10th 2020 with an introduction price of CAD$1.40. Now, the stock is traded around CAD$0.40, or a 70% loss. After its massive correction and being on an uptrend again, PlantX Life could be an interesting stock for you to consinder.
An Evolving Market
The food industry, the energy industry, is looking for greener and sustainable ways to produce, manufacture and innovate as customers are concerned about our planet’s future. The Global Plant-Based Food Market currently represents USD$40.34B and will reach USD$111.96 by 2030 with a compound annual growth rate of 12.1%.
The E-commerce buoyed by retailers also helps to boost the growth of the general market. In 2015, the Sales Value represented USD$1.5B and saw a massive growth in five years, USD$4.9B ! The market has been multiplied by 3.2 in only 5 years. Indeed retailers take conscience of these products through Social Media, a rise in food safety concerns is observed AND Covid-19 pandemic changed conventional Brick & Mortar shopping.
Thanks to all of this, VEGA which currently has a USD$4.77M forecast in 2021 plans to follow the trend and to reach $USD13.64M in 2030. Not bad for a company which was triggered by an idea in 2019 !
X declined in 3 ways
PlantX life has 3 different platforms to satisfy consumers, Xshop, Xplants and Xfood:
- Xshop: Groceries, household items, beauty products, pet food and more;
- Xplants: Canadian Warehouse, US Distribution Partner;
- Xfood: Meal delivery accross USA & Canada with the celebrity chef Matthew Kenney (culinary officer).
And their platforms are working ! Their web traffic increased by a +51% growth through Q2 2021, 2,650 transactions happened through Q2 which means a +135% growth, and have 40.7K followers on social media for a +264% growth.
They have great partnerships such as Walmart, wellandgood, TheBay and have great influencers with Venus Williams.
They also launched Xmarket, which consists in creating attractive brick and mortar locations in high traffic epicenters. They have 2 locations based in Los Angeles and Squamish, and plan to open 2 new stores in San Diego and Tel Aviv.
A Smart Growth Strategy
PlantX has already acquired great companies ( Bloombox Club, Little West, Locavore Bar & Grill, New Deli ) for their goal to become number 1 in the online marketplace in the plant-based industry.
- Bloombox Club: acquisition through £560,000 in cash and 10,782,559 in Common Shares;
- Locavore: acquisition through CAD 327,435 in cash and 1,897,152 in Common Shares.
- Little West: acquisition through US$385,000 in cash plus 7,305,674 in Common Shares;
- New Deli: acquisition through US$471,000 in cash and 2,515,983 Common Shares.
With their initial products and the new ones thanks to their acquisitions, PlantX offers a great diversity. They are also well located and are now planing to expand worldwide, to Australia, Latin America, Europe, UK, and Asia.
VEGA is still a junior company compared to its other competitors. Indeed their Market cap is still pretty low (CAD$45M)compared to other big companies. VERY has a market cap of CAD$372M and the mammoth Beyond Meat has a market cap of US$9.92B
As we said earlier, VEGA currently has a Market Cap of CAD$45M for a Price/Sales ratio of 4.29. In comparison with VERY’s P/S ratio (36), it is more than 8 times smaller. Beyond Meat’s P/S ratio is at 16. It show that VEGA’s stock price could be traded upper without a consequence of being considered as overvalued.
Talking about total shares outstanding, they represent 113.14M for a float of 100.63M, 14.15% Held by insiders. There is a possibility of a “small dilution” because there are 41 M Warrants outstanding and 12 M stock options outstanding.
According to their last earnings:
- The Company generated gross revenue of $4,089,705 for the three month period ended June 30, 2021, an increase of $3,956,815 from the gross revenue generated in Q1 2021;
- The Company achieved a gross margin of 28% for the three months ended June 30, 2021, compared to 23% in Q4 2021;
- As of June 30, 2021, the Company had working capital of $14,905,700, inclusive of cash of $13,573,427.
The company can generate cash which gives them leverage and then a lower possibility to see dilutions in the future.
What to conclude then ?
After a long and slow downtrend, PlantX stock finally moved back up. The great acquisitions, the healthy market plus their vision should driive the stock price up. They have also great financials and a good advisory team who will bring PlantX on the right path. This why you should at least consider to add VEGA to your watchlist.
