Planet 13 Holdings Inc. (CSE:PLTH) reported strong Q4 2018 results from the Company’s Las Vegas Superstore
SmallCapPower | May 2, 2019: Solid quarter to illustrate significant growth potential. On April 30, 2019, Planet 13 Holdings Inc. (CSE:PLTH) released Q4/18 financial results. These results were highlighted by revenue, which came in at $8.3M, a 145% increase from $3.4M quarter-over-quarter. In addition, gross profit was $4.2M, compared with $1.7M in Q3/18. We note that for the last two months of F2018, Planet 13 had an average 1,417 visitors per day and an average transaction size of ~$78.75. Recall that Planet 13’s main dispensary is located on the Las Vegas strip, minutes away from every casino and resort.
Outside of Planet 13 Las Vegas
Source: Company Reports
Additionally, Planet 13 re-released unaudited results for Q1/19 (previously announced April 3, 2019), with revenues ~$13.8M, the results show sequential growth of 66% over Q4/18. Since the Las Vegas superstore opened last November, monthly revenues have grown at a 12.8% CAGR with regards to increased customer visits per day and average spends per customer. During Q1/19, an average of 2,623 visitors came to the store per day with a visitor conversion ratio of 67.3% and average ticket size of $87.61. We strongly believe that the average visitors per day and this high transaction size are some of the strongest dispensary figures in the U.S. right now.
Inside of Planet 13 Las Vegas
Another expansion within the dispensary. On April 3, the Company announced a Phase II expansion, which includes a coffee shop, a pizzeria bistro, an event space, and a customer-facing production facility. Cannabis cultivation from the production facility is expected to be an input.
Waiting on a license for its second Nevada dispensary. Planet 13 has a location for a second Nevada dispensary approximately 6.5 km from the Las Vegas strip. On December 6, 2018, Planet 13 announced that it did not receive a license for the second location in the latest round of Nevada licensing. Planet 13 is planning on appealing the decision, citing reversed licencing decisions the state government of Nevada has repealed in the past. We highlight that this shows how difficult it is to get a retail dispensary license in Nevada. We believe there should be a premium value associated with operating dispensaries in the State.
Trades a discount compared with peers. Based on consensus estimates, Planet 13 trades at a 4.0x 2019E and 2.7x, 2019E and 2020E, EV/Revenue multiples, compared with U.S.-based peers, which trade at a consensus average of 8.0x and 4.0x multiples, respectively. Once the Company continues to report monthly or quarterly increases in revenue and store traffic, this valuation gap should close.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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