Asia Plus Securities (ASPS) expects traders to return to speculate on hemp and cannabis stocks after Public Health minister Anutin Charnvirakul signed a ministerial announcement on Tuesday officially removing cannabis and hemp from necrotic.
All parts of cannabis grown in Thailand are allowed to use, excluding cannabis extracts containing more THC than 0.2% by weight. The announcement takes effect 120 days after it is published in the Royal Gazette. Cannabis can be used as a medicine, as well as an ingredient in food, beverages, and cosmetics.
ASPS sees positive sentiment towards companies that plan to work on hemp and cannabis businesses and have sufficient capital, including upstream producers (grower) like STA (Target Price: THB33.0), intermediate producers (extraction) like RBF and DOD, and downstream producers (using hemp and cannabis in products) like food-beverage plays (CBG, OSP and SAPPE).
In addition to this, ASPS recommends BUY for SAPPE (Target Price: THB33.0) as new hemp-and cannabis-related products will boost domestic sales and share price. 1Q22-2Q22 profit is expected to shine in the high season (summer). 2022 normalized profit is estimated to grow 16% to THB504 million. It has a solid financial position with net cash of THB1.6 billion. SAPPE is expected to show inorganic growth and its average dividend yield is 4.5% p.a.
