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Broker Date Rating Target (C$) Commentary "Within the cannabis sector and amongst all companies we have seen, we forecast that Valens will generate one of the most attractive EBITDA margin profiles. Based on our forecasted financial AltaCorp Capital Inc. June 11, 2019 Outperform $8.00 performance, Valens offers a very attractive opportunity to invest in what we believe is an undervalued and uniquely positioned business." "The company has executed a number of processing and product development agreements with some Haywood Securities Inc. June 11, 2019 Buy $7.00 of the larger LPs in the Canadian landscape that we believe will drive meaningful revenue and EBITDA growth over the course of 2019 and into 2020." "[Valens'] strong cash position will allow the company to increase extraction capacity at its Kelowna Mackie Research Capital Corp. Apr 25, 2019 Buy $6.75 facility, strategically increase its domestic geographic presence and address potential working capital requirements." "Valens presents investors with an opportunity to gain exposure to a rapidly growing industry very GMP Securities July 26, 2019 Buy $10.00 early in its development cycle [with] strong growth expected, attractive valuation, and readiness for edibles market." “Valens is trading at a steep discount to Canadian LPs; valuation gap should narrow as company Eight Capital July 25, 2019 Buy $8.25 continues to deliver on its extraction agreements. Extraction will be in high demand as additional cultivation comes online, with Valens poised to be a leading player.” (In CAD$MM, unless otherwise noted) Share Price: As of 30 th of June 2019 $3.68 Basic Shares O/S 122.6 Fully Diluted Shares O/S 140.1 Equity Value $515.6 Cash and Cash Equivalents $70.2 ITM Securities $6.1 Debt $0.0 Enterprise Value $439.3 Financials (Based on Analyst Estimates) CY2019 CY2020 CY2021 Revenue $50.2 $162.1 $218.1 Adjusted EBITDA $16.7 $74.1 $103.2 Trading Multiples CY2019 CY2020 CY2021 EV/Revenue 8.7x 2.7x 2.0x EV/ Adjusted EBITDA 26.3x 5.9x 4.3x 18
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Share Equity Total Enterprise Revenue(1) EBITDA(1) EV/Revenue EV/EBITDA Price Value Debt Value CY2019E CY2020E CY2021E CY2019E CY2020E CY2021E CY2019E CY2020E CY2021E CY2019E CY2020E CY2021E Canadian Large Cap Companies (C$) (C$MM) (C$MM) (C$MM) (C$MM) (C$MM) (C$MM) (C$MM) (C$MM) (C$MM) (x) (x) (x) (x) (x) (x) Canopy Growth Corporation $43.27 $16,300 $615 $12,856 603.7 1,171.3 1,929.6 (307.1) (55.9) 307.8 21.3 11.0 6.7 NMF NMF 41.8 Aurora Cannabis Inc. $8.24 $8,843 $834 $8,914 494.2 994.7 1,866.1 (22.8) 227.7 571.4 18.0 9.0 4.8 NMF 39.2 15.6 Tilray, Inc. $53.65 $5,637 $624 $5,718 178.0 363.7 547.3 (46.6) 20.2 127.6 32.1 15.7 10.4 NMF >100.0x 44.8 Aphria Inc. $7.16 $1,826 $537 $1,621 463.2 786.8 N/A 16.4 138.9 169.2 3.5 2.1 N/A 98.6 11.7 9.6 HEXO Corp. $5.58 $1,714 $34 $1,413 178.3 424.1 615.2 4.3 95.3 171.8 7.9 3.3 2.3 >100.0x 14.8 8.2 OrganiGram Holdings Inc. $7.85 $1,295 $49 $1,226 134.6 236.1 329.0 51.6 92.7 130.9 9.1 5.2 3.7 23.8 13.2 9.4 Cronos Group Inc. $18.17 $3,552 $0 $1,093 50.2 177.2 332.8 (34.4) 52.8 98.4 21.8 6.2 3.3 NMF 20.7 11.1 Mean 16.3 7.5 5.2 61.2 19.9 20.1 Canadian Mid Cap Companies The Green Organic Dutchman Holdings Ltd. $3.02 $956 $1 $618 43.6 272.6 517.2 (33.8) 84.4 151.1 14.2 2.3 1.2 NMF 7.3 4.1 The Flowr Corporation $4.91 $571 $13 $521 28.1 49.2 146.9 2.0 11.9 54.7 18.5 10.6 3.5 >100.0x 43.7 9.5 The Supreme Cannabis Company, Inc. $1.36 $501 $100 $508 83.0 157.0 N/A 12.7 40.9 N/A 6.1 3.2 N/A 40.1 12.4 N/A Emerald Health Therapeutics, Inc. $2.06 $299 $0 $274 25.8 42.4 85.9 (28.2) (13.6) 9.0 10.6 6.5 3.2 NMF NMF 30.5 Mean 12.4 5.6 2.6 40.1 21.2 14.7 Canadian Small Cap Companies WeedMD Inc. $1.56 $185 $35 $196 41.6 132.6 161.7 (3.5) 46.6 37.0 4.7 1.5 1.2 NMF 4.2 5.3 VIVO Cannabis Inc. $0.48 $143 $38 $107 33.6 88.6 230.7 (14.1) (1.7) 18.5 3.2 1.2 0.5 NMF NMF 5.8 Delta 9 Cannabis Inc. $0.97 $87 $27 $102 41.9 91.2 140.9 (0.8) 20.7 37.1 2.4 1.1 0.7 NMF 4.9 2.7 Harvest One Cannabis Inc. $0.53 $114 $2 $90 36.9 101.2 N/A 2.0 25.9 N/A 2.4 0.9 N/A 46.1 3.5 N/A 48North Cannabis Corp. $0.82 $151 $0 $80 47.3 106.1 125.8 (1.5) 9.9 19.8 1.7 0.8 0.6 NMF 8.1 4.0 James E. Wagner Cultivation Corporation $0.57 $57 $8 $54 25.1 N/A N/A (1.9) N/A N/A 2.1 N/A N/A NMF N/A N/A Westleaf Inc. $0.44 $66 $5 $52 8.0 115.9 199.5 (9.6) 17.6 47.3 6.5 0.5 0.3 NMF 3.0 1.1 Mean 3.3 1.0 0.7 46.1 4.7 3.8 Canadian Extraction Companies MediPharm Labs Corp. $5.49 $797 $26 $687 110.7 198.6 295.2 26.2 64.4 90.9 6.2 3.5 2.3 26.2 10.7 7.6 Neptune Wellness Solutions Inc. $7.55 $769 $4 $702 57.7 155.0 229.9 15.1 54.5 93.0 12.2 4.5 3.1 46.5 12.9 7.6 Valens Groworks Corp. (2) $3.68 $516 $0 $439 50.2 162.1 218.1 16.7 74.1 103.2 8.7 2.7 2.0 26.3 5.9 4.3 Radient Technologies Inc. $0.76 $223 $7 $208 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Mean 9.0 3.6 2.5 33.0 9.8 6.5 Mean - All 10.2 4.6 2.9 43.9 13.5 12.4 Source: Company Filings, S&P Capital IQ, AltaCorp Capital As of July 31 st , 2019; shares outstanding based on most recent quarterly financials and adjusted for share issuance transactions and other significant publicly disclosed transactions; presented as fully diluted with all in-the- money securities added to the equity value and cash proceeds added to diluted cash balance; N/D = Not Disclosed (1) Based on Analyst consensus estimates; (2) Valen's financial estimates are based on November 30 th fiscal year-ends rather than calendar year-ends 22
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