London, UK, 30 July 2021

SynBiotic (SBX): Initiation - Working together

Management plans to utilise its experience in scaling profitable companies to accelerate SynBiotic's strategy and become a leading platform company in the cannabinoids industry. It acquired SolidMind in June 20, followed by subsequent smaller deals, and we expect further deals as the platform grows. Increasing consumer acceptance of cannabinoids across a range of applications (from healthcare to wellbeing) ensures a huge target market. New product sources (both cannabinoids and plants) may enhance efficacy and lawful commercialisation. SynBiotic raised €6.3m of equity in December. Notwithstanding evident execution/ regulatory risk, SynBiotic seems cautiously rated at c 4x management's projected FY21 revenue.

Due to the scale and nature of SynBiotic's continuing evolution with reliance on early-stage unlisted investments, financial forecasts cannot be made with any certainty. This is compounded by strict and volatile regulatory risk (substantial 'grey areas'). However, the market opportunity for SynBiotic appears clear. The shares are trading on c 4x management's estimated FY21 sales of €15m, which gives the company little benefit of doubt, even ignoring more established CBD peers rated at over 20x revenue.

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