Tekcapital PLC (LON:TEK) ) shares soared in mid-morning trading Monday after it reported a record level of net assets in its latest full-year results and eyed the cannabis sector for its next potential investment.
In the year ended 30 November 2018, the IP investment group reported net assets of US$16.1mln, up 51% on the year before, while net asset value (NAV) rose 20% to US$0.3 per share.
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The valuation of the company’s portfolio also surged by 88% to US$13.7mln.
Looking to the current fiscal year, Tekcapital’s executive chairman Clifford Gross said the company was exploring “a new potential investment in cannabidiol intellectual properties” to address current market demand, adding that “further increases in returns” from its portfolio were expected.
Cannabidiol, also known as CBD, is a medicinal compound found in the cannabis plant and can be used in the treatment of certain neurological disorders such as epilepsy.
Tekcapital’s move comes as the cannabis market continues to gain traction following its legalisation in several jurisdictions recently, most notably Canada and several US states. According to business consultancy Grand View Research, the market is predicted to be worth around US$146.4bn by 2025 with an annual growth rate of 35%.
In the rest of the results, Tekcapital’s pre-tax profits rose to US$4.55mln from US$4.15mln in the year, while total revenues dipped to US$6.83mln from US$7.26mln.
Revenues from services, however, increased 28% to US$1mln, including management fees and research & development tax refunds.
Operating expenses were also cut by 29% during the year to US$1.7mln.
In a note to clients, company broker finnCap upped their target price for the firm by 68% to 32p to reflect the increased NAV.
Shares were up 27% at 7.4p.