Beacon Securities analyst Doug Cooper nearly doubled his share target for Village Farms International To $60.00

Globe says Village Farms International kept at "buy"

2019-04-03 08:16 ET - In the News

The Globe and Mail reports in its Wednesday edition that Beacon Securities analyst Doug Cooper nearly doubled his share target for Village Farms International ($20.04) in the wake of Monday's announcement that its 50-per-cent-owned joint venture, Pure Sun Farms, has exercised its option on the existing 1.1-million-square-foot Delta 2 greenhouse facility in Delta, B.C. The Globe's David Leeder writes in the Eye On Equities column that Mr. Cooper says in a note: "This will double the size of PSF's footprint ... to 2.2 million square feet. We believe this catapults PSF to top-3 status in terms of scale of all of the Canadian LP's in terms of domestic capacity. As a reminder, PSF also has an option on D1 (2.4 million SF), which is available until Sept. 28, 2021. If that is optioned, we believe PSF will be the largest Canadian LP and could ultimately have 30-40-per-cent market share in Canada." With an unchanged "buy" rating, Mr. Cooper hiked his share target to $60 from $32. Analysts on average target the shares at $41.25. Mr. Cooper adds, "In terms of total production, our recent site visit confirmed that PSF is currently on a 50-55,000 kilogram run-rate (making it one of, if not the largest Canadian producer."

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VFF Ready To Run Up Again

Emerald Health exercises an option to almost double production

Last week, British Columbia-based Emerald Health Therapeutics (NASDAQOTH:EMHTF)announced that it would be exercising one of its lease options regarding its Pure Sunfarms joint venture with Village Farms International (NASDAQ:VFF). In doing so, it nearly doubled its peak production potential.

Back in 2017, Emerald Health and Village Farms created the 50-50 Pure Sunfarms joint venture with the idea of retrofitting Village Farms' existing vegetable-growing greenhouses to cannabis production. The initial outlay involved 1.1 million square feet of vegetable-growing space that, when complete, would house 1.03 million square feet of cultivation area and yield at least 75,000 kilos per year. Thus far, approximately 825,000 square feet of cultivation space has been licensed by Health Canada at the Delta 3 facility, with the remainder expected to be licensed very soon.

However, the joint venture featured an option for Emerald Health to acquire up to 3.7 million square feet of additional growing space from Village Farms to be used for cannabis production. On Monday, April 1, Emerald Health exercised its option for a second 1.1-million-square-foot facility (to be known as Delta 2), and announced its intent to purchase 25% of the aggregate production from Delta 2 and Delta 3 in 2020, 2021, and 2022. Emerald Health is expected to commit roughly 25 million Canadian dollars to help construct Delta 2, with positive operating cash flow from the joint venture funding the remaining CA$35 million (the Delta 3 facility cost CA$60 million).

It's worth noting that the Delta 3 greenhouse was built with an automated nursery -- and since it's adjacent to the Delta 2 facility, this nursery will allow the Delta 2 facility to utilize more space for cultivation than Delta 3.

More importantly, it doubles the peak annual output of Pure Sunfarms to at least 150,000 kilos. Inclusive of the company's Verdelite facility in Quebec, this move nearly doubles Emerald Health's capacity from 47,000 kilos to 84,500 kilos. Of course, with the company's Metro Vancouver space and the potential for acquiring up to 2.6 million square feet in additional grow space from Village Farms, peak yearly output should exceed 100,000 kilos.

https://www.fool.com/investing/2019/04/08/this-marijuana-stock-nearly-doubled-its-peak-produ.aspx