Following a new financing, GMP Securities analyst Martin Landry is maintaining his bullish stance on Village Farms International (Village Farms International Stock Quote, Chart TSX:VFF).

Last Thursday, VFF announced it had completed a $20-million bought deal. The company says it intends to use the proceeds for working capital and for its hemp business in the United States.

Landry says he expects the company’s execution mode will continue and explained two reasons why he has a positive stance on the stock. First, he says the company has demonstrated expertise in growing at scale.

“For nearly 30 years, VFF has been supplying major retailers needing strict quality standards for perishable produce,” he says. “This reassures us that it will successfully scale-up its cannabis operations. VFF’s experienced workforce and high-tech infrastructure should translate into production costs under $1/g, ranking amongst the industry’s top quartile.”

Next, the analyst says VFF has sizable near-term production to exploit the supply shortage.

“We expect a supply and demand imbalance for recreational cannabis in the next year given the significant rise in demand and delays in getting large cultivation projects licensed by Health Canada,” Landry adds. “This imbalance favours producers with existing licensed facilities and should result in elevated prices in the coming year. With 50 tonnes of production in 2019, VFF should be amongst the 10 largest cannabis producers in Canada, well positioned to exploit the shortage.”

In a research update to clients today, Landry maintained his “”Buy” rating and one-year price target of $22.50 on Village Farms, implying a return of 45.4 per cent at the time of publication.

Landry thinks VFF will Adjusted EBITDA (excluding stock-based compensation) of $25.03-million on revenue of $147.5-million in fiscal 2019.