Initiating Coverage. We are initiating research coverage on GABY Inc. with an Outperform rating and a $0.05 12-month price target. GABY Inc. is a California-focused cannabis retail consolidator and the owner of San Diego-based Mankind Dispensary, one of the oldest and largest licensed dispensaries in the state. With significant organic and inorganic growth opportunities, we believe GABLF shares present an attractive risk/reward situation. Focus on California Consolidation. GABY’s overarching strategy is to consolidate dispensaries in California. The Company's first step was the April 2021 acquisition of Mankind Dispensary. The California market remains highly fragmented. No brand owns more than 2.5% of the retail dispensary locations and 4% of overall market share. Ripe for consolidation, in our view.California Market. California is the largest cannabis market in the U.S. Its approximately $5 billion of retail sales is more than double the next largest state. Add in $8 billion of estimated illicit sales and the TAM is over $13 billion. While only 20% of California municipalities currently allow retail dispensaries, that is changing, which should drive more of the illicit market to the legal market.Management. GABY has built an experienced management team, with experience in retail, consolidation, and cannabis. And one that is invested in the success of the Company. CEO Ms. Micallef has an enviable business track record and was part of over $15 billion worth of M&A transactions in a previous life. Ms. Micallef's merchant banking firm has invested in a diverse group of businesses to include broadcasting, publishing, food service, and food manufacturing. Ms. Micallef has invested over $8 million personally into GABY.Projections. For the fourth quarter of 2021 we are projecting revenue of CAD$8.0 million and a net loss of $1.7 million, or breakeven EPS. For 2022, we estimate revenue to rise to CAD$41 million and a net loss of $430,000 or breakeven per share. Read More >>