MICT Inc (NASDAQ: MICT) has been one of the top stocks on my list for the past few weeks, and I’m glad it has. The stock has climbed from around $2.10 per share to the $2.60 per share range, and if coming catalysts are any indication, more gains are on the horizon.
Here’s what’s going on:
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The Trading Platform Is Coming
MICT has two arms of business, one focused on an advanced trading platform and the other focused on the provision of insurance in a booming, emerging, Chinese market. We’ll talk about the insurance in a bit, for now, we’ll focus on the more immediate story, the trading platform.
Most recently, MICT announced that it partnered with the Shanghai Petroleum and Natural Gas Trading Center, an entity that facilitates about 20% of the oil and natural gas trades in China. Under the partnership, MICT will serve a large percentage of the Shanghai Petroleum and Natural Gas Trading Center’s customers, while providing leverage to expand possibilities for those that take part in trading oil and natural gas in China.
That side of the trading platform is already in place and will be launching very soon, likely within weeks, rather than months.
However, that’s not the big story.
The big story is the fact that MICT recently acquired a broker in Hong Kong which gives the company access to a license to be able to facilitate stock trades in the region. The finalization of this licensing could come in days.
Once this goes through, MICT will have the ability to launch a stock trading platform like Robinhood or Webull in Hong Kong and around the world. That’s a massive opportunity, especially considering that platforms like Futu Holdings Limited (NASDAQ: FUTU) and Up Fintech Holding Ltd. (NASDAQ: TIGR) are trading with market caps upwards of $25 billion and $4.5 billion, respectively.
If MICT climbed to a valuation of just 30% of that of TIGR, it would be sitting at $1.35 billion, which would mean gains in multiples for the stock, and it’s not out of the realm of possibility. Today, the stock has a market cap of around $220 million.
MICT already has a database of millions of consumers, and that database is growing. Futu has about 10.4 million people in its database, only just over 400,000 of which are paying users. Moreover, there are only a couple hundred thousand investors in the Up Fintech Holdings database, due to relatively confusing reporting, I couldn’t tell you if those are paying users or simply subscribers.
One thing I can tell you is that MICT has millions of subscribers, and with a mobile app and trading platform the likes of nothing investors in Hong Kong have seen before, tackling a large percentage of the market should be a relatively simple task.
Earnings on the Horizon
MICT is expected to release its financial results soon, and this report is slated to be the most important for the company thus far. To date, MICT is pre-revenue.
I’m expecting that will change on the release of the company’s financial results.
In the most recent quarter, the company began the sales of its insurance product. While the product sales are expected to be minimal at this stage due to the fact that there simply hasn’t been much time for the company to work, there will be something. Moreover, insurance revenues are expected to spike following the recent acquisition that will greatly enhance margins and audience. For more on that topic, read on. Nonetheless, the financial results are expected soon, and I believe the stock is going to react in a significantly positive way.
I’m also expecting that we’ll see an insurance update come down the line relatively soon. I don’t want to go too deep into the complex inner workings of the company, but MICT’s insurance subsidiary is facilitating a way for both consumers to find quality insurance and insurers to find quality customers.
However, the company was working in select demographics in China, and making relatively small margins in the process. That’s all going to change.
MICT recently acquired Beijing Fucheng Insurance Brokerage Co., Ltd., a well established insurance company in China. Moreover, through the acquisition, the company gained a nationwide license to provide insurance products to Chinese consumers.
So, not only will the acquisition lead to a significant ramp up in revenue, it opens the door to opportunities across greater China, rather than in select regions of the country.
Sellers Have Sold
One of the most exciting factors in all of this happened yesterday, February 16th. Volume went crazy, MICT added thousands of followers to its StockTwits ticker page, and retail investors jumped in head first.
At the same time, anyone who considered selling the stock and was looking for the right opportunity to do so, did.
So, what we have now is a company that I’m expecting to quickly take a leadership position in two massive Chinese markets. One that retail investors are getting behind, and one that those who thought of selling in the past have already sold out of.
As a result, the sky’s the limit.
All in all, there’s a lot to look forward to with MICT. From a trading perspective, with all sellers out and several catalysts on the horizon, there’s very little by way of short term resistance and plenty of retail demand.
From an investing perspective, the long term potential of an investment in MICT is hard to ignore. We’ve watched as emerging companies in China with little more than a pot to piss in have made millionaires. MICT is far from a comparison to those companies.
The company has entered into a massive partnership that will immediately make it a major player in the commodities trading industry in China. Not to mention, with licensing coming down the line, MICT has the potential to become the premier stock trading platform in Hong Kong, and around the world. Moreover, with a recent acquisition in the insurance space, the company’s insurance product margins are going to fly, along with sales as it takes a regional company and makes it national.
No matter how you look at it, MICT is a stock that’s hard to ignore.
Disclosure. CNA Finance is not a financial advisor or broker dealer. This article does not constitute a solicitation to buy any stock mentioned. The article represents the honest opinions of the author, but not necessarilly the outlet it was published on. CNA Finance has a monetary relationship with MICT. Trading in penny stocks can result in the loss of capital.