MICT Stock Gains As Results Show Execution

MICT, Inc. (NASDAQ: MICT) is having a great start to the trading session in the premarket hours after announcing its quarterly results. The results show the company is firing on all cylinders and executing on its promises. Here’s what’s happening:

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MICT Announces Quarterly Results

In the release, MICT made it clear that they are following their plan to the T. Recently, we’ve talked quite a bit about three key factors:

  • Insurance. On the insurance side of the coin, the company reminded investors that it received a nationwide license in China, giving it the ability to offer a broad range of insurance brokerage products and services through its acquisition of Beijing Fucheng. This has clearly paid off, with the insurance arm of the company generating $8.2 million in revenue in the first three months of operation, generating $1.9 million in gross profit, and representing the lion’s share of the nearly $9 million in revenue generated in the quarter. Keep in mind, this is very early in the game. So, while revenue is impressive, it’s truly the tip of the iceberg. 
  • Trading Platform. MICT recently achieved regulatory approval from the Hong Kong SFC to enable the acquisition of Huapei Global Securities. This also makes it possible to launch the stock trading platform that investors have been waiting on. Importantly, Darren Mercer, CEO of the company, said the platform is in the late stages of testing and is expected to launch in late June or early July. 
  • Commodities Trading. Finally, MICT said that it has commenced the development of its commodity and futures trading platform following the new partnership with Shanghai Petroleum and Natural Gas Trading Center. This sets the stage for tremendous revenue growth ahead as the company will be handling about 20% of the trades through this Center. 

Of course, the company is also sitting on a strong financial foundation. In fact, it currently has about $123 million of cash in the bank, giving it all the funding it needs to continue executing at the high level it has been. 

Management Commentary

In a statement, Darren Mercer, CEO at mict, had the following to offer:

After launching our insurance platform in late December, MICT experienced a strong ramp generating revenues of almost $9 million in our first full quarter of operation. This business continues to have strong momentum and we expect a long runway of robust growth. The prospects for our insurance business are particularly exciting as we continue to leverage strong relationships to generate leads.

The first quarter also saw us complete the development of our stock trading platform, which is now at an advanced stage of testing and expected to have a soft launch in late June with the full rollout in July. As of March 31, 2021, we also had $123 million in cash on our balance sheet, which will provide sufficient capital to execute on our growth plans and offer our customers leveraging facilities. The opportunities for market trading in China and Southeast Asia remain enormous and we are well positioned to capitalize on them.

It has therefore been a transformative quarter for the Company, and we have achieved a tremendous amount in a very short period of time. In terms of licenses, we obtained regulatory approval from the Hong Kong SFC, enabling us to progress towards the launch of our stock trading app, which is in the late stages of testing. We acquired a Chinese nationwide broker licensing in the insurance space, which will facilitate rapid growth in our insurance business in China. The acquisition enables us to offer b2c products direct to customers, enables us to move into higher margin insurance products, and the building of our database each month provides a strong foundation as we move to direct b2c sales during the second half of the year, which will lead to improvements in overall volume and margin.

From a technological standpoint, we have also made remarkable progress. As already mentioned, we launched our b2b insurance platform in late December, to which we have continued to make improvements, and we have moved our stock trading platform into the final stages of testing with the expectation of a soft launch in late June. We have also begun the development of our commodities trading platform, for which we will provide further updates at the appropriate time.

We are in great shape across all our key metrics, including in those relating to licenses, technology and operations, and our fundraisings over the course of the quarter have created a balance sheet that enables us to create and operate a number of strong fintech platforms and scale at pace in one of the largest and fastest growing fintech markets in the world.

Finally, we have very strong management teams in each of our divisions who are executing well and very excited about Q2 and beyond. We also continue to strengthen our management and operational work force through targeted recruitment.

Our current position is in stark contrast to this time last year when the Company had a very small market cap, was burdened with around $9M in debt, and had only $3M in cash. We were also a minority shareholder in Micronet, which was underperforming and underwhelming in the market. Whereas at March 31st 2021, we have no material liabilities and $123M cash on our balance sheet. Furthermore, Micronet, of which we are now a majority shareholder, is showing great signs of growth and productivity, having signed key orders and obtained the license to operate on the global T-Mobile network.

Most importantly, our move to the fintech space is paying off. Our insurance business is performing well, having generated in excess of $8Min revenue during the quarter, our stock trading platform is about to come online, and the development of our commodities trading business is progressing at pace. Furthermore, we are sitting on significant cash to support and develop each of our fintech businesses.

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The Bottom Line

The bottom line here is simple. MICT has made quite a few promises, and seems to be fulfilling them all. The company generated significant revenue from the insurance arm all while the platform was in its infancy. At the same time, the company is setting the stage for tremendous revenue growth, not just from insurance, but also from its stock trading platform and commodities and futures trading platform, both of which will likely come online relatively soon. All in all, there’s quite a bit to be excited about with MICT stock. 

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CNA Finance is not a financial advisor or broker/dealer. This article is for entertainment and information purposes and not a solicitation to buy or sell securities. This article is the result of a monetary relationship between MICT and CNA Finance. Trading in penny stocks can lead to potentially significant losses.