MICT Inc (NASDAQ: MICT) is setting the stage for a tremendous day in the market today, and for good reason. The licensing news investors have been hoping for was announced this morning. Here’s what’s going on:
Skip to What You Want to Read
- MICT Acquires Key License
- Management Commentary
- Why This News Is So Exciting
- What Analysts Think About MICT Stock
- Final Thoughts
MICT Acquires Key License
In the press release, MICT announced that it has received approval from the Hong Kong Securities and Futures Commission, or SFC, to complete the acquisition of Huapei Global Securities.
This is a key acquisition that will provide the company with a licensed platform to facilitate the trading of securities on the major stock exchanges in Hong Kong, the United States, and China for its Chinese and Hong Kong clients.
In October of 2020, the company acquired 9% of Huapei with the option to acquire the remaining 91% of the company upon the receipt of approval from the regulatory authority.
MICT went on to explain that with the approval from the Hong Kong SFC, the acquisition is expected to be finalized in the next two to three weeks. As a result of the acquisition, the company is able to commence the final stage of testing of its trading platform app in a live environment ahead of its coming launch.
This is huge news. As a result of the license, MICT is now able to serve customers in China, one of the largest contributors to online securities trading. In fact, China and Hong Kong based investors accounted for about 45% of trading volume in 2017. Moreover, China’s online retail securities market has grown significantly from $1.8 trillion in 2021 to $12.7 trillion in 2017, with a CAGR of nearly 48%. By 2022, the market is expected to reach $30.3 trillion.
In a statement, Darren Mercer, CEO at MICT, had the following to offer:
The acquisition of Huapei marks a pivotal event for MICT, in particular, Huapei’s licenses allow us to launch our mobile app-based equities trading platform and gains us access into the one of the world’s largest retail investment markets.
We believe our platform will be competitive with other comparable offerings in China and that it possesses all of the attributes needed to quickly gain market share, including a strong balance sheet to offer margin financing; a strategic marketing plan to attract new users; relationships with major online platforms, allowing access to their user-bases; and an interface that appeals to the fast-growing Chinese online retail investor market. Based on these factors, we believe, once launched, our platform will provide a meaningful contribution to MICT’s overall revenue in 2021 and beyond and deliver accretive shareholder value.
Why This News Is So Exciting
The news released by MICT was huge. The fact of the matter is that this license puts the company in line with Up Fintech Holding (NASDAQ: TIGR), a company valued at nearly $4 billion, and Futu Holdings (NASDAQ: FUTU), a company valued at around $23 billion. However, there’s one key difference.
Licensing to trade securities in Hong Kong is a very difficult move to achieve. In fact, even FUTU wasn’t able to accomplish this goal. In order to get licensing for their platform, FUTU had to go through New Zealand, where it was later fined for unsavory activities.
The fact of the matter here is that when we talk about MICT, we’re talking about a company with a market cap of around $230 million that has accomplished what a company valued at more than $20 billion simply wasn’t able to accomplish.
MICT has been firing on all cylinders. Recently, the company announced the expansion of its insurance product from a regional product to a product that will soon be available across greater China. At the same time, the company has entered into a partnership that will make it a leader in commodities trading in China, and now, with the Hong Kong license to facilitate securities trades, the company is likely to become a top-tier competitor in the Chinese securities trading industry, an industry that’s growing rapidly.
All in all, if you’re not paying attention to MICT yet, you’re missing out.
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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.