MICT Signs New Financial Services Partnership for Commodity Trading and Futures
MICT, Inc. (Nasdaq: MICT) (“MICT” or the “Company”) today announces
that its wholly owned subsidiary has entered into a partnership
with Shanghai Petroleum and Natural Gas Trading Center (the
“Exchange”), established in 2015 by Xinhua News Agency, PetroChina,
Sinopec, and CNOOC, among others, to provide pioneering financial
services in support of the platform’s corporate and government
customers who are estimated to make up approximately 20 percent of
China’s oil and gas trade.
Under the agreement, MICT will act as a
strategic third-party partner to the Exchange’s clients to provide
trade execution, margin financing and trade clearing capabilities.
The group will initially focus on services for clients trading
futures and commodities contracts in China’s growing,
multi-hundred-billion-dollar oil and gas markets. According to the
China Central Administration of Customs China, crude oil imports
reached RMB 1,669,697,209,337 or $259 billion in 2019. Natural gas
imports were RMB 287,298,753,366 or $44 billion.
MICT’s subsidiary will earn commissions and
transaction fees related to trade clearing, as well as much larger
margin financing fees. While the Shanghai exchange will share a
small percentage of transaction revenue, MICT will receive all of
the considerably larger margin finance fees. In addition, the
Company has identified an experienced management team with deep
sector knowledge to oversee the platform launch and operations.
The subsidiary will initially service several
hundred of the Exchange’s approximately 2,400 customers, including
provincial government departments, state-owned enterprises and
large corporations, with the intention of increasing its customer
base throughout the following quarters.
“Our key strategic alliance with the Exchange
drives high-margin revenue growth potential for MICT through both
per contract commissions and the lucrative margin financing
associated with leveraged futures and commodity products trading,
among other related service fees. The fact that our clients are
comprised of government and government-backed entities, among
others, provides an element of low financial default risk,
supported in part from the strong financial relationships Xinhau
brings to the venture.
In addition, we believe the Xinhau platform will
increase its market share of oil and gas revenues as a result of a
nationwide rollout through the link to the commodities and futures
exchange. We also anticipate extending our commodities and futures
trading business beyond oil and gas and into precious metals, other
metals and food and agriculture products over time, each of which
is a significant market in its own right,” commented MICT’s CEO
“This also supports our upcoming stock trading
platform and related services, which drive strong technological and
financial services value propositions. As we have discussed over
the last several weeks, we are already receiving significant
revenue from our insurance business and expect a rapid rise in the
coming months. In addition, we are anticipating the launch of our
stock trading and wealth management services platform in the coming
weeks. With the realization of our commodities and futures exchange
services, we believe we offer a most comprehensive financial
technology and services offering in China, which is supported by an
ever-growing database of users. We look forward to the continued
advancement of all three business verticals,” Mr. Mercer
The Company believes the platform will be ready
for launch during the second quarter of 2021 and further expects to
commence revenue generation soon thereafter.
MICT, Inc. (NasdaqCM: MICT) operates through its
subsidiaries, GFH Intermediate Holdings Ltd. (“GFHI”) and Micronet
Ltd. (“Micronet”). GFHI’s versatile proprietary trading technology
platform is designed to serve a large number of high growth sectors
in the global fintech space. Primary areas of focus include online
brokerage for equities trading and wealth management services and
sales of insurance products in several high-growth foreign markets,
including Asia, where GFHI owns a substantial database of users.
Micronet operates in the growing telematics and commercial Mobile
Resource Management market, mainly in the United States and Europe.
Micronet designs, develops, manufactures, and sells mobile
computing solutions that provide fleet operators and field
workforces with computing solutions in challenging work
Litigation Reform Act of 1995 and other U.S.
Federal securities laws. These forward-looking statements include,
but are not limited to, statements related to revenue targets, the
growth of the Chinese Insurance market and other statements that
are not historical facts. Such forward-looking statements and their
implications involve known and unknown risks, uncertainties and
other factors that may cause actual results or performance to
differ materially from those projected. The forward-looking
statements contained in this press release are subject to other
risks and uncertainties, including those discussed in the "Risk
Factors" section and elsewhere in the Company's annual report on
Form 10-K for the year ended December 31, 2019 and in subsequent
filings with the Securities and Exchange Commission. Except as
otherwise required by law, the Company is under no obligation to
(and expressly disclaims any such obligation to) update or alter
its forward-looking statements whether as a result of new
information, future events or otherwise.