MJP International Ltd (OTCMKTS:MJPI) is up close to 4,000% since December 6, with markets responding to the company’s announcement of a recent acquisition. There’s very little to go on with this one, so determining whether or not the company is likely to expand further is tough. Let’s have a go nonetheless.
First, a bit about the company.
Right off the bat, we’ll say that this one’s not a particularly interesting company operationally. That doesn’t mean its not a great trading opportunity (more on this shortly), of course. It formed back in 2010, but didn’t really become operational in its current format until 2012, when it took over two entities called MJP Lighting Solutions Ltd. and MJP Holdings Ltd. Since then, it’s focused on selling LED lighting, by way of a couple of US locations and a Chinese office. The Chinese office sources LED tech, and then ships it over to Canada, where it gets sold into the Canadian and US markets.
Sales haven’t been great, however. Revenues for the three-month period ended September 30, 2016, hit just $5,432, compared to zero revenues for the same period a year earlier. Since inception (and to September 30) the company has generated a total of $110.8K revenues, and chalked up a net loss of $282K the circa seven-year period.
We think, however, that in light of the latest acquisition announcement, there’s little value in looking backwards. The acquisition represents a pivot on its LED operations, and could provide markets with a positive news flow on which to trade in line with momentum.
On December 6, the company announced that it had completed the acquisition of 80% of the issued shares of Human Energy Alliance Laboratories Corp (HEAL) through its wholly owned subsidiary Energy Alliance Labs Inc. MJP also announced that its CEO, Tong Tang, had stepped down, and that Liao Zu Guo had stepped in to the role. Additionally, Christopher Hudson, who previously served as the President of the just acquired HEAL, stepped into the COO role at MJP.
So, here’s what’s happened.
Tong Tang is out, and the LED business sourcing, buying, distribution (China side) was his job, so chances are LEDs are not going to account for any part of the company’s operations any more. Instead, HEAL management has taken over the reigns, and Zu Guo, an accountant by trade, will work with HEAL to pivot towards a solar panel installation entity.
HEAL describes itself as offering a wide array of green energy solutions, which it markets and sells online. Among them are state of the art wind and solar installations for both commercial and residential customers. There’s a lot of momentum in the solar space right now, and some of the major names have fallen foul of holding too much debt over the last couple of years. This has resulted in a bit more fractionallity in the industry, and presents an opportunity for some of the smaller players to snap up a bit of market share.
So what’s next?
Well, we want to see a few more releases relating to the company’s fresh operational approach (and specifically, the numbers achieved to date) before we can say exactly how the acquisition is going to impact MJP’s topline, but one thing’s pretty much certain – it’s going to provide the company with a boost in sales. $5K revenues is not going to be tough to build on, and as such, there’s probably some upside momentum on offer on revenue growth announcements alone.
Our takeaway on this one is that we’re going to need more info before we can say with any certainty what the future holds, but it’s not going to be difficult to get things moving based on the current numbers, and with this in mind, there’s an opportunity to stick to the momentum and ride it to return. Best not to get too attached, but for a number of short term plays, there’s opportunity here.
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Disclosure: We have no position in MJPI and have not been compensated for this article.