SMALL CAPE IDEA: Majestic’s ‘bonanza grade’ tech recycling efforts make it one of those on the watch list

In the small cap sector, it is rare to find revenue-generating and profitable companies, especially on Aquis Market, known for its early-stage companies.

But Majestic Corporation (AQSE:MCJ), a recycling company founded by Australian businessman Peter Lai, is a notable exception.

Interim data was released on Monday showing a 92 per cent increase in revenue to $25 million, leading to a 33 per cent rise in pre-tax profits to $1.2 million.

Majestic is the epitome of a niche business, creating a sustainable, defensible and high-growth segment in the emerging circular economy: the sustainable recycling and reuse system.

Its competitive advantage lies in the complex relationships with foundries and end users that it has built and fostered over the past 25 years, allowing it to create long-term value.

High barriers

“Regulatory barriers and high capital requirements make it difficult for competitors to replicate their operations,” says Andrew Male, the company’s recently appointed non-executive director. “It’s not something that can be done right away.”

Majestic is strategically capitalizing on the rising tide of disposable IT equipment, catalytic converters and battery materials, as well as the growing need to recycle these materials.

The United Nations Environment Program reports that 54 million metric tons of electronic waste are produced annually, which is equivalent to about 7 kilograms for every person on the planet. Currently, only 17 percent of this e-waste is recycled and, if no significant action is taken, the figure is expected to double by 2050.

wealth of materials

Majestic’s recycling operations focus on three main areas: professional and consumer electronics, vehicle catalytic converters, and base metals found in electrical equipment.

These processes produce a large amount of valuable elements such as copper, aluminum, gold, silver, platinum, cobalt, graphene and nickel.

Male, a seasoned veteran of the extractive industries, highlights the potential of this approach: “One ton of waste material could produce up to 15 grams of gold,” he notes. In mining terms, these are called “bonanza laws”: exceptionally high returns.

Majestic achieves this without the need for costly exploration or large capital investments typically required to develop a gold mine.

Its extensive network of subsidiaries and affiliates extends throughout the world. Through this network, the company obtains, acquires, stores and processes materials, which it then supplies to refineries, reintroducing them into the global supply chain.

long term relationships

Processing more than 30,000 metric tons of waste annually, the company has built long-term relationships across the sector, offering investors exposure to key issues such as decarbonization and national efforts to secure critical materials and supply chains.

Several factors position Majestic for sustained growth. By focusing on niche markets, the company offers highly personalized service to clients who are often overlooked by larger competitors.

In today’s world, where decarbonization and circular economy principles are gaining traction, Majestic’s focus on environmentally sound practices resonates with clients seeking sustainable business solutions.

Looking to the future, the group has ambitious growth plans. Research from Pitt Street suggests the company is targeting a 400% increase in sales in the coming years.

Fast acceleration

Central to these aspirations is Telecycle Europe Limited, a subsidiary with a rapidly expanding facility in Deeside, Wales. Male is excited about the growth of the site: “The operation at Deeside has accelerated really rapidly in recent years and continues on an accelerated trajectory.”

Majestic has also announced that it will conditionally acquire Telecycle.

The appointment of Male, who brings extensive management and capital markets experience from both the UK and Canada, signals that Majestic is assembling the talent needed for its next phase of growth.

Additionally, the company’s recent Enterprise Investment Scheme (EIS) status offers generous tax advantages to investors, opening the door for venture capital trusts to join Majestic’s shareholder register as the company seeks to issue new actions.

One for the watch list

Diversification and expansion of the shareholder base, currently dominated by a small number of early investors, will be key to increasing liquidity and improving share value. Ultimately, this process may lead to a move to a higher-ranking exchange, although the company has remained mum on this possibility for now.

As Male acknowledges: ‘We are effectively a private, publicly traded company. But at the moment, our goal is simply to raise awareness about Majestic and the opportunity.”

In other words, Majestic is definitely one to watch.

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