Methes Energies International Ltd (OTC Other: MEIL) is a micro-cap company with a large-cap perspective. In fact, if MEIL executes its strategies effectively, it may move up the valuation ranks sooner than later. Thus, at roughly $0.05 a share and with an aggressive business plan pushing its innovative “CLEAN TECH” products portfolio, current prices may be presenting an attractive opportunity.
Keep in mind, though, that markets are trading with extreme volatility. So much so that even best-of-breed companies are seeing their share prices appreciably cut. Still, while that affects short-term performance, those taking a longer-term perspective have historically weathered the market storms. Considering that Methes Energies is in a red-hot sector with no signs of slowing, share price weakness may help expose a valuation disconnect worthy of consideration.
Of course, MEIL’s share price isn’t the reason to consider investing in MEIL. While it exposes a valuation disconnect, the real reason to invest in any company should be based on its intrinsic value and the value inherent to those assets. Methes Energy checks those two considerations in the positive, intrinsically leveraging its ability to manufacture green “CLEAN TECH” renewable energy products that can meet global demands while exposing the inherent power of those products to generate considerable revenues in the process. They plan to accomplish the latter by bringing to market bio-derived products that meet superior performance expectations without leaving a toxic carbon footprint.
In other words, MEIL manufactures the right types of products at the right time. And by marketing an assortment of bio-lubricants and bio-diesel fuels that combine domestically sourced farm-grown bio-derived feedstocks with proprietary technologies for superior performance, the upside for MEIL and its investors may be the path of least resistance.
Being Different Is MEIL’s Advantage
That’s speculative. Still, it’s fair to also suggest that MEIL has built the foundation to become a bigger company faster by executing a mission molded around the four ideologies of being GREEN: renewable, biodegradable, recyclable, and non-toxic. Said in simplest terms, and as the company emphasizes: Earth Friendly.
But advancing an environmentally friendly business plan is just a part of the whole. Beyond good intentions, its biodegradable, environmentally acceptable, and preferred supreme synthetics are excellent options compared to traditional oil-based products. Additionally, MEIL’s products are packaged in reusable & recyclable “sustainable” packaging that equals or outperforms comparably advanced synthetic positioned and parity priced mineral oil base products. Thus, as MEIL expedites its plans to make these earth-friendly products readily available after satisfying EPA regulatory requirements, product users will get more than the benefit of performance without sacrificing social responsibility; they will also be ushering in a new generation and means for how products get powered.
Leading that charge is MEIL’s “b2” product brand, which the company believes will become not just “the green option”, but a logical one that delivers maximum value without environmental consequences. The asset came into MEIL’s portfolio after finalizing its acquisition of the Celebration, Florida-based manufacturer and marketer of b2 biOil and other bio-lubricants, EarthFriendly Products Inc. The value-added acquisition combines efforts and enhances Methes’ current platform to launch more bio-renewable solutions.
B2 Differences Are Advantages
As for b2, there are several reasons supporting the optimism for why it can change the revenue-generating trajectory of the company. Foremost is that its differences are also competitive advantages. For instance, B2’s innovative formulation is Ultimate Biodegradable, meaning its product footprint degrades by over 60% within 28 days. In addition, its bio-content has been proven to reduce CO2 emissions by upwards of 69% compared to conventional oils. Not only that, its ingredients are “renewable” and able to be domestically sourced, locally manufactured, and then packaged in best-practice sustainable solutions such as proprietary collapsible/recyclable plastic “bags” or repurposed/recyclable steel “drums.”
But the most valuable aspect of b2 BiOil is that it’s been created to replace decades-old oil-based lubricants and mitigate global concerns regarding motor oil’s environmental effects. And the company believes that by satisfying consumer demands and meeting the needs of ongoing government requirements mandating the procurement of domestically sourced bio-derived biodegradable products, b2 could metaphorically become the bio-formulated rocket fuel to power its own strategic ambitions.
An update indicated that the mission is in progress, with MEIL believing its eco-friendly b2 biOil fully synthetic supreme motor oil is well positioned to satisfy diverse customer needs and provide superior performance motor oil that exceeds industry demands. B2 is also API SN and ILSAC G-5 certified and satisfies the requirements to be included within the USDA BioPreferred Procurement Program, particularly that it biodegrades up to 60% within 28 days and is parity priced with other similar claiming/performing full synthetic motor oils.
Of course, performance matters. B2 checks that box after concluding rigorous testing with the DOD/DLA within various military and government entities, including USPS, US Air Force, Dept. of Homeland Security, and GSA. Testing began in January 2016 and concluded on January 18, 2018, followed by a bio-based acceptance announcement and assignment of NSN #’s (NSN #’s = approval to purchase). In other words, MEIL’s b2 can bid on government procurement assignments through SAM.GOV and other military purchasing sites.
A Better Solution Needed Sooner Than Later
In no uncertain terms, products like b2 are needed sooner than later. While not receiving the headlines deserved, it’s estimated that roughly 37.5 million gallons of petroleum oil are dumped into USA landfills each year from the over 3 billion “used” motor oil bottles disposed of with oil residue still left inside. That’s where MEIL’s packaging considerations become significant value drivers.
And the excellent news there is that packaging, including proper disposal, is an incremental cost that MEIL notes does not necessarily need to be passed on to the consumer or end-users. Instead, by developing new concepts – particularly packaging-related – in motor oil sales and delivery, MEIL can provide a better product in sustainable containers at a competitive price. That matters and consumers are paying attention.
Given a choice, more consumers are choosing environmentally friendly alternatives faster than ever. And in the direct-to-consumer market, which represents about 15% of motor oil sales, providing that option can be a legitimate reason to engage in new product offerings. Methes is after that business, developing unique packaging to meet the demand and requirements of both general consumer and military contracts by utilizing preprinted pouches with a packaged return address envelope that facilitates and expedites the free-of-charge return of that packaging vessel for re-packaging or proper disposal.
If its strategy and earth-friendly initiatives are successful, MEIL could be targeting a multi-billion dollar market opportunity.
A Billion-Dollar Market In-Play
In fact, estimates expect the bio-lubricant market (EALs) to present a $4.26 billion sales opportunity by 2029, resulting from government initiatives governing the reduction of oil-based lubricants – a factor that should bolster sales of bio-lubricants consistently over the next six years. Keep in mind that this opportunity currently makes up less than 1.5% of the global finished lubricants market opportunity. With that said, it’s also growing significantly faster than others, which bodes well for MEIL on a forward-looking basis.
Other factors favoring MEIL are government policies that are expected to increase the use of sustainable lubricants. Furthermore, a significant increase in R&D activities is paving the way for market expansion and ensuring the longevity of the bio-lubricants market presence in the current and future decades. Those who follow the sector see that trend in progress, with strict mandates in North America and Europe helping drive three-quarters of the EAL demand. That won’t ease anytime soon, nor will the interest in utilizing bio-lubricants for industrial applications, led by hydraulic fluids making up the majority of consumption. Simply said, MEIL is in the right markets at the right time.
That presumption is supported by an article in FORTUNE Business Insights, which suggests the bio-lubricant marketplace should see continued and enhanced demand as government initiatives hobble oil-based lubricants as a go-to option. Thus, after its three-year search to find a synergistic partner to continue promoting its bio-renewable solutions and completing the deal with EarthFriendly Products to perpetuate marketing b2, MEIL has the product to effectively compete.
A Value Proposition In-Play
All told, there’s plenty to appreciate about where MEIL is today and where they intend to be a year from now. They have an excellent product, plan, and the ambition to continue proving that its b2 bio-lubricant can fill a massive need in diversified markets. Better packaging, innovative renewable formulations, and a results-driven management team are ingredients for immediate and long-term success, and MEIL has them all.
Accounting for the sum of MEIL’s parts, $0.05 a share may not give proper justice to a company starting to hit on all cylinders. Considering its completed acquisition will be immediately accretive to growth from products meeting EPA guidelines, that price may be a bargain. Then again, market weaknesses have caused many stocks to drop sharply. That trend, however, shouldn’t be a defining deterrent, noting that the bear market tends to expose significant opportunities.
Getting a running start into a billion-dollar market with a potential best-in-class bio-lubricant, Methes Energies International, Inc., may be one of those disconnects to consider. But primed for growth, it’s a gap that could close quickly.
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