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Janel World Trade Ltd. (OTCBB: JLWT) $9M (MarketCap) Sits Down with WMM

Janel World Trade offers full-service cargo transportation logistics management, including freight forwarding – via air, ocean and land-based carriers – customs brokerage services, and warehousing and distribution services. The company operates a second, much smaller segment selling computer software, support, and maintenance. Janel offers value-added logistics services in addition to its traditional freight forwarding business that’s been conducting business through a network of company-operated facilities and independent agent relationships in most trading countries.

I’ve written two articles previously on Janel as two interesting pieces of news hit wires almost back-to-back, starting with the company announcing they had completed a comprehensive and successful test on the effectiveness and safety of Clear Blue 104™ as an effective algaecide and bactericide in live lake conditions during 2009. The Clear Blue project is one that’s been in research and development for the last two years specifically for the application of Lake Tai, a body of water in Shanghai that supplies drinking water around the country that has recently been plagued by an explosion of dangerous algae born from man-made waste that has turned the lake ghoulish fluorescent green.

While the solutions to the rampant and observable pollutions in China are going to ultimately be political, Janel has been working had to provide a practical step towards changing the ultimate fate of this ancient countryside’s primary source of water, a basic human necessity and resource. Solutions are available, but the government won’t get behind them because that would shake the “social order” of the culture – that environmental activities speaking out and damming the current conditions to bring about social change would be heard by stepping on the toes of the local officials.

I talked with Paul McCreary, he’s the president of the Environmental Products Division at Janel who was able to clarify the history of the project and some updates. First and foremost, I asked how a U.S. transportation and logistics company becomes involved with cleaning up polluted lakes in China.


Janel had been approached about two years ago by an environmental group who wanted to move 600 containers of clean-up solution to Lake Tai and had asked Paul for help in acquiring some of the needed equipment and manpower to complete the project, a value-added service the company was happy to provide. Having a familiarity with Chinese customs and the nature of how they do business, the management team at Janel began to notice the environmental group wasn’t progressing the way they should because they did not recognize what they were doing wrong – specifically, dealing with the central governments and bypassing the local officials who are actually in control of the municipalities of the area during communications. When the company lost the contract to license the Clear Blue solution, Janel took advantage of an opportunity to leverage their accumulated knowledge on the project and political roadmaps to plunge in and take over from there.

That’s exactly what they did. Janel has become the distributor of the Clear Blue 104 anti-algaecide and bactericide, the same solution that was in the 600 containers they were paid to ship to China only two years earlier, and has successfully completed two series of tests on live lake conditions in the area the company had footed the bill for. They’ve partnered with numerous international environmental consultants in China and San Diego, Hard Hat Services, an environmental construction firm, and a consorting partner that brings web-based water monitoring technology to the table. The next step was to approach the United States Trade Department (USTD) to apply for a grant that could test the effectiveness of the Clear Blue solution and other American resources in a major environmental remediation project and with tremendous assistance from the World Bank who has themselves committed $150M to clean up Lake Tai, landed one. The Chinese have committed to cleaning up the lake but lacked the technology to do so, and that’s where the USTD comes in. The current U.S. Administration has made no secret of its position on foreign trade – export as much as possible to compete with other nations – so developing and launching environmentally responsible aid in foreign nations is a nice foothold to start from.

“The political climate for us is good; we’ve got tremendous support in the Wuxi municipal government, which is the largest city that surrounds Lake Tai with a population of about five million. So our support with the Municipal Water Resources Bureau and the environmental testing service with the mayor’s office are extremely good” Mr. McCreary said.

How will we know this pilot project is a success? The two most important attributes that need to be accomplished and consistent from here is scalability and the ability to replicate what Janel has done at Lake Tai in other provinces in China and around the world. The pilot project is set to commence late this summer during which local, state, and federal and central officials from the U.S. and China will be invited to view the technology and processes Janel has been working so hard on. Big support has come from right here at home: Mr. McCreary has spoken with and secured support from two house members from New York and two senators from New Jersey about the company’s efforts in China during a time in which the political Administration in office that has been more committed to opening economic flexibility and promoting trade with foreign nationals than any other time in history.

You can read my original article on Janel here that follows the story of the company announcing they had been awarded a USTD grant to further test Clear Blue at Lake Tai, released in May. Following that article a week later, I wrote about second quarterly earnings that had been released– revenue was up 12%, a record for Janel while net income was $.006 per share compared to a net loss for the year earlier. Janel has also reported they had hired on Mr. Ray Tobia from Air Sea Forwarding, Inc., who was expected to bring about $1.5-$2M in top-line revenue growth for the rest of this year.

Lastly, I wanted to point out the price to sales ratio. Sales in 2009 totaled $82,746,806 and weighted-outstanding shares as of today totals 18,381,082; meaning revenue per share is $4.50. The share price today for Janel is $.50 per share, putting the price-to-sales ratio at .10x – a strikingly diminutive ratio when compared to their peers.


Disclosure: no positions