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Original-Research: Advanced Blockchain AG - von GBC AG

Einstufung von GBC AG zu Advanced Blockchain AG

Unternehmen: Advanced Blockchain AG
ISIN: DE000A0M93V6

Anlass der Studie: Research Report (Note)
Empfehlung: Buy
Kursziel: 11.00 EUR
Kursziel auf Sicht von: 31.12.2024
Letzte Ratingänderung:
Analyst: Matthias Greiffenberger, Julien Desrosiers

Successful cost-cutting program: Advanced Blockchain AG maintains EBITDA at
previous year's level. Bitcoin halving in March 2024: supply shortage as a
catalyst.
 
The first half of 2023 witnessed Advanced Blockchain AG navigating through
a persistently volatile capital market, grappling with inflation concerns,
and contending with geopolitical uncertainties on both financial and
societal fronts. The crypto winter, intensified by the FTX collapse and the
insolvency of other crypto exchanges and custodians like Genesis, continued
to exert its influence. This was notably reflected in the pronounced
volatility of Bitcoin, commencing the year at $16,500 and concluding on
June 30, 2023, at $30,350-a significant distance from its pinnacle of
$69,045 in November 2021.
 
Ongoing efforts to regulate crypto assets, exemplified by MiCA regulation
(Markets in Crypto-Assets), persist. MiCA, an EU-approved regulatory
framework for crypto assets, aims to establish risk-appropriate regulation
enhancing investor protection and contributing to the functionality of
cryptocurrency markets. MiCA's implementation is to unfold in two stages,
with specific provisions, particularly those pertaining to asset-referenced
crypto assets and E-money tokens (stablecoins), anticipated to take effect
from July 2024. The majority of the regulation is slated to be operational
in early 2025. The regulation imposes requirements on crypto asset
providers and traders, mandating the submission of a whitepaper to
supervisory authorities. Additionally, it champions consumer protection by
necessitating a publicly accessible register for crypto asset whitepapers
and providers of crypto asset services.
 
MiCA categorizes crypto assets into three segments: E-money tokens,
asset-referenced tokens, and utility tokens. While encompassing common
cryptocurrencies like Bitcoin and Ethereum, it excludes security tokens or
non-fungible tokens (NFTs). Issuers of asset-referenced tokens and E-money
tokens must fulfill minimum liquidity requirements and have their
headquarters within the EU. The regulation introduces a customer right of
redemption against issuers and anti-money laundering regulations that
necessitate customer identification for crypto service providers. These
regulations also extend to transactions between 'hosted wallets' and
'unhosted wallets,' requiring identification of the owner of the 'unhosted
wallet' for transactions exceeding 1,000 euros.
 
The imminent introduction of Bitcoin ETFs by major asset management
entities such as BlackRock is suggested by the current news flow in the
United States. The proposed spot Bitcoin ETF by BlackRock, listed with the
Depository Trust & Clearing Corporation (DTCC), indicates potential
approval by the U.S. Securities and Exchange Commission (SEC). The SEC is
expected to make a decision by January 10, 2024. Approval of such an ETF
could pave the way for additional crypto ETFs, including those from ARK
Investment, Fidelity, and Valkyrie. While the SEC sanctioned Bitcoin
futures ETFs in October 2021, no Bitcoin or Ether spot funds have been
listed on U.S. exchanges.
 
Adding to the landscape is the significant event of the upcoming Bitcoin
halving in March 2024, where the miner reward will be halved. This
anticipated supply shortage could exert a positive influence on the
performance of Bitcoin.
 
In the first half of 2023, Advanced Blockchain experienced a reduction in
revenue to EUR1.23 million (compared to EUR23.4 million in the previous year).
This decline can be attributed to a diminished number of portfolio
transactions.
 
EBITDA stood at EUR0.52 million (compared to the previous year's EUR0.88
million). Despite the dip in revenue, EBITDA was successfully maintained
close to the previous year's level, owing to the effective implementation
of a cost-saving program by the management. EBIT even achieved a positive
value of EUR0.45 million (compared to the previous year's -EUR0.54 million).
The same positive trend extended to the net result, reaching EUR0.45 million
in the first half of 2023 (compared to the previous year's -EUR0.54 million).
 
As of June 30, 2023, the equity of the company remained relatively
unchanged at EUR14.48 million (compared to EUR14.93 million on December 31,
2022). The equity ratio also held steady at 67.3%, mirroring the figure as
of December 31, 2022 (66.3%). The predominant portion of equity and token
investments, amounting to EUR16.63 million, is documented within the category
of other assets.
 
The working capital exhibited an increase, reaching EUR-0.52 million (as
opposed to EUR-3.78 million on December 31, 2022), propelled by a notable
surge in trade receivables, which climbed to EUR2.74 million (compared to
EUR0.01 million as of December 31, 2022). The persistently negative working
capital underscores the efficient utilization of available capital, with
only limited funds being tied up.
 
Cash and cash equivalents experienced a significant decline to EUR0.34
million (versus EUR3.49 million on December 31, 2022). Given the ample
liquidity of certain securities in the portfolio, we hold no apprehensions
concerning the existing low cash position of the company. Additionally,
approximately EUR3 million was allocated to new investments during the first
half of 2023, capitalizing on a favorable investment climate. These
strategic investments are anticipated to establish a robust groundwork for
forthcoming positive outcomes, fortifying the company's standing in the
market.
 
Due to the lack of a published cash flow statement, we are unable to
perform a detailed liquidity analysis.
 
In the fiscal year 2023, Advanced Blockchain AG has been strategically
focusing on sustainable growth and meticulous cost management. The company
anticipates a reduction in expenses coupled with revenue generation through
token transactions and potential investments in upcoming token issuances.
Advanced Blockchain AG is actively engaged in advanced negotiations with
potential buyers for portfolio investments tied to token and equity
transactions, with the objective of achieving up to five successful sales,
totaling EUR5 million.
 
Currently, the company is in the planning stages of issuing a new
convertible bond with a total value of up to EUR3 million, intended to
replace the existing convertible bond expiring on July 14, 2024. The volume
was subsequently limited to a nominal amount of EUR1.1 million on October 17,
2023. This fresh bond boasts a six-year term and an annual interest rate of
3.0%, with a conversion price set at EUR4.25. It is proposed to issue up to
EUR1.5 million through the exchange of convertible bonds previously issued by
the company (ISIN: DE000A3MP4Q7). The net proceeds stemming from the
issuance of the convertible bond 2023/2029 will be allocated to general
business purposes, encompassing the financing of additional investments and
the advancement of the existing portfolio.
 
In a noteworthy development, Advanced Blockchain AG successfully secured
another prominent investor, selling 100,000 of its own shares to a fund
managed by Axxion S.A. at a per-share price of EUR 2.70.
 
To sustain its pioneering role as a blockchain incubator and Web3 investor,
Advanced Blockchain AG is strategically expanding its team of global
experts and planning to initiate two to three new investments. The company
is also gearing up to implement cross-chain initiatives across various
blockchain domains to leverage success and network effects. A commitment to
ongoing research and clear strategies will steer the progress and adoption
of diverse topics and use cases. Through the incubation of promising
protocols and technologies, Advanced Blockchain AG aims to bolster the
growth of the global blockchain ecosystem.
 
The continuous assessment of the top 10 portfolio investments is geared
towards enhancing transparency for investors. As of May 31, 2023, the top
10 investments encompass peaq/EoT Labs GmbH (incubation, equity, and token
investment), Mero (token investment), Contango (token investment), Maverick
(token investment), Talisman (token investment), Neon Labs (token
investment), Obol Network (token investment), Polymer (equity and token
investment), DELV/Element Finance (token investment), and Composable
Finance (incubation and token investment), presented in no particular
order. Based on an independently valued assessment as of May 31, 2023,
these top 10 Advanced Blockchain portfolio companies currently reflect a
total value of EUR39.65 million. Our analysis suggests a conservative
valuation approach, and we believe the fair value of the listed positions
is likely higher, estimating it to be around EUR45 million.
 
The undervaluation of Advanced Blockchain becomes strikingly apparent when
focusing solely on the top 10 positions in the portfolio and the market
capitalization. These top 10 positions alone carry a fair value of at least
EUR40 million, whereas Advanced Blockchain's market capitalization currently
hovers around EUR11 million. We posit that the remaining portfolio positions
hold a similar value to the top 10, leading us to estimate the current
portfolio value at approximately EUR90 million. Factoring in holding costs of
EUR2 million, the adjusted total value of the portfolio after deducting these
costs should be around EUR88 million.
 
Our enterprise value estimation, based on the net asset value (NAV), stands
at approximately EUR88 million, equating to EUR23.19 per share. In light of the
pronounced downturn in the crypto markets and the persistent 'crypto
winter,' we have applied an additional discount to the fair value,
currently pegged at around 53%.
 
We are maintaining our valuation. We have determined a fair value of EUR41.74
million or EUR11.00 per share. Due to the considerable upside potential, we
assign a BUY rating.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/28323.pdf

Kontakt für Rückfragen
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung
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Date (time) Completion: 17.11.2022 (11:20) German version: 13.11.2022 (12:30)
Date (time) first publication: 17.11.2022 (12:00) German version: 13.11.2022 (13:30)

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Quelle: dpa-AFX