Ori­gi­nal-Re­se­arch: Ad­van­ced Block­chain AG (von GBC AG): Buy

Re­se­arch | 17 No­vem­ber 2023 00:00

Ori­gi­nal-Re­se­arch: Ad­van­ced Block­chain AG – from GBC AG

Clas­si­fi­ca­ti­on of GBC AG to Ad­van­ced Block­chain AG

Com­pa­ny Name: Ad­van­ced Block­chain AG
ISIN: DE000A0M93V6

Re­ason for the re­se­arch: Re­se­arch Re­port (Note)
Re­com­men­da­ti­on: Buy
Tar­get pri­ce: 11.00 EUR
Tar­get pri­ce on sight of: 31.12.2024
Last ra­ting ch­an­ge:
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

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 €1.23 mil­li­on (com­pared to €23.4 mil­li­on in the pre­vious year). This de­cli­ne can be at­tri­bu­ted to a di­mi­nis­hed num­ber of port­fo­lio tran­sac­tions.

EBITDA stood at €0.52 mil­li­on (com­pared to the pre­vious year’s €0.88 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 €0.45 mil­li­on (com­pared to the pre­vious year’s -€0.54 mil­li­on). The same po­si­ti­ve trend ex­ten­ded to the net re­sult, rea­ching €0.45 mil­li­on in the first half of 2023 (com­pared to the pre­vious year’s -€0.54 mil­li­on).

As of June 30, 2023, the equi­ty of the com­pa­ny re­main­ed re­la­tively un­ch­an­ged at €14.48 mil­li­on (com­pared to €14.93 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 €16.63 mil­li­on, is do­cu­men­ted wi­thin the ca­te­go­ry
of other as­sets.

The working ca­pi­tal ex­hi­bi­ted an in­crease, rea­ching €-0.52 mil­li­on (as op­po­sed to €-3.78 mil­li­on on De­cem­ber 31, 2022), pro­pel­led by a no­ta­ble sur­ge in trade re­ceiv­a­bles, which clim­bed to €2.74 mil­li­on (com­pared to €0.01 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 €0.34 mil­li­on (ver­sus €3.49 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 €3 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 €5 mil­li­on.

Curr­ent­ly, the com­pa­ny is in the plan­ning stages of is­suing a new con­ver­ti­ble bond with a to­tal va­lue of up to €3 mil­li­on, in­ten­ded to re­place the exis­ting con­ver­ti­ble bond ex­pi­ring on July 14, 2024. The vo­lu­me was sub­se­quent­ly li­mi­t­ed to a no­mi­nal amount of €1.1 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 €4.25. It is pro­po­sed to is­sue up to €1.5 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 20232029 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 €39.65 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 €45 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 €40 mil­li­on, whe­re­as Ad­van­ced Blockchain’s mar­ket ca­pi­ta­liza­ti­on curr­ent­ly ho­vers around €11 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 €90 mil­li­on. Fac­to­ring in hol­ding cos­ts of €2 mil­li­on, the ad­jus­ted to­tal va­lue of the port­fo­lio af­ter de­duc­ting the­se cos­ts should be around €88 mil­li­on.

Our en­ter­pri­se va­lue esti­ma­ti­on, ba­sed on the net as­set va­lue (NAV), stands at ap­pro­xi­m­ate­ly €88 mil­li­on, equa­ting to €23.19 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 €41.74 mil­li­on or €11.00 per share. Due to the con­sidera­ble up­si­de po­ten­ti­al, we as­sign a BUY ra­ting.

Die voll­stän­di­ge Ana­ly­se kön­nen Sie hier down­loa­den:

Kon­takt für Rück­fra­gen
Hal­der­stra­ße 27
86150 Augs­burg
0821241133 0
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:
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)

——————-über­mit­telt durch die EQS Group AG.——————-

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E‑mail: office(@)gbc-ag.de

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