Original-Research

Blockchain Intelligence Group (von GBC AG): BUY

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Original-Research: Blockchain Intelligence Group - von GBC AG

Einstufung von GBC AG zu Blockchain Intelligence Group

Unternehmen: Blockchain Intelligence Group
ISIN: CA08906Q1000

Anlass der Studie: Research Note
Empfehlung: BUY
Kursziel: 1,03 CAD
Letzte Ratingänderung: -
Analyst: Harald Hof, Matthias Greiffenberger

The first half of 2018 is in line with expectations - the current gross margin of over 80% shows the high scalability of the business model
BIG predominantly operates in two segments, the area of forensic analysis and the area of risk assessment. Both areas relate primarily to the Bitcoin universe, but other cryptocurrencies are increasingly supported.
In the area of forensic analysis, BIG develops software primarily for police agencies as well as national and multinational law enforcement. They use the software to monitor and review flows of cryptocurrencies. BIG also allows tracking on the dark web, where cryptocurrencies are primarily used to pay for illegal goods and services. The product QLUE was developed for this purpose. QLUE is an analytics platform for forensic investigation that helps to combat financial crime and the financing of terrorism associated with Bitcoin. The program contains various technologies and extended search algorithms to identify suspicious activities and to detect Bitcoin transactions on the dark web.

The second area of risk assessment deals with the assessment of risk levels for transactions and wallets. The developed technology could make a significant contribution to ensuring that cryptocurrency exchanges, banks, auditors and the general public have a reliable and comprehensible cryptocurrency assessment tool. This represents an important step in increasing the transparency of cryptocurrencies and would facilitate regulation. With increasing regulation, cryptocurrencies would gain recognition and mass suitability, which is required for this technology to establish itself in the long term. The company developed BitRank for this purpose. BitRank is a risk scoring system that assesses the security level of Bitcoin transactions and is simple to use with clearly comprehensible system. To this end, BitRank checks which transactions Bitcoin was historically used in the blockchain. The system provides a warning if accounts, dealers or the like that are associated with illegal activity were involved. BitRank could therefore provide banks with information about possible money laundering.

It should be noted that both areas constitute services in the blockchain infrastructure that are used independently of the prices of cryptocurrencies.

The products of the company are currently in the advanced beta and we expect the commercial market launch in Q1 2019. Strategic partnerships have been formed to this end to establish BIG solutions as a valid standard in the long term. This strategy seems to be working at present. We have identified important milestones in relation to this development. For example, a pilot project was completed at the beginning of 2018 with a large financial institution in Canada. This cooperation served to explore opportunities to carry out a risk and compliance assessment of customer activities. In our view, this project demonstrates traditional financial institutions' clear interest in cryptocurrencies and the great challenge to be overcome by potential regulation.

Furthermore, a reseller agreement was concluded in April 2018 with the German company SHS VIVEON AG for BitRank. BitRank is to be integrated into SHS VIVEON's customer management software in order to achieve improved transaction transparency and to guarantee more comprehensive customer risk assessment. This also shows that the industry is still in its infancy and there is global demand for solutions. This also forms the basis of cryptocurrencies' establishment as a payment method in the long term.
The commercial market launch is expected in Q1 2019, therefore current sales figures only have limited significance. Sales have started and revenue in the amount of CAD 0.06 million has been generated in the first half of the year. Nevertheless, a gross margin of 80.5% has already been achieved, which speaks for the business model. At present, revenue is almost exclusively (93.9%) generated by consulting services. However, these consulting services should also result in product revenue in the medium term since the company uses its own software for demonstrations and training. EBIT in the first half of 2018 was CAD -4.51 million, primarily due to advertising costs, research and development and personnel expenses.
Based on the assumption that mainstream adoption of cryptocurrencies by investors and consumers will continue to grow in the medium to long term, the technology has the potential to fundamentally change the world. The situation is often compared to the establishment of the internet.
Based on the first half of the year, the company is on the right track in our opinion and is focusing on advance sales and strategic partnerships. The company continues to report on its sales successes and concluded, for example, a customer agreement with QUOINE, creators of one of the world's largest cryptocurrency exchanges, in September 2018. This is already the second customer agreement with one of the largest crypto exchanges and shows the demand for BIG technologies. QUOINE operates one of the world's largest crypto fiat exchanges with an annual transaction volume of over USD 12 billion and is fully regulated in Japan. QUOINE is set to integrate BitRank into their platform and BIG will be paid based on API requests to the risk scoring service. With the BitRank Verified solution, BIG helps the QUOINE exchange to combat money laundering and reduces risks by creating transparency with regard to the legality of transactions.
Against this background, we expect extremely dynamic growth in revenue and initially expect CAD 0.30 million in 2018, followed by CAD 5.53 million in 2019 and CAD 11.27 million in 2020.

The high scalability should generate high profitability in the medium term. Currently, we expect EBITDA to be CAD -4.03 million in 2019, CAD 0.88 million in 2020 and CAD 4.22 million in 2021.

Based on our DCF model, we have determined a fair value of CAD 1.03 and, unchanged from the initial coverage, assign the rating BUY.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/17047.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
[e-mail]
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,5b,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung.htm
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Datum (Zeitpunkt) Fertigstellung: 09.10.18 (11:00 Uhr) Datum (Zeitpunkt) erste Weitergabe: 09.10.18 (12:00 Uhr)

übermittelt durch die EQS Group AG.

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw. Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.

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Rating: BUY
Analyst: GBC
Kursziel: 1,03 Euro