CoinShares International (OMX: CS)

Last close As at 21/06/2024

SEK62.50

2.10 (3.48%)

Market capitalisation

SEK4,228m

CoinShares International (CS) develops innovative infrastructure, financial products and services for the digital asset class.

Equity Proposition

CoinShares International is a leading European digital asset firm that provides institutional and retail investors access to digital assets in a secure, transparent and regulated way. It is built on strong technology, which is the foundation of its two major business verticals: asset management platforms and capital markets infrastructure.

1. Digital assets have become a new asset class

We believe that digital assets have become an established, distinct asset class with growing acceptance among retail and institutional investors. Bitcoin’s investment case is centred around its ‘digital gold’ status as an incorruptible, trustless, independent monetary system with a predefined currency supply based on a peer-to-peer network. The appeal of blockchains such as Ethereum is underpinned by decentralised finance as a global, open alternative to the existing financial system, granting all users free access to financial products such as borrowing, lending, saving, trading and payments without the need for traditional intermediaries and in a 24/7 set-up. Finally, non-fungible tokens, or NFTs, extend the technology’s use cases beyond finance and into areas such as gaming, fine art, licensing and digital identity.

A significant milestone for the asset class has been the approval of several spot bitcoin exchange traded funds (ETFs) in the US in January 2024, which subsequently attracted considerable capital. The sector also experienced significant technological advancements, such as major upgrades to the Ethereum blockchain, which allowed the broad investor audience to access the steady income from staking rewards.

2. The company is more than a simple proxy on an investment in bitcoin

The company’s asset management platforms include passive investment products and the ETF platform, which generate regular income from management fees. Its capital markets infrastructure division is active in liquidity provisioning, fixed-income investments, decentralised finance investments and proprietary trading based on low-latency delta-neutral (ie non-directional) strategies aimed at exploiting market inefficiencies. Consequently, the company is more than a simple beta play on the bitcoin price, as it provides the opportunity to benefit from both overall progress in terms of digital asset adoption (and the potential accompanying increase in the market capitalisation of major cryptocurrencies) and market volatility in the sector.

3. CoinShares International is a well-established, experienced player in the industry

CoinShares International is one of the pioneers in the emerging digital assets sector, formed in 2013 and headquartered in Jersey, with offices in London and New York. It is a well-established player in a nascent, high-growth industry and one of the largest digital asset companies globally. The company has recently made forays into the US market through its newly launched hedge fund solutions business, as well as the acquisition of Valkyrie Funds, which manages several investment products linked to digital assets, including a US spot bitcoin ETF. We believe that the high-profile collapses of poorly regulated players in the crypto sector in 2022, coupled with recent legislative progress in the sector, support the market position of regulated and transparent investment products offered by CoinShares International.

4. CoinShares International has recently become a dividend payer

The company has recently introduced a dividend policy to pay out between 20% and 40% of its total comprehensive income adjusted for currency translation differences. It has already declared its first dividend, paid out of FY23 earnings, at 13 pence per share. Based on the share price at the time of the declaration, it implies a dividend yield of around 3%.

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Sector

Financials

Equity Analyst

Milosz Papst

Milosz Papst

Director, Financials

Key Management

  • Daniel Masters

    Chairman

  • Jean-Marie Mognetti

    CEO

  • Richard Nash

    CFO

Balance Sheet

Forecast net debt (£m)

16.1

Forecast gearing ratio (%)

5

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (2.2) 15.7 70.1
Relative 0.3 12.5 45.2
52 week high/low SEK71.5/SEK37.0

Financials

CoinShares International (CS) is a pioneer and a well-established player in the nascent, high-growth digital asset industry. The company recently introduced a dividend policy to pay out between 20% and 40% of its total comprehensive income adjusted for currency translation differences. This is underpinned by the steady income from management fees and capital market infrastructure activities, including rewards from staking digital assets, most notably Ether following the recent major upgrades to the Ethereum blockchain network.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2022A 51.3 (6.8) (16.0) 4.0 115.8 1.0
2023A 43.1 57.3 47.2 54.0 8.6 N/A
2024E 85.8 83.6 73.4 120.9 3.8 N/A
2025E 91.4 99.1 91.0 146.6 3.2 2.0

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