Last close As at 05/08/2026
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Market capitalisation
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Research: Financials
CoinShares International (CS) maintains its stable development in 2023, posting an adjusted EBITDA of £9.9m in Q323 (£6.4m in Q322). This is despite the £3.0m loss on principal investments, arising primarily from provisions recognised by FlowBank (in which CS holds a 28.3% stake). Both the asset management business and capital markets activities were solid contributors to the Q323 results, with the former posting £10.7m in fees and the latter £9.3m in gains and income. In September 2023, CS officially launched its Hedge Fund Solutions (active asset management business), with its initial strategies active since the end of Q323 and discussions with potential investors across the globe ongoing.
CoinShares International |
Both profit engines delivering solid results |
Q323 results |
Financials |
15 November 2023 |
Share price performance
Business description
Next events
Analyst
CoinShares International is a research client of Edison Investment Research Limited |
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CoinShares International (CS) maintains its stable development in 2023, posting an adjusted EBITDA of £9.9m in Q323 (£6.4m in Q322). This is despite the £3.0m loss on principal investments, arising primarily from provisions recognised by FlowBank (in which CS holds a 28.3% stake). Both the asset management business and capital markets activities were solid contributors to the Q323 results, with the former posting £10.7m in fees and the latter £9.3m in gains and income. In September 2023, CS officially launched its Hedge Fund Solutions (active asset management business), with its initial strategies active since the end of Q323 and discussions with potential investors across the globe ongoing.
Year |
Revenue |
Other gains and |
Adjusted EBITDA* (£m) |
Adjusted EPS (£) |
DPS |
P/E |
Yield |
12/21 |
80.8 |
70.9 |
121.1 |
1.62 |
0.0 |
1.8 |
N/A |
12/22 |
51.5 |
(19.6) |
(6.5) |
0.04 |
0.0 |
74.4 |
N/A |
12/23e |
41.4 |
31.5 |
40.9 |
0.40 |
0.0 |
7.4 |
N/A |
12/24e |
54.3 |
40.5 |
55.4 |
0.65 |
0.0 |
4.6 |
N/A |
Note: *Sum of revenue, other gains and income (income and gains from capital markets infrastructure and gains on principal investments) less administrative expenses excluding D&A.
Ether staking and fixed income driving CSCM
The capital market infrastructure segment’s (CSCM’s) Q323 gains and income came primarily from Ether staking rewards (£4.9m), as well as fixed income activities (£3.4m). This was supplemented by gains on delta neutral strategies (£0.8m), mostly trading in CME futures, as well as a minor income from liquidity provisioning (£0.2m). CS’s asset management fees were largely generated on XBT Provider products (£9.6m), which saw US$30.8m net outflows in Q323 (US$87.5m ytd), relatively moderate compared to its end-September 2023 AUM of c £1.3bn and the net outflows in 2021 and 2022. CoinShares Physical contributed £0.6m of fees and saw minor net inflows of US$6.7m in Q323 (vs US$40m in H123).
Approval of spot Bitcoin ETF in the US coming soon?
We note that, after the reporting date, digital asset prices went up significantly (with the bitcoin price up c 32% in Q423 so far), fuelled by hopes that a spot Bitcoin ETF could be approved by the US Securities and Exchange Commission (SEC) soon. A catalyst for this has been the recent court win of Grayscale, the largest digital asset manager globally, which had filed an application to convert its Bitcoin Trust into a spot ETF. A judge in the US Court of Appeals for the DC circuit ordered that the SEC’s denial of Grayscale’s application be reviewed. We note that several high-profile asset managers also have spot Bitcoin ETF applications that are pending review, including BlackRock, Fidelity and WisdomTree, among others.
Valuation: Still trading below book value
Despite more than doubling year to date, CS’s share price is still well below our fair value estimate in our base case scenario of SEK83.6 (broadly unchanged vs SEK85.0 previously). Using a more cautious scenario with digital asset price growth of only 2% pa, we value CS at SEK40.6 (vs SEK40.0 previously).
Powered by its two core divisions in Q323
Following a robust H123, CS continued to generate good results in Q323, with an adjusted EBITDA of £9.9m compared to £6.4m in Q322 (see Exhibit 1). Asset management generated fees of £10.7m, broadly stable compared to both Q322 and Q223, while CSCM posted £9.3m gains (vs £4.5m in Q322 and £10.0m in Q223).
Some drag on performance came from CS’s principal investments (a £3.0m loss in Q323 vs marginal losses of £0.1m and £0.2m in Q322 and Q223, respectively), which is primarily the result of the c £5.0m loss attributable to its stake in Swiss-based online neo bank FlowBank. This loss resulted from significant provisions FlowBank made in its FY22 accounts ‘to meet potential challenges and guarantee the stability of its future operations’, according to the company’s press statement from 18 October 2023. That said, CS highlighted that FlowBank has reported positive cash flow in 2023 year to date (CS accounts for FlowBank as an associate). We note that FlowBank completed a funding round in Q123 at a pre-money valuation that is 2.5x CS’s initial investment cost (£8.7m), which would value CS’s stake in FlowBank at around £21.8m (close to the fair value recognised in CS’s books at end-September 2023 of £22.8m). The FlowBank loss was partly offset by the revaluation of CS’s stakes in digital asset custodian Komainu (£1.5m) and Kingdom Trust (£1.2m), an independent qualified custodian operating US retirement account provider Choice.
CS’s approach to operating expenses remains prudent, with £6.9m administrative expenses excluding D&A in Q323 versus £8.3m in Q322, resulting in an EBITDA margin of 58.2% (vs 42.6% in Q322). CS’s total comprehensive income of £14.4m in Q323 benefited from foreign exchange tailwinds stemming from the depreciation of sterling against the US dollar (the currency translation differences arise mostly from the accrued XBT Provider fees, which are hedged to US dollars).
Exhibit 1: Q323 results highlights
£m, unless otherwise stated |
Q323 |
Q322 |
change y-o-y |
Q223 |
change q-o-q |
Revenue, of which: |
10.7 |
10.8 |
-1.0% |
10.7 |
0.1% |
XBT Provider |
9.6 |
9.1 |
4.8% |
9.8 |
-2.1% |
CoinShares Physical |
0.6 |
0.6 |
-9.5% |
0.5 |
15.3% |
Equities platform |
0.4 |
0.4 |
-5.3% |
0.3 |
8.2% |
Other |
0.2 |
0.2 |
-16.5% |
0.1 |
125.0% |
Capital market infrastructure income/gains, of which: |
9.3 |
4.5 |
108.3% |
10.0 |
-6.7% |
Liquidity provisioning |
0.2 |
0.4 |
-59.0% |
0.2 |
-13.2% |
Delta Neutral Trading Strategies |
0.8 |
0.3 |
147.1% |
2.0 |
-59.9% |
Fixed income activities |
3.4 |
1.2 |
192.0% |
3.0 |
12.4% |
DeFi |
4.9 |
1.5 |
216.1% |
6.0 |
-18.4% |
Other |
0.1 |
1.1 |
NM |
(1.1) |
NM |
Principal investment gains/(losses) |
(3.0) |
(0.1) |
NM |
(0.2) |
NM |
Administrative expenses excluding D&A |
(6.9) |
(8.3) |
-16.9% |
(7.5) |
-8.3% |
Adjusted EBITDA |
9.9 |
6.4 |
53.0% |
12.8 |
-23.2% |
Adjusted EBITDA margin |
58.2% |
42.6% |
15.6pp |
62.8% |
-4.6pp |
Depreciation and amortisation |
(1.0) |
(0.8) |
13.4% |
(1.1) |
-15.6% |
Finance expense |
(2.0) |
(0.9) |
130.1% |
(1.5) |
27.5% |
Income taxes |
(0.2) |
(0.3) |
-26.4% |
(0.1) |
71.8% |
Net income |
6.7 |
4.5 |
50.6% |
10.0 |
-32.9% |
Currency translation differences |
7.7 |
15.5 |
-50.5% |
(4.8) |
-261.1% |
Total comprehensive income |
14.4 |
20.0 |
-27.8% |
5.3 |
172.2% |
Source: CoinShares International data
Asset management: Fee income stable q-o-q and y-o-y
CS’s fee income continues to be driven primarily by the earlier XBT Provider product range (£9.6m in Q323) offering synthetic backing from a combination of physical digital assets and derivatives. CoinShares Physical, its more modern, physically backed exchange traded products (ETPs), generated £0.6m fees in Q323, followed by £0.4m from the blockchain equities platform. XBT Provider products experienced moderate net outflows of US$30.8m in Q323, bringing the year-to-date net outflows to US$87.5m (vs net outflows in 2021 and 2022 of US$1,173m and US$446m, respectively). A further c US$8m in net outflows was recorded post balance sheet date to 10 November 2023.
As discussed in our August update note, we conservatively expect further net outflows from this product suite in the coming years (US$120m in 2023 and US$391m in 2024, vs US$158m and US$424m, respectively, assumed previously) given its synthetic backing and high management fee of 2.5%. That said, we note the sustained interest among Nordic investors in these products (with some possible drivers being strong brand and pricing in Swedish krona), which CS is building upon, as illustrated by its recent first direct-to-consumer campaign in Sweden. CS’s management believes that it can move the XBT Provider towards a net inflow position using cost-efficient strategies.
|
Exhibit 2: XBT Provider weekly net outflows (US$m) |
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|
Source: CoinShares International data |
Given the muted activity and sentiment in the digital asset markets in Q323 (illustrated by the c 9% decline in the crypto market’s total market cap in Q323), CoinShares Physical recorded a mere US$6.7m net inflows during the quarter (US$53.8m ytd), with the US$10.5m net inflows into altcoin ETPs offsetting the US$3.8m net outflows from the Bitcoin ETP. Post reporting date, there was a pick-up in net inflows with c U$38m collected to 10 November 2023, according to CS’s Digital Asset Fund Flows Weekly report. We assume c US$110m and US$300m net inflows into the CoinShares Physical platform in 2023 and 2024, respectively (vs c US$120m and US$300m, respectively, assumed previously). On top of strategic partnerships with broker platforms (which so far have been the main driver of inflows into CoinShares Physical ETPs), CS also plans to embark on direct-to-customer campaigns in Germany.
CS’s blockchain equities ETF experienced c US$6.8m of net inflows in the first nine months of 2023 (US$11.4m so far this year to 10 November 2023). As a result, CS’s total AUM reached £1.98bn at end-September 2023 (vs £2.14bn at end-June 2023 and £1.44bn at end-2022), see Exhibit 3.
|
Exhibit 3: CS’s assets under management (£m) |
|
|
Source: CoinShares International data |
CSCM: Benefiting from Ethereum’s shift to proof-of-stake
Despite the low volatility and spot volumes in the digital asset markets, CSCM delivered solid £9.3m gains and income in Q323, mostly driven by Ether staking rewards (£4.9m, received in exchange for providing Ether as collateral to secure the Ethereum network), as well as CS’s fixed income activities (£3.4m, which includes digital asset lending and interest on balances with brokers and treasury bills). This was supplemented by £0.8m gains on delta neutral trading strategies, mostly from trading in CME futures. CS’s liquidity provisioning income was modest at £0.2m due to the limited in- and outflows from XBT Provider products.
We note that the current Ether staking yield stands at c 4.56% pa, according to CoinDesk’s Composite Ether Staking Rate. This compares with 4.23% at end-September 2023 and 4.80% at end-2022. The yield is influenced by several factors, most notably the proportion of Ether being staked (which has been steadily growing, supported by recent network upgrades including The Merge and Shapella) and activity on the Ethereum network (which has been more modest recently given muted digital asset markets). CS’s management expects the yield to go down further to around 3.5% by end-2024, which will be a function of a continued increase in the percentage of Ether being staked (reducing the rewards from the consensus layer), partly offset by a pick-up in network activity (ie supporting rewards from the execution layer), with one of the potential drivers for the latter being growth in layer-2 network activity (for an explanation of layer-2 solutions, see our earlier thematic blockchain report). We have factored in the 3.5% staking yield in our FY24 forecasts.
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Exhibit 4: CS’s capital market infrastructure gains (£m) |
|
|
Source: CoinShares International data |
Forecast and valuation revisions
We have applied minor positive changes to our asset management fee and CSCM gains/income forecasts (see Exhibit 5). We have marginally lowered our adjusted EBITDA forecast for FY23, mostly due to the loss recognised in Q323 on CS’s investment in FlowBank. At the same time, we have raised our FY24 and FY25 EBITDA forecasts by 5.8% and 6.9%, respectively. Our total comprehensive income forecast for FY23 is up by 29% due to the positive foreign exchange effects in Q323 as described above, while the FY24 and FY25 estimates are up broadly in line with the adjusted EBITDA forecast revisions in absolute terms.
Our CS fair value estimate (derived from our discounted cash flow model) is marginally down to SEK83.6 per share (vs SEK85.0 previously), mostly because we assume a lower cash inflow from the cash release of XBT Provider fees, given the relatively limited redemptions recently. Using a more cautious scenario with digital asset price growth of only 2% pa, we value CS at SEK40.6 (vs SEK40.0 previously).
Exhibit 5: Summary of forecast revisions
£m, unless otherwise stated |
FY22 |
FY23e |
FY24e |
FY25e |
||||||
Actual |
Old |
New |
diff (%) |
Old |
New |
diff (%) |
Old |
New |
diff (%) |
|
Revenue, of which: |
51.5 |
40.9 |
41.4 |
1.3 |
53.2 |
54.3 |
2.1 |
77.2 |
80.2 |
4.0 |
XBT Provider |
46.0 |
36.6 |
36.6 |
0.2 |
41.5 |
41.8 |
0.7 |
55.9 |
56.9 |
1.9 |
CoinShares Physical and other* |
2.3 |
2.5 |
2.9 |
15.0 |
9.1 |
10.3 |
14.0 |
17.4 |
20.0 |
14.7 |
Block index |
1.9 |
1.4 |
1.4 |
(2.0) |
1.9 |
1.6 |
(17.7) |
2.7 |
2.1 |
(22.5) |
B2C |
0.9 |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
Capital market infrastructure income/gains, of which: |
(17.4) |
35.1 |
35.1 |
0.2 |
39.4 |
40.5 |
2.8 |
42.5 |
43.7 |
2.8 |
Liquidity provisioning |
4.5 |
1.6 |
0.7 |
(58.4) |
4.2 |
3.0 |
(27.0) |
3.9 |
5.0 |
28.2 |
Delta Neutral Trading Strategies |
2.6 |
7.3 |
5.4 |
(25.6) |
6.6 |
7.4 |
11.3 |
9.8 |
8.8 |
(9.5) |
Fixed income activities |
5.0 |
9.9 |
11.8 |
19.3 |
9.9 |
11.2 |
13.3 |
9.4 |
10.7 |
13.3 |
DeFi |
13.9 |
18.0 |
18.8 |
4.8 |
18.7 |
18.8 |
0.7 |
19.4 |
19.2 |
(1.2) |
Other |
(43.3) |
(1.8) |
(1.6) |
(6.5) |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
Principal investment gains/(losses) |
(4.9) |
(1.2) |
(3.6) |
203.9 |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
Administrative expenses excluding D&A |
(35.3) |
(32.6) |
(31.6) |
(3.1) |
(39.6) |
(38.9) |
(1.9) |
(48.9) |
(48.4) |
(1.1) |
Adjusted EBITDA |
(6.5) |
41.8 |
40.9 |
(2.2) |
52.3 |
55.4 |
5.8 |
69.6 |
74.3 |
6.9 |
Total comprehensive income |
3.0 |
21.4 |
27.6 |
29.0 |
41.1 |
44.4 |
8.1 |
57.9 |
62.1 |
7.4 |
Source: CoinShares data, Edison Investment Research. Note: *Includes fees from CoinShares Physical and Invesco.
Exhibit 6: Financial summary
Year ending 31 December, |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
FY23e |
FY24e |
FY25e |
FY26e |
FY27e |
Income Statement |
|
|
|
|
|
|
|
|
|
|
Revenues |
10,549 |
11,331 |
18,389 |
80,755 |
51,484 |
41,441 |
54,273 |
80,203 |
99,035 |
104,931 |
Administrative expenses |
(10,927) |
(9,284) |
(14,312) |
(32,059) |
(38,166) |
(34,602) |
(41,900) |
(51,413) |
(60,070) |
(65,957) |
Other operating income |
4,811 |
529 |
607 |
14,665 |
16,599 |
14,000 |
14,700 |
15,435 |
16,207 |
17,017 |
Profit/(loss) on financial instruments |
519,988 |
(64,553) |
(1,398,436) |
(2,483,773) |
2,001,602 |
(990,228) |
(1,115,076) |
(1,933,512) |
(697,285) |
(702,633) |
Realised gain/(loss) on investments |
(1,074) |
(405) |
942 |
5,287 |
(2,800) |
3,021 |
0 |
0 |
0 |
0 |
Adj EBITDA |
12,993 |
11,171 |
22,113 |
121,059 |
(6,521) |
40,896 |
55,373 |
74,330 |
81,277 |
83,926 |
EBIT |
523,347 |
(62,382) |
(1,392,810) |
(2,415,125) |
506,719 |
34,370 |
42,389 |
61,407 |
68,227 |
70,746 |
Finance income |
693 |
931 |
3,793 |
10,905 |
12,964 |
10,131 |
9,936 |
9,875 |
10,002 |
10,131 |
Finance expense |
(148) |
(404) |
(1,191) |
(7,045) |
(6,373) |
(6,826) |
(7,148) |
(8,107) |
(7,997) |
(9,122) |
Pre-tax profit |
523,892 |
(61,855) |
(1,390,208) |
(2,411,265) |
513,310 |
37,675 |
45,176 |
63,174 |
70,232 |
71,756 |
Income taxes |
(230) |
(269) |
(401) |
(1,056) |
(500) |
(580) |
(777) |
(1,030) |
(1,131) |
(1,154) |
Net income |
523,662 |
(62,124) |
(1,390,610) |
(2,412,322) |
512,810 |
37,095 |
44,399 |
62,144 |
69,101 |
70,601 |
Total comprehensive income |
14,407 |
8,914 |
18,419 |
113,443 |
3,046 |
27,595 |
44,399 |
62,144 |
69,101 |
70,601 |
Adjusted EPS (diluted, £) |
N/A |
N/A |
0.28 |
1.62 |
0.04 |
0.40 |
0.65 |
0.91 |
1.01 |
1.04 |
DPS (£) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Balance Sheet |
|
|
|
|
|
|||||
Property, plant and equipment |
214 |
376 |
223 |
510 |
1,936 |
1,200 |
534 |
(61) |
(583) |
(1,028) |
Digital assets |
N/A |
N/A |
N/A |
N/A |
112 |
112 |
112 |
112 |
112 |
112 |
Intangible assets |
0 |
7 |
20 |
19,781 |
11,992 |
11,119 |
10,246 |
9,373 |
8,500 |
7,627 |
Investments |
6,158 |
5,585 |
3,626 |
24,501 |
45,020 |
41,494 |
41,494 |
41,494 |
41,494 |
41,494 |
Long term receivables and other |
15 |
323 |
329 |
581 |
1,360 |
1,360 |
1,360 |
1,360 |
1,360 |
1,360 |
Non-current assets |
6,387 |
6,290 |
4,199 |
45,372 |
60,420 |
55,285 |
53,746 |
52,278 |
50,884 |
49,565 |
Trade and other receivables |
9,350 |
27,011 |
62,274 |
1,075,971 |
199,045 |
598,145 |
839,812 |
1,218,758 |
1,390,640 |
1,591,122 |
Digital assets |
217,521 |
427,524 |
1,826,695 |
2,736,481 |
868,944 |
1,621,782 |
2,452,828 |
3,860,338 |
4,391,216 |
5,066,266 |
Cash at bank |
32,897 |
2,350 |
2,266 |
11,088 |
26,565 |
12,962 |
32,757 |
41,789 |
86,230 |
182,335 |
Amounts due from brokers |
N/A |
39,405 |
66,518 |
118,976 |
233,507 |
161,963 |
241,099 |
386,459 |
440,810 |
513,073 |
Current assets |
259,767 |
496,290 |
1,957,752 |
3,942,516 |
1,328,061 |
2,394,851 |
3,566,496 |
5,507,344 |
6,308,896 |
7,352,795 |
Total assets |
266,154 |
502,580 |
1,961,951 |
3,987,888 |
1,388,480 |
2,450,136 |
3,620,242 |
5,559,622 |
6,359,779 |
7,402,361 |
Share capital |
2,214 |
2,215 |
31 |
34 |
34 |
34 |
34 |
34 |
34 |
34 |
Share premium |
111 |
111 |
2,387 |
30,781 |
30,781 |
30,781 |
30,781 |
30,781 |
30,781 |
30,781 |
Other reserves |
104,322 |
168,813 |
1,209,630 |
667,846 |
(22,500) |
(32,000) |
(32,000) |
(32,000) |
(32,000) |
(32,000) |
Retained earnings |
(68,003) |
(125,795) |
(1,155,551) |
(497,727) |
195,644 |
232,739 |
277,139 |
339,283 |
408,384 |
478,985 |
Total equity |
38,644 |
45,343 |
56,497 |
200,934 |
203,959 |
231,554 |
275,954 |
338,098 |
407,199 |
477,800 |
Trade payables and other liabilities |
227,469 |
419,340 |
1,792,936 |
3,491,612 |
1,025,734 |
2,016,479 |
3,118,203 |
4,998,194 |
5,701,134 |
6,635,730 |
Amounts due to brokers |
N/A |
37,631 |
112,121 |
292,708 |
135,385 |
178,701 |
202,683 |
199,928 |
228,045 |
265,429 |
Lease liabilities |
0 |
0 |
0 |
0 |
581 |
581 |
581 |
581 |
581 |
581 |
Current tax liabilities |
42 |
266 |
398 |
2,635 |
236 |
236 |
236 |
236 |
236 |
236 |
Current liabilities |
227,510 |
457,237 |
1,905,454 |
3,786,955 |
1,161,937 |
2,195,998 |
3,321,704 |
5,198,940 |
5,929,997 |
6,901,977 |
Non-current liabilities |
0 |
0 |
0 |
0 |
22,584 |
22,584 |
22,584 |
22,584 |
22,584 |
22,584 |
Total equity and liabilities |
266,154 |
502,580 |
1,961,951 |
3,987,888 |
1,388,480 |
2,450,136 |
3,620,242 |
5,559,622 |
6,359,779 |
7,402,361 |
Ratios |
|
|
|
|
|
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Adj. EBITDA margin |
52.1% |
54.0% |
62.8% |
85.3% |
-19.1% |
53.4% |
58.5% |
60.0% |
58.2% |
56.5% |
Adj. net margin |
59.4% |
38.4% |
47.6% |
79.9% |
8.9% |
36.0% |
46.9% |
50.1% |
49.5% |
47.5% |
Source: Company data, Edison Investment Research
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Research: TMT
Nanoco’s announcement that it has fulfilled its first commercial order heralds the company’s transition from a development-stage company to a commercial supplier of quantum materials. The order provides support for our FY24 forecasts and is a key milestone on the company’s pathway towards becoming self-financing in FY25, with the potential to scale up significantly beyond that, if design wins in high-volume sensing applications can be secured.