Last close As at 05/08/2026
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Research: Financials
CoinShares International (CS) delivered another solid set of quarterly results, with Q223 EBITDA of £12.8m versus £8.4m in Q123. Its asset management business generated fee revenue of £10.6m (down from £14.2m in Q222, but up from £9.2m in Q123) as total AUM rebounded to £2.14bn at end-June 2023 from £1.44bn at end-2022. Its capital market infrastructure activities (CSCM) posted a £10.0m gain in Q223, bolstered primarily by fixed income, staking and decentralised finance (DeFi) activities. CS is continuing to develop its active asset management business, starting with running its first strategy to generate a track record ahead of the formal launch towards the end of 2023.
CoinShares International |
Maintaining AUM leadership in Europe |
Q223 results |
Financials |
16 August 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) delivered another solid set of quarterly results, with Q223 EBITDA of £12.8m versus £8.4m in Q123. Its asset management business generated fee revenue of £10.6m (down from £14.2m in Q222, but up from £9.2m in Q123) as total AUM rebounded to £2.14bn at end-June 2023 from £1.44bn at end-2022. Its capital market infrastructure activities (CSCM) posted a £10.0m gain in Q223, bolstered primarily by fixed income, staking and decentralised finance (DeFi) activities. CS is continuing to develop its active asset management business, starting with running its first strategy to generate a track record ahead of the formal launch towards the end of 2023.
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 |
2.3 |
N/A |
12/22 |
51.5 |
(19.6) |
(6.5) |
0.04 |
0.0 |
92.0 |
N/A |
12/23e |
40.9 |
33.9 |
41.8 |
0.31 |
0.0 |
11.7 |
N/A |
12/24e |
53.2 |
39.4 |
52.3 |
0.60 |
0.0 |
6.1 |
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.
Firing on both cylinders
CS’s assets under management (AUM) within its passive asset management business was supported by the rebound in digital asset prices from the end-2022 trough, as well as by limited outflows from XBT Provider products and continued steady, though moderate inflows to CoinShares Physical ETPs. CSCM also delivered good results despite the relatively low volatility and trading volumes in the digital asset markets year-to-date compared to the bull run in 2021. This was assisted by rewards from Ether staking (where CS became more active following the successful Shanghai upgrade enabling withdrawals of staked Ether), as well as higher interest rates and opportunities in the CME futures markets.
Gradual digital asset adoption continues
The regulatory crackdown on key crypto players (combined with still pending US congress legislation for the sector) continues in the US, with the Securities and Exchange Commission filing enforcement actions against Binance and Coinbase in June 2023. In spite of this, there are further signs of interest from traditional finance players in the digital assets space, as illustrated by recent US filings for a Bitcoin spot ETF from BlackRock and Invesco, as well as PayPal’s launch of its own Ethereum-based stablecoin. Moreover, digital asset investment products attracted net inflows in the year to 4 August of c US$365m globally, according to CS data.
Valuation: Upside remains despite recent price rally
Despite increasing by c 67% since our last update note in May 2023, CS’s share price is still well below our fair value estimate in our base case scenario, which currently stands at SEK85.0 (slightly up from SEK79.0 previously). Using a more cautious scenario with digital asset price growth of only 2% pa, we value CS at SEK40.0 (vs SEK34.6 previously).
Continued robust EBITDA in Q223 at £12.8m
CS continues to deliver robust earnings, with Q223 adjusted EBITDA of £12.8m (see Exhibit 1), which represents a c 35% y-o-y increase (after adjusting Q222 for the £17.7m one-off Terra/UST loss), with asset management fees of £10.7m (vs £13.9m in Q222) and capital market infrastructure gains of £10.0m (vs £6.3m in Q222 excluding the above-mentioned one-off loss). As a result, its H123 net profit came in at £16.4m, representing a c 16% annualised return on equity. Its H123 total comprehensive income was somewhat lower at £8.2m due to £8.1m negative sterling to US dollar currency translation differences arising mostly from the accrued XBT Provider fees (which are hedged to US dollars).
Exhibit 1: Q223 results highlights
£m, unless otherwise stated |
Q223 |
Q222 |
change y-o-y |
Q123 |
change q-o-q |
Revenue, of which: |
10.7 |
13.9 |
-23.1% |
9.4 |
14.1% |
XBT Provider |
9.8 |
13.0 |
-25.0% |
8.3 |
17.0% |
CoinShares Physical |
0.5 |
0.6 |
-22.9% |
0.6 |
-10.4% |
Equities platform |
0.3 |
0.6 |
-39.2% |
0.3 |
2.0% |
Other |
0.1 |
(0.1) |
NM |
0.1 |
-31.8% |
Capital market infrastructure income/gains, of which: |
10.0 |
(11.4) |
NM |
6.7 |
49.0% |
Liquidity provisioning |
0.2 |
1.6 |
-89.2% |
0.7 |
-74.5% |
Delta Neutral Trading Strategies |
2.0 |
(1.3) |
NM |
1.4 |
41.0% |
Fixed income activities |
3.0 |
0.8 |
277.2% |
2.2 |
36.1% |
DeFi |
6.0 |
4.9 |
20.6% |
3.0 |
97.4% |
Other |
(1.1) |
(17.5) |
NM |
(0.6) |
83.3% |
Principal investment gains/(losses) |
(0.2) |
(5.1) |
NM |
(0.6) |
-63.2% |
Administrative expenses excluding D&A |
(7.5) |
(5.8) |
29.8% |
(6.9) |
9.1% |
Adjusted EBITDA |
12.8 |
(8.2) |
NM |
8.4 |
52.0% |
Adjusted EBITDA margin |
62.8% |
N/A |
NM |
54.7% |
15.0% |
Depreciation and amortisation |
(1.1) |
(0.7) |
51.1% |
(0.8) |
48.2% |
Finance expense |
(1.5) |
(2.4) |
-35.9% |
(1.3) |
20.7% |
Income taxes |
(0.1) |
(0.1) |
NM |
(0.1) |
4.5% |
Net income |
10.0 |
(11.4) |
NM |
6.3 |
59.7% |
Currency translation differences |
(4.8) |
11.3 |
NM |
(3.4) |
41.5% |
Total comprehensive income |
5.3 |
(0.1) |
NM |
2.9 |
80.5% |
Source: CoinShares International data
Asset management: Are XBT Provider trackers really legacy products?
CS’s asset management fees of £10.6m in Q223 still largely came from its XBT Provider products (£9.8m), with CoinShares Physical and the blockchain equities platform delivering £0.5m and £0.3m, respectively. XBT Provider trackers may be considered legacy products, given that: 1) they have synthetic backing from a combination of physical digital assets and derivatives giving rise to increased counterparty risk and 2) they are subject to a quite high 2.5% fee. Therefore, our base scenario in the long term assumes continued net outflows from these products, as earlier buyers realise their capital gains, as was the case in both 2021 and 2022 with net outflows of US$1,173m and US$446m, respectively. However, year-to-date net outflows were quite muted with only US$7.2m in Q223 after US$40.5m in Q123 (see Exhibit 2). This may be due to overall more limited activity in the digital markets (and related products) so far this year. That said, CS highlighted that XBT Provider experienced sustained interest in the Nordic markets with 3,500 new clients per month (as opposed to continued redemptions from professional investors in the US and the rest of Europe). Management highlighted that this may be due to XBT Provider’s strong brand locally and long track record, and the fact that it is available in local currency (Swedish krona).
|
Exhibit 2: XBT Provider weekly net outflows (US$m) |
|
|
Source: CoinShares International data |
Sustained lower net outflows would be beneficial to CS’s earnings given the higher fee versus newer products (eg the CoinShares Physical Bitcoin ETP charges 0.98% pa). However, we note that CS collects the fees in cash only upon redemption of the respective units, which means that low gross outflows from the products would also limit the near-term cash inflow to CS.
CoinShares Physical ETPs attracted c US$40m of net inflows to the end of June 2023 (of which US$17.8m was in Q223), compared to US$492m and US$278m in 2021 and 2022, respectively. This represents c 19% of the platform’s end-2022 AUM and compares with US$61m (8%) of net inflows for 21Shares and US$153m (48%) for ETC Group, two of its main European competitors (based on data from CS’s weekly funds flows reports). We estimate that with the £1.66bn of ETP AUM at end-June 2023 (vs £1.00bn at end-2022 and £1.10bn at end-June 2022), CS’s market share in the European ETP market stood at c 43% (excluding CS’s seed assets in CoinShares Physical), which is broadly stable versus end-2022 (as price appreciation has been a more important factor than net inflows in the period). CoinShares Physical saw an additional c US$34m of net inflows in July 2023. The blockchain equities platform, which had £0.48bn in AUM at end-June 2023 (vs £0.43bn at end-2022 and £0.56bn at end-June 2022), saw minor outflows of US$14m in the quarter.
|
Exhibit 3: CS’s assets under management (£m) |
|
|
Source: CoinShares International data |
CSCM: Navigating the muted markets well
CS generated solid £10.0m CSCM gains in an environment marked by limited volatility and trading volumes, as well as still relatively muted sentiment towards digital assets (despite the price rally in the second half of June). Key contributors were DeFi (£6.0m gain in Q223 vs £4.9m in Q222), mostly from Ether staking rewards (received in exchange for providing Ether as collateral to secure the network), and fixed income activities (£3.0m vs £0.8m in Q222), despite a more selective approach to counterparties, as CS’s treasury management and lending book benefit from higher interest rates. CS’s delta neutral trading strategies added another £2.0m, as CS seized opportunities in trading CME futures. Liquidity provisioning related to XBT Provider products generated a modest £0.2m gain amid limited fund flows into and out of the product during Q223.
|
Exhibit 4: CS’s capital market infrastructure gains (£m) |
|
|
Source: CoinShares International data |
Forecast revisions
We have raised our asset management revenue expectations up by c 9–10% in the coming years, primarily due to lower assumed net outflows from XBT Provider products in 2023 at US$158m (vs US$279m previously) and slightly higher bitcoin and Ether price assumptions (eg we assume end-2023 bitcoin and Ether prices at c US$33,000 and US$2,350, respectively vs US$30,700 and US$2,150 previously, respectively). In our base scenario, we still assume a pick-up in net inflows to CoinShares Physical products in the coming years as digital asset adoption accelerates, though we have trimmed our near-term assumptions for 2023 and 2024 to c US$120m (from c US$220m previously) and US$301m (from c US$365m previously), respectively. We have also increased our forecasted CSCM gains (mostly in FY23 and FY24) on the back of a solid year-to-date performance.
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 |
37.5 |
40.9 |
9.0 |
48.2 |
53.2 |
10.3 |
71.1 |
77.2 |
8.6 |
XBT Provider |
46.0 |
31.9 |
36.6 |
14.6 |
34.2 |
41.5 |
21.5 |
44.9 |
55.9 |
24.5 |
CoinShares Physical and other* |
2.3 |
3.8 |
2.5 |
(33.1) |
11.3 |
9.1 |
(19.7) |
22.1 |
17.4 |
(21.1) |
Block index |
1.9 |
1.5 |
1.4 |
(4.6) |
2.1 |
1.9 |
(7.7) |
2.9 |
2.7 |
(7.7) |
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) |
26.3 |
35.1 |
33.5 |
30.5 |
39.4 |
29.1 |
40.9 |
42.5 |
3.9 |
Liquidity provisioning |
4.5 |
3.0 |
1.6 |
(45.1) |
4.6 |
4.2 |
(9.7) |
4.3 |
3.9 |
(8.7) |
Delta Neutral Trading Strategies |
2.6 |
4.6 |
7.3 |
59.0 |
5.4 |
6.6 |
23.5 |
12.0 |
9.8 |
(18.6) |
Fixed income activities |
5.0 |
6.7 |
9.9 |
48.1 |
8.0 |
9.9 |
23.5 |
9.6 |
9.4 |
(2.3) |
DeFi |
13.9 |
12.0 |
18.0 |
49.5 |
12.5 |
18.7 |
49.5 |
15.0 |
19.4 |
29.6 |
Other |
(43.3) |
0.0 |
(1.8) |
N/A |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
Principal investment gains/(losses) |
(4.9) |
(0.7) |
(1.2) |
62.1 |
0.0 |
0.0 |
N/A |
0.0 |
0.0 |
N/A |
Administrative expenses excluding D&A |
(35.3) |
(30.9) |
(32.6) |
5.5 |
(37.0) |
(39.6) |
7.1 |
(45.7) |
(48.9) |
7.1 |
Adjusted EBITDA |
(6.5) |
31.8 |
41.8 |
31.3 |
41.1 |
52.3 |
27.3 |
65.1 |
69.6 |
6.9 |
Total comprehensive income |
3.0 |
17.4 |
21.4 |
23.0 |
30.4 |
41.1 |
35.3 |
53.6 |
57.9 |
8.1 |
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 |
40,929 |
53,165 |
77,152 |
91,420 |
95,730 |
Administrative expenses |
(10,927) |
(9,284) |
(14,312) |
(32,059) |
(38,166) |
(35,624) |
(42,635) |
(51,966) |
(60,086) |
(65,453) |
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 |
(917,946) |
(1,083,642) |
(1,812,238) |
(662,633) |
(633,484) |
Realised gain/(loss) on investments |
(1,074) |
(405) |
942 |
5,287 |
(2,800) |
0 |
0 |
0 |
0 |
0 |
Adj EBITDA |
12,993 |
11,171 |
22,113 |
121,059 |
(6,521) |
41,826 |
52,327 |
69,555 |
75,222 |
73,265 |
EBIT |
523,347 |
(62,382) |
(1,392,810) |
(2,415,125) |
506,719 |
22,079 |
33,413 |
50,899 |
56,318 |
54,103 |
Finance income |
693 |
931 |
3,793 |
10,905 |
12,964 |
15,637 |
15,866 |
15,608 |
15,856 |
16,114 |
Finance expense |
(148) |
(404) |
(1,191) |
(7,045) |
(6,373) |
(6,434) |
(7,661) |
(7,939) |
(7,773) |
(8,416) |
Pre-tax profit |
523,892 |
(61,855) |
(1,390,208) |
(2,411,265) |
513,310 |
31,282 |
41,618 |
58,567 |
64,400 |
61,801 |
Income taxes |
(230) |
(269) |
(401) |
(1,056) |
(500) |
(444) |
(533) |
(687) |
(744) |
(722) |
Net income |
523,662 |
(62,124) |
(1,390,610) |
(2,412,322) |
512,810 |
30,838 |
41,085 |
57,880 |
63,657 |
61,079 |
Total comprehensive income |
14,407 |
8,914 |
18,419 |
113,443 |
3,046 |
21,387 |
41,085 |
57,880 |
63,657 |
61,079 |
Adjusted EPS (diluted, £) |
N/A |
N/A |
0.28 |
1.62 |
0.04 |
0.31 |
0.60 |
0.85 |
0.93 |
0.90 |
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 |
43,823 |
43,823 |
43,823 |
43,823 |
43,823 |
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 |
57,614 |
56,075 |
54,607 |
53,213 |
51,895 |
Trade and other receivables |
9,350 |
27,011 |
62,274 |
1,075,971 |
199,045 |
629,557 |
875,547 |
1,272,475 |
1,388,047 |
1,590,636 |
Digital assets |
217,521 |
427,524 |
1,826,695 |
2,736,481 |
868,944 |
1,612,462 |
2,390,100 |
3,746,113 |
4,028,886 |
4,642,044 |
Cash at bank |
32,897 |
2,350 |
2,266 |
11,088 |
26,565 |
29,207 |
36,481 |
34,888 |
95,190 |
155,292 |
Amounts due from brokers |
N/A |
39,405 |
66,518 |
118,976 |
233,507 |
127,347 |
183,737 |
292,329 |
316,499 |
366,452 |
Current assets |
259,767 |
496,290 |
1,957,752 |
3,942,516 |
1,328,061 |
2,398,573 |
3,485,864 |
5,345,805 |
5,828,622 |
6,754,425 |
Total assets |
266,154 |
502,580 |
1,961,951 |
3,987,888 |
1,388,480 |
2,456,187 |
3,541,939 |
5,400,412 |
5,881,835 |
6,806,319 |
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) |
(31,951) |
(31,951) |
(31,951) |
(31,951) |
(31,951) |
Retained earnings |
(68,003) |
(125,795) |
(1,155,551) |
(497,727) |
195,644 |
226,482 |
267,567 |
325,447 |
389,104 |
450,183 |
Total equity |
38,644 |
45,343 |
56,497 |
200,934 |
203,959 |
225,346 |
266,431 |
324,312 |
387,968 |
449,047 |
Trade payables and other liabilities |
227,469 |
419,340 |
1,792,936 |
3,491,612 |
1,025,734 |
2,015,926 |
3,053,621 |
4,858,364 |
5,260,063 |
6,090,260 |
Amounts due to brokers |
N/A |
37,631 |
112,121 |
292,708 |
135,385 |
191,513 |
198,485 |
194,335 |
210,403 |
243,610 |
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 |
2,208,257 |
3,252,924 |
5,053,516 |
5,471,283 |
6,334,688 |
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 |
2,456,187 |
3,541,939 |
5,400,412 |
5,881,835 |
6,806,319 |
Ratios |
|
|
|
|
|
|
|
|
|
|
Adj. EBITDA margin |
52.1% |
54.0% |
62.8% |
85.3% |
-19.1% |
55.0% |
56.5% |
58.1% |
56.5% |
53.5% |
Adj. net margin |
59.4% |
38.4% |
47.6% |
79.9% |
8.9% |
28.1% |
44.4% |
48.4% |
47.8% |
44.6% |
ETP management fee |
2.5% |
2.5% |
2.5% |
2.3% |
2.2% |
1.9% |
1.7% |
1.5% |
1.3% |
1.1% |
Source: Company data, Edison Investment Research
|
|
Research: Financials
JDC Group (JDC) reported H123 results that showed accelerating growth at its key Advisortech division (c 89% of revenue) of 11.2%. After three slower quarters, JDC expects overall growth to accelerate in H223 and reiterated its challenging but realistic FY23 guidance of 17% revenue growth at the midpoint, with EBITDA of €11.5–13.0m. JDC trades at an FY24e EV/EBITDA multiple of 13.2x on consensus estimates, which we believe is undemanding for what is essentially a fast-scaling platform business. Our DCF calculation provides a valuation of €34.09/share.