Original-Research: Blockchain Intelligence Group - von GBC AG
Einstufung von GBC AG zu Blockchain Intelligence Group
Unternehmen: Blockchain Intelligence Group
Anlass der Studie: Research Note
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
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.
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Datum (Zeitpunkt) Fertigstellung: 09.10.18 (11:00 Uhr)
Datum (Zeitpunkt) erste Weitergabe: 09.10.18 (12:00 Uhr)
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