HILBERT GROUP Despite a challenging crypto landscape, with the FTX collapse creating ripple effects throughout the crypto ecosystem, Hilbert Group is progressing as planned. While reported numbers in Q3’22 failed to impress, Hilbert’s multi-vertical setup makes it well positioned to capitalize on a stabilization of the crypto space in 2023 and we now find support for a fair value of SEK 6–8 per share (14–17) in 12-18 months.
Andreas Eriksson | 2022-12-08 08:00
Building a solid foundation in stormy surroundings
In an already negative sentiment, the crash in FTX and the upcoming trial of its founder Sam Bankman-Fried, adds to the insecurities plaguing the crypto market. FTX and also of LUNA crashing earlier in 2022 have highlighted that “traditional financial regulations” might be necessary also in the blockchain/crypto space, or at least for the centralized exchanges. While these collapses have nothing to do with blockchain or digital assets and is more the result of lacking governance and sometimes even fraudulent behavior, these events affect all crypto businesses across the board.Coin360 already one of the biggest in the space
Despite the negative sentiment, Hilbert Group has continued to build a solid organization to stand ready when the markets turn. Hilbert has added well-renowned names such as Richard Murray as CEO of the asset management division. Murray brings extensive experience from Finisterre Capital and Brevan Howard, one of the world’s leading macro hedge funds, and Hilbert currently has discussions with over 100 financial institutions about investments in Hilbert’s funds. The company’s first equity investment, in the website Coin360 is also a bright spot, as it has contributed SEK 5,7m in revenues so far in 2022, mainly from ads. The next step is to launch a Data & Analytics service, with a retail and a premium version to cater to the three million unique page visitors every month. Also, crypto investment bank HAYVN (Hilbert’s second equity investment), has managed to grow their number of employees over the year from 14 to 43 today, onboarded over 1000 KYC approved customers while growing revenue 6x year-on-year.Ready to capitalize when the bull market returns
In our view, the key figure to watch for long-term shareholder value in Hilbert Group is the assets under management (AUM). While the SEK 97m in AUM reported in Q3’22 is lower than what we estimated in the beginning of the year, this is also a reflection of the fact that Bitcoin, and most altcoins with it, are down some 75% from the top in November 2021. With lower than projected AUM, and subsequent lower projected earnings from fees, we have now lowered our estimated EBIT in 2023 from SEK 63m to SEK 16m. With an assumption of total AUM of SEK 130m by the end of 2022, capital inflow from several institutions and the Bitcoin price up 50% in 2023, we now find support for a fair value of SEK 6 – 8 per share (SEK 14 – 17) in 12-18 months.
DISCLAIMER
This commissioned research report is for informational purposes only and is to be considered marketing communication. This research does not constitute investment advice and is not a solicitation to buy shares. Information provided here or on Emergers’ website emergers.se is not intended to be financial advice. This research shall not be construed as a recommendation or solicitation to invest in the companies described. Emergers cannot be held liable for either direct or indirect damages caused by decisions made on the basis of information in this analysis. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
This material is not intended to be financial advice. This material has been commissioned by the Company in question and prepared and issued by Emergers, in consideration of a fee payable by the Company. Emergers charges a standard fee for the production and broad dissemination of a detailed note following by regular update notes. Fees are paid upfront in cash without recourse. Emergers may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained herein represent those of the research analyst at Emergers at the time of publication. The company has been given the opportunity to influence factual statements before publication, but forecasts, conclusions and valuation reasoning are Emergers’ own. Forward-looking information or statements contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.
Exclusion of Liability: To the fullest extent allowed by law, Emergers shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained in this material.
No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Emergers’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in this material may not be eligible for sale in all jurisdictions or to certain categories of investors. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
Investment in securities mentioned: Emergers has a restrictive policy relating to personal dealing and conflicts of interest. Emergers does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Emergers may have a position in any or related securities mentioned in this report, subject to Emergers’ policies on personal dealing and conflicts of interest.
Copyright: Copyright 2023 Incirrata AB (Emergers)
United Kingdom
This document is prepared and provided by Emergers for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ”FPO”) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.
This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.
United States
Emergers relies upon the ”publishers’ exclusion” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Emergers does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
