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CoinShares: An eventful quarter with a positive net effect - ABG

- FTX claim sold and FlowBank investment impaired
- We increase adj. EBIT by 10% for '24e
- '24e adj. EV/EBIT of 2x with dividend yield of 16%

FTX claim sold at premium, FlowBank investment impaired
CoinShares has sold its claim on the FTX bankruptcy proceedings for GBP 31.3m. The claim was fully provisioned and hence we expect a positive gain in the Q2'24 report. On a more negative note, CoinShares' investment in FlowBank will be fully impaired due to FlowBank's newly-opened bankruptcy proceedings. The impairment amounts to GBP 21.8m. In our CoinShares valuation we had assigned zero value to both the principal investments and the FTX claim, therefore the net gain is positive valuation-wise. The Flowbank impairment is also non-cash, while the sale of the FTX claim should increase CoinShares' cash positition significantly. On the other hand, investors might argue that the sale of the FTX claim was somewhat expected, while the Flowbank impairment was not.

Raising '24e and fine-tuning '25e-'26e
While the price of Bitcoin has decreased since our last report, the CoinShares Physical AUM has progressed well, likely due to inflows and new product launches. We estimate the XBT AUM and the Valkyrie AUM to decrease by 15% and 17% q-o-q, which can be compared to the Bitcoin price decrease of 14% and the Ethereum price decrease of 4%. We make minor revisions to XBT and raise AUM expectations for CoinShares Physical while we decrease our AUM expectations for Valkyrie, due to the somewhat disappointing lack of inflows. Finally, we raise '24e EBIT by 10% on the back of the FTX sale while only fine-tuning '25e-'26e EBIT.

2024e adj. EV/EBIT of 2x with dividend yield of 16%
CoinShares has had a strong start to the year and is currently trading at '24e adj. EV/EBIT of 2x, with a dividend yield of 16%. The company is trading 88-82% below asset management peers on EV/EBITDA and 81-68% on P/E in '24e-'26e. We fine-tune our fair value range to SEK 59-121 (58-118).
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