Additions to crypto basket; JD Logistics rides the e-commerce bonanza

Additions to crypto basket; JD Logistics rides the e-commerce bonanza

Equities 6 minutes to read
PG
Peter Garnry

Head of Equity Strategy

Summary:  May has been tough for cryptocurrencies and our crypto basket has also suffered, but much less than cryptocurrencies themselves, making it the worst performing theme in May. We are adding five new companies to our crypto and blockchain theme basket including the Swedish-based crypto broker Safello Group that has just IPO'ed in Stockholm. JD Logistics have just IPO'ed in Hong Kong providing investors with a pure play on logistics in China which is essentially a play on e-commerce but from a different angle than the typical retailing perspective.


Our crypto and blockchain theme basket has been the worst performing basket this month down 18.1% as cryptocurrencies have experience extreme volatility and an intra-month maximum drawdown of 49.6% in Bitcoin (see chart). The divergence in performance between Bitcoin prices and the crypto theme basket shows that the companies in the basket are not purely driven by cryptocurrency prices. This means that our theme basket provides a different exposure profile to the crypto industry than just speculating on cryptocurrencies.

Source: Bloomberg

Safello Group, which is Swedish-based crypto broker, recently IPO’ed in Stockholm, and we are using this IPO as an opportunity to add some new companies to our theme basket. In this update we are adding the five companies Safello Group, Northern Data, Quickbit, Taal Distributed, and Digihost expanding the theme basket to 23 companies representing $97.7bn in combined market value. As the table shows, the median price target is 56% above the current price suggesting that analysts remain very bullish on this industry despite the recent volatility. We do not have a firm view on this industry except that outright speculation is for now the main activity in cryptocurrencies and that the industry still need to prove that it can be other than pure speculation.

NameSegmentMarket Cap (USD mn.)Sales growth (%)P/BDiff to PT (%)5yr return
Coinbase Global IncCrypto exchange51,558139.348.557.9NA
Signature Bank/New York NYBank14,4082.52.216.492.4
Galaxy Digital Holdings LtdCrypto services6,009NA3.873.61,115.4
MicroStrategy IncInvestment firm4,8132.013.239.7158.7
Marathon Digital Holdings IncCrypto mining2,570735.03.887.7-39.7
Riot Blockchain IncCrypto mining2,398322.16.528.1846.0
Silvergate Capital CorpBank2,990NA4.135.6NA
Voyager Digital LtdCrypto broker2,98213,223.929.864.0NA
Canaan IncInfrastructure1,571-68.5313.4NANA
Monex Group IncFinancial institution2,02847.02.5-1.2245.3
Hive Blockchain Technologies LtdCrypto mining1,00712.516.5NANA
Argo Blockchain PLCCrypto mining848120.019.553.4NA
Hut 8 Mining CorpCrypto mining542-26.82.1109.9NA
Bit Digital IncCrypto mining456NA0.0NANA
Bitfarms Ltd/CanadaCrypto mining6497.025.847.9NA
Bitcoin Group SECrypto broker248-44.46.7NANA
Future FinTech Group IncBlockchain e-commerce227-81.54.2NA79.8
DMG Blockchain Solutions IncInvestment firm125NA12.4NANA
Safello Group AB (*)Crypto broker5749.4NANANA
Northern Data AG (*)Infrastructure1,793253.710.869.8NA
Quickbit EU AB (*)Crypto payment services137NA4.3NANA
Taal Distributed Information Technologies Inc (*)Blockchain platform134NA3.060.8310.9
Digihost Technology Inc (*)Crypto mining125NA2.3NANA
Aggregate / median97,67729.85.455.6202.0

Source: Bloomberg and Saxo Group
* Added to theme basket on 28 May 2021
** Infrastructure segment means physical computing applications for crypto mining

How much more upside is there in logistics?

The logistics industry is enjoying rapid growth these days with container freight rates and shipping companies rallying again this year (listen to today’s podcast for more colour on these topics). JD Logistics, a logistics spinoff from the Chinese e-commerce giant JD.com, had its first day of trading today in Hong Kong following its $3.2bn IPO capitalizing on the trend of rising profitability and growth. The company grew revenue 47% y/y in 2020 to $10.6bn and EBITDA to $903mn with the EBITDA margin expanding 3.2%-points and is for now a pure play on Chinese logistics which is expected to continue growing rapidly over the coming years as e-commerce continues to grow in China.

We are planning to launch a logistics theme basket next week and we have previously written about the industry highlighting that it has delivered outperformance against the general equity market for over a decade. It seems there are some intrinsic dynamics in the logistics industry that creates a lot of shareholder value. The L&G E-commerce Logistics ETF is up 128% from the lows last year highlighting the massive inflow of capital into this theme. Given the outlook on global supply chain bottlenecks which are expected to last at least the rest of this year, we have a positive view on logistics companies.

Source: Saxo Group
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
Most of our staff in Singapore are working from home to help limit the spread of the coronavirus. We remain at your service on the details below. Thank you for your understanding.

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.