EQUITY RESEARCH

Delivering ownership of digital assets

Date published: 20 July 2020

Indicative valuation: A$0.25

 

  • Rapidly growing industry - Animoca Brands operates in the fast-growing mobile games industry which is outpacing the broader gaming industry by a factor of 1.4x. The sector is expected to generate US$77b in CY2020 with smartphone games delivering more than 80% of the revenue.

  • Creating a pathway for ownership of digital assets - The company is forging a pathway for consumers, rather than game companies, to securely own their digital assets by leveraging blockchain technology in games. The company is a leading player in blockchain gaming, enabling true digital ownership of in-game content and collectibles in its games, as compared to the traditional game industry, where content is owned by the developer/publisher and rented by the player.

  • Partnering with some of the biggest entertainment brands - The company has secured partnerships with some of the biggest brands in entertainment including Disney (NYSE:DIS), Marvel, Formula 1, and WWE (NYSE:WWE).

  • Revenue growth accelerating - The company has recorded strong revenue growth over the past five calendar years, with a CAGR of 19%. Revenue growth has been accelerating in recent times with CY19 revenue lifting by 39% to $17.9m and Q1 CY20 revenue increasing by 44% to $6.2m. April experienced a record $4.3m in revenue bringing total revenues for the first four months of CY20 to $10.5m, surpassing the $8.3m in revenue reported for the six months to June 2019.

  • Pathway to profitability emerging - The company has announced that April 2020
    experienced positive EBITDA of $0.38m and positive operating cashflow of $0.53m for the four months to April 30.

  • Well-funded and attracting global investors - On July 3, Animoca Brands completed a US$4.1m (A$6m) unsecured convertible note offer to global investors, led by Mind Fund Group and M7 Alternative Investment Strategies Asia Limited, with a 9% coupon and conversion to equity at $0.18/share. The company now has total liquid assets of $8.7m including $6m cash, $1.1m in Bitcoin and Ether, and $1.6m in other cryptocurrencies.

  • Creating new investment opportunities - Animoca Brands has announced plans to spin off its AI-driven health and fitness platform OliveX Holdings Limited into a publicly traded vehicle on the National Stock Exchange (NSX). It also has announced plans, as part of its recent $6m capital raise, to explore an IPO of its blockchain gaming assets on the LSE, Euronext or another public exchange. This would create a digital asset play making Animoca Brands a leader in the emerging digital ecosystem for virtual assets.

  • Valuation - We have undertaken a compco valuation of Animoca Brands, using the Golden Rule methodology to define the appropriate EV/Revenue multiple to apply to the company’s CY19 revenues. The Golden Rule methodology takes into account the earlier lifecycle stage of Animoca Brands’ earnings relative to more established peers. Based on this analysis and using FY19 accounts, we have arrived at an indicative base valuation of $0.25/share.

 

Top down to get bottom up

Date published: 08 June 2017

Rating: BUY

Price target: A$ 0.10

 

  • Synopsis

  • FY16 expense review

  • e-book update

  • Changes to forecasts

  • Investment view

 

He-Man flexes muscles

 

Date published: 31 October 2016

Rating: BUY

Price target: A$ 0.45

 

  • Update

  • 3Q16 highlights

  • Hot games

  • e-book status

  • Performance shares

  • Investment view

 

Smile and wave

 

Date published: 09 August 2016

Rating: BUY

Price target: A$ 0.45

 

  • New agreement

  • Upside for AB1

  • Highly successful franchises

  • Changes to forecasts

  • Investment view

 

Acquires Finnish Game Developer TicBits

 

Date published: 07 July 2016

Rating: BUY

Price target: A$ 0.43

 

  • Acquisition of TicBits

  • Forecasts

  • Valuation

 

Edison - Animoca Brands Corp

 

Published in May 2016

  • The business model

  • Business strategy

  • Valuation: Early stage

 

Operating Metrics Accelerate

 

Date published: 19 May 2016

Rating: BUY

Price target: A$ 0.40

 

  • Forecasts

  • Recommendation and valuation

 

Strong lead at quarter time: Baillieu Holst gives Animoca Brands a target price of A$0.40

 

Date published: 2 May 2016

Rating: BUY

Price target: A$ 0.40

 

  • Company Report

  • Financial summary

 

Multiple Milestones Achieved: Veritas Securities gives Animoca Brands a target price of A$0.40

 

Date published: 8 March 2016

Rating: BUY

Price target: A$ 0.40

 

  • December Financial Year 2015 Results

  • Valuation

 

Toy Story: Baillieu Holst increases AB1 price target to $0.40

Date published: 1 March 2016

Rating: BUY

Price target: A$ 0.40

  • Financial summary

  • AB1 casual gaming downloads

  • AB1 summary of key relationships

 

X marks the spot in China: Baillieu Holst Research gives Animoca Brands (ASX:AB1) another BUY rating

Date published: 12 February 2016

Rating: BUY

Price target: A$ 0.35

  • Financial summary

  • Summary of agreements announced to date

 

Full Mattel Jacket: Baillieu Holst Initiates Coverage of Animoca Brands with a Target Price of $0.35

Date published: 24 December 2015

Rating: BUY 

Price target: A$ 0.35

  • Financial summary

  • Investment view

  • History and business

  • Animoca brands and social gaming

  • e-books

  • Baillieu Holst forecasts

  • Board of directors

 

Signs Ourpalm Agreement, Release of Paris Hilton Game and Q2 Quarterly Update

Date published: 12 August 2015

Rating: BUY (revenue multiple)

Price target: A$ 0.40

  • Both Parties to Benefit from Strategic Partnership

  • First to Market Paris Hilton Content Released

  • Reasons to BUY

  • Q2 CY2015 Quarterly Update

 

Veritas Securities initiates coverage of AB1 with "buy" rating

Date published: 7 July 2015

Rating: BUY (revenue multiple)

Price target: A$ 0.40

  • Highly scalable business model

  • Attractive valuation

  • Strong board

  • Major shareholders

Animoca Brands does not endorse, confirm, or express a view as to the accuracy of the earnings forecasts in the research reports nor does it make any representation that its earnings will fall within the range of the forecasts provided​.

Address: 211 McIlwraith Street, Princes Hill, VIC 3054, Australia

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