HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

<ul>
<li>At the top end of the price range (HK$6.95), <a href="https://www.smartkarma.com/entities/hashkey-holdings-limited" target="_blank" data-smartkarma-citation="entities:40847:1" rel="noopener">HashKey (3887 HK)</a>'s IPO equals a FY26F P/S of 14.9x, and this is not a particularly appealing level. </li>
<li>While it is the industry leader in the region and Hong Kong, it is expected to stay in the red for FY25-27, making a PER comparison meaningless. </li>
<li>Tiny public shareholder base, cryptocurrency volatilities, and the increasingly competitive environment heightened risks. Only a low-end IPO price, or 12.7x FY26F P/S, is attractive.</li>
</ul>


At the top end of the price range (HK$6.95), HashKey (3887 HK)'s IPO equals a FY26F P/S of 14.9x, and this is not a particularly appealing level. 
While it is the industry leader in the region and Hong Kong, it is expected to stay in the red for FY25-27, making a PER comparison meaningless. 
Tiny public shareholder base, cryptocurrency volatilities, and the increasingly competitive environment heightened risks. Only a low-end IPO price, or 12.7x FY26F P/S, is attractive.


Hashkey Holdings (3887 HK) IPO: Pricing Uncertainties Expensively

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Bakkt Holdings, a crypto platform company, has recently reported its financial results for the first quarter of 2024, showcasing various strengths and facing some challenges as it explores potential sale opportunities.</li><li>The CEO emphasized the focus on growing the client network, enhancing the product portfolio, and aligning costs with strategic priorities.</li><li>The CFO outlined financial details, stressing cost management and asset growth.</li></ul>

Bakkt Holdings, a crypto platform company, has recently reported its financial results for the first quarter of 2024, showcasing various strengths and facing some challenges as it explores potential sale opportunities.The CEO emphasized the focus on growing the client network, enhancing the product portfolio, and aligning costs with strategic priorities.The CFO outlined financial details, stressing cost management and asset growth.

Bakkt Holdings Weighing A Potential Sale But Can It Get Acquired? At What Value?  - Financial Forecasts

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

<ul><li>President and CEO Andy Main focused on Bakkt’s three key priorities for 2024 as the company saw strong 1Q24 crypto trading activity with notional traded volume up 324% sequentially.</li><li>The company is cutting costs, and it expects to have between $42 million and $57 million in cash at the end of 2024.</li><li>Objectives for 2024 include broadening client networks, expanding products, and expense management.</li></ul>

President and CEO Andy Main focused on Bakkt’s three key priorities for 2024 as the company saw strong 1Q24 crypto trading activity with notional traded volume up 324% sequentially.The company is cutting costs, and it expects to have between $42 million and $57 million in cash at the end of 2024.Objectives for 2024 include broadening client networks, expanding products, and expense management.

Bakkt Holdings, Inc. - 1Q24 Saw Strong Client Crypto Trading

<ul><li>Bakkt’s new President and CEO Andy Main led the earnings call, where net revenue of $16.7 million was better than pre-announced, while the GAAP EPS loss of $0.29 was worse than our expectation of a $0.19 loss, driven by higher restructuring and goodwill write-downs.</li><li>While 4Q23 was pretty much old news, Main highlighted how strong tailwinds in 1Q24 have led to significant notional crypto trading volume increases.</li><li>He stated that, “QTD notional traded volumes have been very strong, with March QTD up over ~260% from 4Q23 versus overall market activity up ~65%.”</li></ul>

Bakkt’s new President and CEO Andy Main led the earnings call, where net revenue of $16.7 million was better than pre-announced, while the GAAP EPS loss of $0.29 was worse than our expectation of a $0.19 loss, driven by higher restructuring and goodwill write-downs.While 4Q23 was pretty much old news, Main highlighted how strong tailwinds in 1Q24 have led to significant notional crypto trading volume increases.He stated that, “QTD notional traded volumes have been very strong, with March QTD up over ~260% from 4Q23 versus overall market activity up ~65%.”

Bakkt Holdings, Inc. - New CEO Comments on 4Q23 Earnings and the Way Forward

<ul><li>In its continuing push in international markets, Bakkt announced on January 24 that it activated its crypto capabilities in several new international markets in Asia, Europe, North America, and South America with existing clients Hapi and SogoTrade.</li><li>Bakkt crypto trading is now live in Hong Kong and Singapore with SogoTrade.</li><li>Bakkt is excited about its entry into these markets given the rapid growth in their crypto economies. </li></ul>

In its continuing push in international markets, Bakkt announced on January 24 that it activated its crypto capabilities in several new international markets in Asia, Europe, North America, and South America with existing clients Hapi and SogoTrade.Bakkt crypto trading is now live in Hong Kong and Singapore with SogoTrade.Bakkt is excited about its entry into these markets given the rapid growth in their crypto economies. 

Bakkt Holdings, Inc. - Broadens Latin American Footprint While Entering Asia

United States

Bakkt Holdings, Inc. operates as a software company. The Company develops digital asset marketplace that enables consumers to buy, sell, store, and spend digital assets. Bakkt Holdings serves customers worldwide.

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Bakkt (BKKT US)

Hashkey Holdings (3887 HK) IPO: Pricing Uncertainties Expensively

HashKey's IPO at HK$6.95 equals 14.9x FY26F P/S, unappealing due to a tiny public shareholder base, crypto volatilities, and a competitive...

Osbert Tang, CFA

Bakkt Holdings Weighing A Potential Sale But Can It Get Acquired? At What Value? - Financial Forecasts

Bakkt Holdings, a crypto platform company, has recently reported its financial results for the first quarter of 2024, showcasing various strengths...

Baptista Research

Bakkt Holdings, Inc. - 1Q24 Saw Strong Client Crypto Trading

President and CEO Andy Main focused on Bakkt’s three key priorities for 2024 as the company saw strong 1Q24 crypto trading activity with notional...

Water Tower Research

Bakkt Holdings, Inc. - New CEO Comments on 4Q23 Earnings and the Way Forward

Bakkt’s new President and CEO Andy Main led the earnings call, where net revenue of $16.7 million was better than pre-announced, while the GAAP EPS...

Water Tower Research

Bakkt Holdings, Inc. - Broadens Latin American Footprint While Entering Asia

In its continuing push in international markets, Bakkt announced on January 24 that it activated its crypto capabilities in several new...

Water Tower Research

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hashkey Holdings (3887 HK) IPO: Pricing Uncertainties Expensively

​HashKey's IPO at HK$6.95 equals 14.9x FY26F P/S, unappealing due to a tiny public shareholder base, crypto volatilities, and a competitive...

Osbert Tang, CFA

Bakkt Holdings Weighing A Potential Sale But Can It Get Acquired? At What Value? - Financial Forecasts

Bakkt Holdings, a crypto platform company, has recently reported its financial results for the first quarter of 2024, showcasing various strengths...

Baptista Research

Bakkt Holdings, Inc. - 1Q24 Saw Strong Client Crypto Trading

President and CEO Andy Main focused on Bakkt’s three key priorities for 2024 as the company saw strong 1Q24 crypto trading activity with notional...

Water Tower Research

Bakkt Holdings, Inc. - New CEO Comments on 4Q23 Earnings and the Way Forward

Bakkt’s new President and CEO Andy Main led the earnings call, where net revenue of $16.7 million was better than pre-announced, while the GAAP EPS...

Water Tower Research

Bakkt Holdings, Inc. - Broadens Latin American Footprint While Entering Asia

In its continuing push in international markets, Bakkt announced on January 24 that it activated its crypto capabilities in several new...

Water Tower Research

HashKey's IPO at HK$6.95 equals 14.9x FY26F P/S, unappealing due to a tiny public shareholder base, crypto volatilities, and a competitive...