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Original-Research: Advanced Blockchain AG - from GBC AG

Classification of GBC AG to Advanced Blockchain AG

Company Name: Advanced Blockchain AG

ISIN: DE000A0M93V6

Reason for the research: Management interview

Recommendation: Buy

Target price: 11.00 EUR

Target price on sight of: 31.12.2024

Last rating change:

Analyst: Matthias Greiffenberger, Julien Desrosiers

'Our top 10 investments alone amassed a value of 57.5 million euros by the

end of 2023 - notably exceeding our market capitalization.'

 

In this interview, GBC speaks with Simon Telian, the CEO of Advanced

Blockchain AG. Since our last GBC interview in September 2023, the market

capitalization has more than doubled. Based on our last valuation, we

remain optimistic that there is further potential for growth. We expect to

adjust our valuation with the publication of the 2023 annual report.

 

GBC AG: Can you briefly introduce Advanced Blockchain AG?

 

Simon Telian: Advanced Blockchain AG is the first and only publicly traded

company on the German stock market specializing in decentralized blockchain

technologies. We are a key player in the blockchain industry, focusing on

research, incubation, and investments - both equity and tokens - in

disruptive technologies in the blockchain sector. Our current portfolio

includes more than 30 blockchain companies or projects. Alone, our top 10

investments had a value of 57.5 million euros by the end of 2023 -

significantly more than our market capitalization. Our primary focus is on

incubating and investing in promising projects in the decentralized finance

sector, also known as 'DeFi,' which is currently the fastest-growing area

in the blockchain world. This enables users to access financial products

frictionlessly, without the intermediation of centralized institutions such

as traditional banks. Other key focus areas include applications and

companies in the Economy of Things, where connected devices not only

communicate with each other but also create economic value for the user.

The portfolio is rounded out by investments in companies that enable

frictionless communication between different blockchain technology

protocols, also known as Cross-Chain Interoperability. Additionally,

Advanced Blockchain is not only an early-stage investor but also a leading

venture builder, supporting its investments with an extensive network of

software developers and a strong focus on research. In historical context,

Advanced Blockchain has been informing major German companies about the

various applications of blockchain technology since 2018, thus building a

broad network even in the traditional corporate environment. Since 2020,

Advanced Blockchain has been intensively involved in incubation,

investments, and building technical expertise in research to create an

extremely successful and valuable portfolio.

 

GBC AG: How does your company identify and evaluate potential investments,

and what criteria are decisive?

 

Simon Telian: The basis of the investment process is always a comprehensive

analysis of the application and implementation potential of the

investments. In addition, the quality of the founding team and the economic

and financial potential are crucial for creating value for the company. Our

extensive and long-standing experience in blockchain technology

significantly supports the decision-making process. Through ABX Analytics,

we will increasingly automate this process and offer it to external

customers or investors. Our broad network is certainly the decisive factor

in identifying interesting investment opportunities early on; numerous

opportunities have been identified in the past in this way. We rely on the

generated value from synergies with other investors in our network.

Co-investments with our partners are common, both in the pure equity

investment area and in our incubation projects.

 

GBC AG: What specific strategies have led to the 45% increase in the ten

largest portfolio values?

 

Simon Telian: The fundamental principles of our investment strategy remain

unchanged. However, the outstanding increase is due to several factors

affecting both our portfolio companies and the overall market. The central

factor is certainly the increasing acceptance of cryptocurrencies and

blockchain technology in society. The acceptance of blockchain ETF funds by

the U.S. Securities and Exchange Commission (SEC) has made investing in

cryptocurrencies increasingly socially acceptable. Particularly noteworthy

is the remarkable increase in inflows into BlackRock's iShares Bitcoin

Trust (IBIT), which recorded a new daily record of $2.2 billion last month.

In addition, the price of Bitcoin reached its all-time high, surpassing the

$69,000 mark, which brings Bitcoin into the price discovery phase. All

these developments show how the market has evolved positively in recent

months. This environment leads to growing interest in many of our key

portfolio companies, such as Composable. The company develops bridge

solutions targeting various ecosystems such as Ethereum, Cosmos, and

Polkadot, as well as future blockchain networks. The interest in this

drives the increase in value significantly. It is important to highlight

the central problem of current blockchain technology, namely the lack of

interoperability, which makes the transfer of digital assets between

different ecosystems impossible. Composable has taken on the challenge of

developing innovations to overcome this challenge and has made considerable

progress. This is just one example; each of our portfolio companies is

driving innovations in a key area of the industry, such as peaq in the

Economy of Things sector, and Polymer in the development of modular

blockchains.

 

GBC AG: How has the currently positive momentum in the crypto market

influenced the valuation of your portfolio?

 

Simon Telian: Of course, the positive market momentum has played an

important role in the appreciation of our portfolio. For example, the

Bitcoin price was slightly above $27,100 at the time of the initial

valuation in late May 2023, and at the end of December 2023, it was at

$42,500. However, the change in market dynamics alone is not sufficient. If

these portfolio companies were not innovative and did not develop core

technologies that are perceived as remarkable by the market, we would not

have seen such a strong increase. Nevertheless, these two aspects are

interconnected.

 

GBC AG: Can you explain the significance of the upcoming Bitcoin halving

for the overall market sentiment?

 

Simon Telian: Bitcoin halving involves reducing the rate at which new

bitcoins are created. With a finite number of bitcoins to be created at

most, Bitcoin halving reduces the supply. With demand levels remaining

constant, this can lead to a price increase. Many investors and speculators

view halving as a key catalyst for positive price movements. Positive price

developments often manifest early, as investors position themselves ahead

of time. Media also play an important role in attracting attention,

especially now with the interest of renowned asset managers like BlackRock

and Fidelity in the crypto industry. Overall, I expect halving to

contribute positively to market sentiment, along with the upcoming Ethereum

spot ETF. It is expected that both events will lead to further significant

inflows into the digital asset market.

 

GBC AG: What is Advanced Blockchain AG's vision for the future of Web 3.0?

 

Simon Telian: Our vision is to become an increasingly global player in the

blockchain field. By investing in and incubating innovative companies and

providing young entrepreneurs with the opportunity to create technology for

the decentralized web (Web 3.0). This also includes increased involvement

in software development. We have demonstrated our competencies through our

previous incubation projects, using this key expertise as a significant

value driver for the next phase of the company's development.

 

GBC AG: Where do you see Advanced Blockchain AG in the next five years, and

what strategic goals are you setting?

 

Simon Telian: In the coming years, Advanced Blockchain will continue to

focus on early-stage startup investments with a sharpened and successfully

proven investment strategy. As mentioned earlier, our goal is to become a

leading global player with a presence in emerging blockchain markets to

access promising new investment opportunities. Our incubation business will

increasingly focus on building innovative software companies with a

recurring revenue model to further diversify our business. Additionally, we

see great value in collaborating with other venture builders to establish

joint ventures in emerging blockchain markets.

 

GBC AG: Thank you for the interview.

You can download the research here:

http://www.more-ir.de/d/29147.pdf

Contact for questions

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

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Completion Date (Time): 13.03.2024. 16:00

First Distribution Date (Time): 14.03.2024. 09:00

-------------------transmitted by EQS Group AG.-------------------

The issuer is solely responsible for the content of this research.

The result of this research does not constitute investment advice

or an invitation to conclude certain stock exchange transactions.

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