website : https://bluestarcapital.co.uk/
I invested in Blue Star Capital several months ago, slowly building a position. Currently hold just under 1% of the company so a fair investment. But what are the reasons for this and why am I writing about it?!
As an Investment Company with a portfolio of assets, it can be tricky to ascertain fair value, especially when some are privately held. Thought it best to try and objectively go through each investment to establish a range for Net Asset Value and then give some potential targets for #BLU itself. Current valuations are either taken from Blue Star website or current market prices for the listed companies.
At time of writing on 16.12.20, #BLU has a share price of 0.19p and market capital of £7.8m
UPDATE 23.12.20 – #BLU now valuing esports portfolio at £3.715m, so Dynasty must have increased to around £1.9m. Total NAV around £8.9m making current fair value 0.205p per share
|Company||Investment||Current Value||Target Price|
or 30.6m shares
|13% of company|
updated 23.12.20 rns
|27.7% of company|
last value on website
|0.9% of company|
|CAD$100k at CAD$0.16|
approx. 62.5m shares
|Portfolio NAV||min £8.9m||£38m|
A quick analysis likes this shows the current market capital to be undercooked by around 9%, without taking into account any of the growth potential in these companies.
In particular, Satoshipay through their DTransfer service are catching the eye. Cross border B2B payments for a fraction of current fees will undoubtedly be popular in the months and years ahead, utilising the Stellar network and a new EURB stablecoin. If they successfully take as little 0.01% of the $218Tn market (1) with a 0.4% fee it is projected to generate approx. $8.7m in recurring fees. For “cross border fees” type companies 3.5x Revenue is projected mean multiple in 2021 (2), meaning Satoshipay is hugely undervalued on this aspect alone. Throw in their other products, the digital wallets used in 40 countries, you have an exciting prospect to consider.
Potential Satoshipay valuation in 3 yrs has to be an estimated range, will they take 0.01% of a market or more? Worst case is staying at £4.75m valuation. Every 0.01% of the cross border payment market is worth approx. £6.3m though to #BLU, if DTransfer took 0.1% of the market we are seeing £63m valuation. I will set my targets half way, with £31m a stretch target over 3 yrs that does seem achievable.
Blue Star also hold investments in a few other companies, which I have assumed until further information is released will no produce a positive effect on their portfolio. With the firepower from the above firms, they wouldn’t be significant.
If the portfolio achieves the target valuation of £38m, assuming no change in share count (4438m) we arrive at a target of 0.85p for BLU
I will endeavour to revisit this in the coming months as progress is made at the investee companies. Should anything material change, my targets will change accordingly.
Please note – these are my independent thoughts on #BLU as a shareholder and not to be taken as investment advice.
(1) – https://www.prnewswire.co.uk/news-releases/stellar-development-foundation-announces-enterprise-fund-investment-in-satoshipay-817608945.html
(2) – http://cdn.hl.com/pdf/2020/fintech-monthly-market-update-may–2020.pdf