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Worth factoring the USD weakness as well and currency exchange given all income and assets/liabilities on the balance sheet are in dollars pretty much.
Last year the dollar was between 1.2-1.3. This year so far 1.3-1.4.
K3, the hosting and electricity costs are the only costs included in the mining margin and as you know these are reported fully each month. They are known already and are £5-£6m ytd so there is no more upside here I’m afraid.
Hexam
It wasn't a halving of expenses, I was wrong.
"Total administrative expenses were reduced by 31% from £3.6m to £2.4m." that was in FY2020.
ARB had £11m hosting expenses, but a lot of that must have gone after they bought the facility from GPUone in February, 2021. Maybe that is just made up of the mining "inefficiency"? IF that is the case, profits could be more in the £15-20m range?
Hi K3,
Not sure what you mean by expenses having halved - they've gone up since 2020. (The mining margin has improved but this is to do with BTC being higher than last year - mining costs have increased and other costs will have to.)
I think the H1 profits will be £10-£15m before tax on the big assumption that there are not yet significant development costs going through the P/L.
This is made up of revenue £30m (RNSs), Costs £12m (split about half mining costs from RNSs and half other costs) and estimated impact of BTC price movement of -£5m between when BTC was mined/bought and the end of June.
So if pay no tax (?) and no currency gain/loss (??) get P/E ratio pretty much the same as you i.e. about 15 on current sp.
This is good but would have been way better if BTC had held on to its value of earlier this year. It will also improve in second half of the year due to the mining difficulty reduction, as long it lasts, and increase in rigs (costs will go up to but not as fast).
Conclusion: In short I think we are undervalued somewhere between quite a bit and an awful lot! But this is subjective and based on estimates that may be significantly out because they can easily put unexpected things through the accounts (though arguably such things shouldn't affect the true underlying P/E ratio).
Hope that makes sense and happy to be corrected on anything.
Yes, under 15x and with comparatively very low debt, which provides even more growth potential
Mara 34.8
Riot 38.0
USIT average 35.2
ARB 240 That's based on last year's earnings of £475k ( FY2020 £19m).
H1 2021 revenue is £29.96. Call it FY 2021 £60m, so 3x.
Mining Efficiency Doubled.
Expenses halved
Maybe have to wait until H1 results come out, but most of the increased revenue will drop through to the bottom line, so I expect the forward pe ratio to be around 15, which is nuts for ARB's future potential
Happy to look at (most) other people's figures. You know sometimes I make misteaks!
Agree Blubay. Lots of moving parts at the moment, not least the unpredictable nature of BTC, but like you would also hope for a £1bn mcap before too long. Whichever way I look at it though the current mcap seems ridiculously low for the current profitability and how this profit is likely to increase in the near future.
to be honest, I rather hope we'll be close to £1bn cap before then, at less than x20, pending price of BTC, but a lot of water to pass under the bridge before then so let's not be hasty
@AimInvestor
Just realised you have mentioned both 20x earnings and 20x revenue so not sure which one you actually mean for ARB. I think 20x earnings (after all costs and tax) is closer to a fair value which as it happens is about 10x revenue for ARB - so I agree £600m may be about right. Although I think revenue will be much higher than £60m this year because of reduced mining difficulty and new machines due - and BTC may even increase! So £600m would be a minimum for me but all very subjective.
I agree ARB is undervalued but struggle to see 20x as necessarily being appropriate. Agree that growth stocks should have higher multiples but comparing two different growth stocks is very difficult and extremely subjective. Also ARB is already at the stage when using P/E ratio is probably better than price to sales.
20x for forward earnings is very fair considering a growth stock
Most are 30 to 40 x
If revenue is higher then that’s even better .
If we work on 60 million revenue this year at a very fair 10x then we are still undervalued and that’s not accounting for any growth
£19m? This was indeed the total mining revenue for last year but this year it is already £30m before July’s figures. So picture looks even better though 20x revenue for fair mcap seems very aggressive.
I estimate around 19 million revenue YTD which is what we made in all of 2020 …so we are on track for doubling our Revenue.
A fair Mcap I feel would be at least 800 million ….40 million revenue ..20x revenue is fair