BIGG Digital can get back to $3.00, PI Financial says

PI Financial analyst Kris Thompson believes BIGG Digital Assets (BIGG Digital Assets Stock Quote, Chart, News, Analysts, Financials CSE:BIGG) is about to be let loose, reiterating a “Buy” rating and target price of $3.00/share for a projected return of 140 per cent in an update to clients on September 30.

Headquartered in Vancouver, BIGG owns, operates and invests in crypto businesses and has Blockchain Intelligence Group, a developer of compliance, search and forensics security and accountability software, and Netcoins, an online cryptocurrency brokerage.

Thompson’s latest analysis comes after the company’s Netcoins subsidiary received its Restricted Dealer license from Canadian regulators, which Thompson views as a positive development.

“Without this license, Netcoins was to discontinue operations in Ontario on October 1 as regulated by the Ontario Securities Commission,” Thompson said. “With this license, Netcoins joins the coveted ranks of Wealthsimple and Coinberry, the only other licensed cryptocurrency platforms operating in Canada.”

The announcement comes after the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) released a framework outlining securities law requirements in March, which allowed crypto trading platforms to trade as restricted dealers, providing a two-year grace period to obtain the proper licensing.

While Netcoins is now the third company to receive the designation, many others have been served notices of non-compliance. 

“After a lengthy process, we are thrilled that Netcoins has been registered as a restricted dealer in Canada. This marks a first for a public company in Canada, and sets Netcoins up for a bright future,” said Mark Binns, BIGG’s Chief Executive Officer in the company’s September 30 press release.

“This registration will enable Netcoins to expand advertising to channels not available to unlicensed competitors, expand coin offerings, open up new partnerships and will attract retail and institutional customers seeking a licensed and regulated trading platform. We also believe regulation will shrink the competitive playing field in Canada, as non-compliant companies are forced out of the market. We look forward to updating shareholders with more news in the coming weeks,” Binns said.

With the announcement, Netcoins has already made a significant personnel move, bringing in Kim Dwyer, who was previously the Senior Director of Digital Strategy and Innovation at CIBC, as the company’s new Chief Operating Officer.

“I am thrilled to join the Netcoins team at this exciting time,” Dwyer said in the company’s October 4 press release. “With the recent registration of Netcoins as a restricted dealer in Canada, there is lots of momentum and growth opportunities for the platform. Bringing my experience in digital strategy and organization transformation, I look forward to working with the Netcoins team to expand the platform and take advantage of these new market opportunities.”

Thompson believes the company to be on a solid growth trajectory in his financial estimates, forecasting $19 million in revenue for 2021 for a potential 533 per cent year-over-year increase over the reported $3 million in 2020, with a near tripling to a projected $56 million in play for 2023.

Meanwhile, after reporting a $4 million loss in 2020, Thompson believes the company’s EBITDA will turn positive in 2021 at $2 million, followed by a significant jump to a projected $24 million in 2022.

Consequently, Thompson’s key trading multiples come into better focus for the company, as he projects the EV/Revenue to drop from the reported 91.4x in 2020 to 12.4x in 2021, then to 4.1x in 2022, while the adjusted EV/EBITDA multiple shifts to a positive projection at 123.5x in 2021 before falling to a projected 9.6x in 2022.

Netcoins has become more accessible for investors through the launch of its Android and Apple iOS crypto trading apps in August, then announcing a partnership with XinFin, developer of the enterprise-ready hybrid blockchain network, XDC, through its Blockchain Intelligence Group operation in September, with an aim to create a more scalable, transparent and compliant future for cryptocurrency.

The company also announced a US$200,000 investment in ZenLedger, which aggregates user transaction information across thousands of exchanges, wallets, and tokens into one dashboard to calculate tax liability and make financial decisions.

With only five coins in its portfolio compared to Coinberry’s 19, Thompson believes the company is well-positioned to become an established Canadian figure in the cryptocurrency industry.

“Being the first public company in Canada to obtain this Restricted Dealer license has been the backbone of our investment thesis,” Thompson said. “BIGG has a strong balance sheet, and armed with the coveted Restricted Dealer license can now pursue an aggressive marketing program to organically grow users and/or to consolidate the industry.”

Overall, BIGG’s stock value has soared in 2021, reeling in a return of 144 per cent for the year to date, though it has cooled off since spiking to a high point of $4.72/share on April 13.