Additions to crypto basket; JD Logistics rides the e-commerce bonanza

Safello Group, which is Swedish-based crypto broker, recently IPO’ed in Stockholm, and we are using this IPO as an opportunity to add some new companies to our theme basket. In this update we are adding the five companies Safello Group, Northern Data, Quickbit, Taal Distributed, and Digihost expanding the theme basket to 23 companies representing $97.7bn in combined market value. As the table shows, the median price target is 56% above the current price suggesting that analysts remain very bullish on this industry despite the recent volatility. We do not have a firm view on this industry except that outright speculation is for now the main activity in cryptocurrencies and that the industry still need to prove that it can be other than pure speculation.

Source: Bloomberg and Saxo Group
* Added to theme basket on 28 May 2021
** Infrastructure segment means physical computing applications for crypto mining

How much more upside is there in logistics?

The logistics industry is enjoying rapid growth these days with container freight rates and shipping companies rallying again this year (listen to today’s podcast for more colour on these topics). JD Logistics, a logistics spinoff from the Chinese e-commerce giant JD.com, had its first day of trading today in Hong Kong following its $3.2bn IPO capitalizing on the trend of rising profitability and growth. The company grew revenue 47% y/y in 2020 to $10.6bn and EBITDA to $903mn with the EBITDA margin expanding 3.2%-points and is for now a pure play on Chinese logistics which is expected to continue growing rapidly over the coming years as e-commerce continues to grow in China.

We are planning to launch a logistics theme basket next week and we have previously written about the industry highlighting that it has delivered outperformance against the general equity market for over a decade. It seems there are some intrinsic dynamics in the logistics industry that creates a lot of shareholder value. The L&G E-commerce Logistics ETF is up 128% from the lows last year highlighting the massive inflow of capital into this theme. Given the outlook on global supply chain bottlenecks which are expected to last at least the rest of this year, we have a positive view on logistics companies.