On August 21, Canaan released its financial report for the second quarter, showing that the net income in the second quarter was 178 million yuan, an increase of 1.6 times from the previous quarter, and the gross profit in the second quarter was 43.3 million yuan, a 17-fold increase from the previous quarter. The adjusted net income for the second quarter of 2020 The loss was RMB 16 million.
In the first quarter financial report released by Canaan on May 22, the revenue was 68.3 million yuan, a year-on-year increase of 44.6% in the first quarter of 2019, and the adjusted net loss was 38.2 million yuan (5.4 million US dollars). Gross profit increased from RMB 2.4 million in the first quarter of 2020 to RMB 43.3 million in the second quarter.
This shows that after the price of Bitcoin rose, Canaan’s revenue increased in the second quarter, losses decreased, and the company’s operating conditions improved. However, due to various reasons, Canaan’s stock price has been relatively sluggish. Recently, it has fallen below 2 US dollars, and its total market value is only about 300 million US dollars.
In contrast, Yibang, another listed mining machine company whose revenue and profit is about half that of Canaan, has a total market capitalization of about US$800 million and a stock price of US$6. The reason may be that Ebang dared to actively release expectations to guide investors, such as 5G telecommunications business, cryptocurrency exchange business, etc. However, the mining machine and AI chip business led by Canaan Beijing is not sexy enough, and it seems that it is not recognized by American investors.
The reason for the slump in Canaans stock price is also the pressure brought by the unlocking of executives. In particular, the power struggle between the two places occurred in Canaan in July. Kong Jianping, the former co-chairman, Sun Qifeng, the former director, Zhang Li, the former head of the financial system and senior vice president, and a group of executives in Hangzhou withdrew. The financial report currently disclosed cannot see the change of executives shareholding.
But from a certain point of view, compared with Yibang, which has a relatively small revenue, Canaan’s market value is less than half of the other’s. The market value is obviously underestimated, and investors have opportunities to take advantage of it.
There is relatively bad news that Wu said that the blockchain found that the investment from Fidelity, the largest investment among institutional investors in the first quarter, had been emptied. As of March 31, Fidelity has increased its holdings of 2,338,558 shares of Canaan Technology, holding 1.49% of Canaan’s shares. But as of June 30, Fidelity and Renaissance Funds have all been emptied. Both Fidelity and Renaissance are the worlds top asset management companies and are keen on the cryptocurrency industry. This may indicate that Canaan is not the long-term investment target of the two or their investors, but a short-term arbitrage investment.
The good news is that Canaans flagship model A1166Pro is launching and selling futures, which will bring a lot of benefits to the financial situation in the third and fourth quarters. Previously, the Canaan A11 series suffered from insufficient technical strength and could not deliver competitive spot products for a long time. Now it seems that A1166Pro seems to have made some progress, and the energy efficiency ratio has reached 42J/T, which is on par with Whatsmart M30S 38J/T. Whatsminer is seriously undercapacitated this year, and Bitmain’s infighting cannot deliver in large quantities. This is a good opportunity for Canaan to return to the first echelon.
Zhang Nangeng, chairman of Canaan, also said that due to strong market demand, it is expected that the companys advance receipts and prepaid expenses from customers will record a substantial increase in the third quarter.
Under the background of unified team, new mining machines released, and gradually mature AI business, external competitors have their own constraints. Whether Canaan can turn around in the third quarter can continue to be paid attention to.
