The secret to the doubling of the stock price of INKEVERSE(03700): Cryptocurrency and short plays soar together

The rise in cryptocurrency prices has once again sparked an investment frenzy in related concept stocks. It is noted that the Hong Kong concept of cryptocurrency - INKEVERSE (03700) has recently seen frequent fluctuations in stock prices, with the moving averages forming a "bullish alignment". On November 11th, the stock price of INKEVERSE surged by 20.18% to 1.37 Hong Kong dollars, reaching a new high since March 2023; on November 12th, the company's stock price briefly exceeded 1.5 Hong Kong dollars, with the largest increase of 134.7% since the beginning of the year. Looking ahead to investing in cryptocurrencies for excess returns Since Trump won the US presidential election, cryptocurrencies have started to soar. The price of Bitcoin has surpassed $89,000 per coin, hitting a new all-time high. As a result, the stock prices of Hong Kong and US concept stocks in cryptocurrencies have shown varying degrees of increase in recent times. Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered Bank, believes that after Trump's victory, the price of Bitcoin will reach $125,000 by the end of this year and $200,000 by the end of 2025. Jan Van Eck, CEO of leading asset management company VanEck, predicts that the price of Bitcoin will reach $300,000. In a bullish sentiment towards cryptocurrencies, INKEVERSE has become a hot commodity in the secondary market. One of the main reasons is that INKEVERSE announced a major investment decision on March 26, 2024, planning to invest $100 million in cryptocurrencies over the next five years, reflecting the company's strategic intent and market foresight on multiple levels. Firstly, INKEVERSE's investment decision in cryptocurrencies demonstrates the company's emphasis on asset allocation strategy. Against the backdrop of increasing global economic uncertainty, cryptocurrencies as a new asset class provide the company with opportunities for diversification and risk hedging. With the maturation of the cryptocurrency market and improvements in the regulatory environment, the company is expected to achieve excess returns through investing in cryptocurrencies. Secondly, in terms of fund allocation, the company plans to use approximately $60 million to buy Bitcoin (BTC), approximately $20 million to buy Ethereum (ETH), and about $10 million each to buy Tether (USDT) and USD Coin (USDC). This investment portfolio illustrates INKEVERSE's diversified investment strategy in the cryptocurrency market, aiming to diversify risks and capture the growth potential of different cryptocurrencies. Furthermore, INKEVERSE's investment in cryptocurrencies also shows the company's confidence in the long-term value of the Web3.0 industry and blockchain technology. The company's board believes that the Web3.0 industry and blockchain technology have the potential to disrupt the current financial and technology industries, with the Web3.0 industry still in an active development stage, and cryptocurrencies having long-term appreciation potential. This view aligns with the global fintech development trend, as many financial institutions and tech companies are actively exploring the applications of blockchain technology and seeing it as a key driver of future growth. INKEVERSE is also expected to leverage blockchain technology to improve content copyright protection, user authentication, and payment systems, enhancing user experience and operational efficiency. With a solid business foundation, INKEVERSE is accelerating the development of new growth curves. Before the eruption of the INKEVERSE market, the company's main shareholder, Kunlun Group Limited, has been steadily collecting chips in the secondary market since September. On October 29th, Kunlun Group Limited increased its holdings of 2.509 million shares of INKEVERSE at an average price of HK$1.021. Following the increase, the latest holding number is approximately 194 million shares, with the latest holding percentage reaching 10.02%. The increase in holdings by major shareholders usually indicates optimism about the company's long-term growth prospects and the belief that the company's stock price does not fully reflect its true value. In fact, after the sharp rise in INKEVERSE's stock price, the market value is still less than HK$3 billion, with a price-earnings ratio (TTM) of only 7.59 times and a price-to-book ratio of 0.56 times. Such low valuation levels may imply undervaluation for a company with clear business growth potential. INKEVERSE occupies a leading position in the Chinese interactive social platform market, with its core product Yingke Live setting a trend in mobile live streaming since its launch in 2015. Leveraging a mature operating model and continuously optimized ecosystem structure, INKEVERSE has created a healthy and active user atmosphere, maintaining the brand advantage of Yingke Live. Currently, the live social business centered around Yingke Live is INKEVERSE's cornerstone business and its "cash cow" business. In the first half of 2024, supported by Yingke Live, INKEVERSE's overall monthly active users (MAU) reached 24.045 million, with a 14.4% year-on-year decrease, but an average monthly revenue per user (ARPU) increased by 32.1% year-on-year to 24.5 yuan. This drove the company's revenue to grow by 13% year-on-year to RMB 3.533 billion, with value-added service revenue increasing by 12.4% year-on-year to RMB 2.601 billion. Currently, INKEVERSE is focused on the steady development of interactive entertainment as its core, consolidating its scale advantage in areas such as live social by relying on its product matrix strategy, steadily advancing the exploration of innovative businesses such as short dramas, continuously accumulating overseas expansion experience, and striving to maintain steady development in a competitive market. One area of INKEVERSE's diversified business matrix that deserves attention is its short drama business. With early entry, precise investment levels, and efficient integrated upstream and downstream collaboration capabilities, INKEVERSE has quickly established a complete chain for short dramas. According to the DataEye Top 100 Platform List released in the first half of 2024, INKEVERSE ranked fourth overall in the heat value of short drama companies; as of August 2024, INKEVERSE has produced over 600 short dramas, reaching over 400 million users, with each piece gaining tremendous popularity.More than 70 blockbuster dramas with over tens of millions of views. In the first half of 2024, the company's revenue from short dramas reached 643 million yuan, a year-on-year increase of 36%, accounting for 18.2% of total revenue.According to iResearch Consulting's estimate, the market size of China's micro-short video industry is expected to reach 48.46 billion yuan in 2024, and the industry market size is expected to exceed one trillion yuan in the next five years. At the same time, the overseas micro-short video market is also growing rapidly, with iResearch Consulting predicting the long-term potential to reach 36 billion US dollars. Against this background, INKEVERSE is carefully exploring the next stage of development for short videos, trying to integrate short videos with cultural tourism and other industries to create high-quality boutique micro-short videos. At the same time, they are also exploring new opportunities in overseas short videos, focusing on verifying commercialization paths and promoting the diversified development of the short video industry. In the overseas market, INKEVERSE has achieved significant success. By launching two micro-short video apps - Redshort and Reelbox, INKEVERSE has successfully entered international markets such as North America and Southeast Asia, and is committed to achieving localized operations. During the process of expanding internationally, the company's exploration of cutting-edge technology will provide strong support. INKEVERSE pointed out in its mid-year 2024 financial report that as a step into the Web3.0 era, the company plans to strategically hold cryptocurrencies for the long term, providing underlying support for entering this emerging field. In addition, the company will continue to focus on the development of AI technology, promoting the application of AI through self-research and cooperation to create a unique entertainment and social ecosystem, leading the future development of the industry. INKEVERSE is actively laying out in the AIGC field to address industry changes and challenges. Through accessing GPT3.5 turbo and technical cooperation with Kunlun Tech, the company is actively exploring the development directions of interactive social, AI music, AI scripts, AI operations, and DIGIHUMAN live streaming. Capital previously pointed out that the cooperation between INKEVERSE and Kunlun Tech broadens diverse interactive entertainment scenarios and is expected to promote business boundary extension, becoming a new growth point. It is worth mentioning that Kunlun Tech announced that its AI short video platform SkyReels will officially launch in the United States on December 10th. This marks further expansion in the global AI entertainment market for Kunlun Tech and will also bring a new intelligent short video experience to North American audiences. This may suggest that the cooperation between INKEVERSE and Kunlun Tech will generate greater synergy. Overall, the sharp rise in INKEVERSE's stock price is the result of the company's improved fundamentals, the booming cryptocurrency market, positive changes in investor sentiment, and market expectations. Looking ahead, the company's active layout in the AIGC field, expansion in overseas markets, and technological innovation and business model upgrades all indicate that INKEVERSE will continue to maintain a strong growth momentum and achieve sustained performance growth as well as market expansion for CKH HOLDINGS. The company's value growth story may be far from over.