Source: Odaily | Author: Wang Ye
What Are Blockchain-Related Stocks?
Blockchain-related stocks are shares of publicly listed companies whose operations are connected to blockchain technology, leading the market to categorize them under this label. However, even being labeled a "concept stock" has its criteria. From Bitcoin and tokens to ICOs and blockchain itself, investors often jump on the bandwagon before fully understanding these concepts, fueling speculative frenzies. It's crucial to remember: blockchain is not Bitcoin, nor is it tokens or ICOs. It represents a vision for how distributed ledger technology could reshape economic models.
Technically, blockchain is a decentralized, distributed digital ledger—a chain-like database built on a peer-to-peer network, maintained across multiple nodes that store data collectively. Think of it as a digital filing cabinet, automatically synchronized and backed up across numerous computers, preserving a complete, immutable history of all transactions as verifiable records. Inside this cabinet, sequentially numbered "blocks" act as ledgers, each containing a batch of "transaction records"—the original accounting entries—bound in strict order. To prevent tampering, cryptographic algorithms link these blocks, forming a one-way, logically sequential chain where new blocks can only be added to the end; insertion, deletion, or modification within the chain is impossible.
The blockchain concept within these stocks may encompass nine developmental stages: digital currency, digital consensus, digital assets, decentralized digital exchanges, digital identity, value intermediation, smart contracts, decentralized autonomous organizations (DAOs), and programmable society. The technology is still evolving, with stable, scalable business models yet to be fully realized. Blockchain is more than a technology; it's a potential extension of human social and economic systems.
These stocks have become darlings of global markets. Whether in the U.S., Hong Kong, or China's A-share market, capital has poured in, driving wave after wave of speculation. To date, blockchain's most significant achievement is the emergence of the token economy. This represents a highly promising application area, primarily addressing real-world transactional needs in the digital economy that are hindered by existing regulations, incentive structures, transaction costs, or payment mechanisms.
Meanwhile, numerous A-share listed companies have rushed to associate themselves with the trend, branding their businesses as "blockchain-enabled." This, coupled with aggressive promotion by retail and institutional investors, has further ignited market enthusiasm. However, most of these companies lack the financial performance to substantiate their blockchain claims. As speculation intensifies, the number of listed firms claiming blockchain involvement has ballooned. From just about 10 at the start of the hype, the sector has rapidly expanded to include 118 stocks.
Among these 118, 66 made no mention of blockchain in their financial reports. Therefore, the following analysis by Bitmain focuses on the remaining 52.
Circulating Market Cap Exceeds RMB 640 Billion; Suning.com Leads
The combined circulating market capitalization of these 52 stocks totals over RMB 644.3 billion, with Suning.com ranking first at approximately RMB 83.5 billion.
Regarding its blockchain activities, Suning.com stated in its 2019 semi-annual report that its financial arm launched a blockchain-based forfaiting service. Its "Blockchain + IoT Auto Inventory Financing System" was recognized as an Outstanding Blockchain Application Case at CITE 2019, and its intelligent debt collection platform received a Class II award from the China Banking and Insurance Regulatory Commission (CBIRC) for a 2018 risk management research project.
Of the 52 stocks, 34 (65.38%) have a circulating market cap below RMB 10 billion; 10 are between RMB 10-20 billion; five range from RMB 20-50 billion; and three exceed RMB 50 billion.
Total Revenue Approaches RMB 29 Billion; New Morning Technology Posts Fastest YoY Growth
The 52 companies reported total H1 2019 revenue of nearly RMB 289.5 billion, a year-on-year increase of 12.8%. New Morning Technology led with staggering growth of 131.64%.
Notably, New Morning Technology is among 14 companies identified as particularly "enthusiastic about blockchain." As noted in a previous article, it doubled its mentions of blockchain in its 2019 semi-annual report compared to the prior year.
On the business front, New Morning Technology has deployed practical applications: during the reporting period, it completed a blockchain-based customer information sharing system for a major financial group and delivered a supply-chain project using blockchain for a joint-stock commercial bank. In 2019, the company continued focusing on practical industry applications and R&D in emerging technologies like blockchain, cloud computing, and big data, increasing its blockchain R&D investment. It actively followed mainstream blockchain platforms and open-source communities, leveraging its expertise in trade finance to pioneer new applications. Concurrently, it advanced research into consensus algorithms, cryptographic algorithms, and cross-chain technologies. Through dedicated team building and the launch of its self-developed Blockchain-as-a-Service (BaaS) platform, New Morning Technology has strengthened its foundational capabilities in the space.
Total Net Profit: RMB 15.5 Billion; Qihoo 360 Accounts for One-Quarter
The 52 stocks collectively posted a net profit of RMB 15.51 billion for H1 2019, a year-on-year decline of 9.91%. Qihoo 360 topped the list with a net profit of RMB 4.032 billion, accounting for roughly 26% of the total.
However, Qihoo 360 mentioned blockchain only twice in its report: first, in a glossary defining its core technologies with the acronym "IMABCDE"—where 'B' stands for blockchain. Second, it disclosed an R&D expenditure of RMB 4.975 million for developing key technologies of a blockchain-based trusted electronic evidence preservation system.
In summary, among the 52 blockchain-related stocks that referenced the technology in their 2019 semi-annual reports, aggregate revenue grew 12.8% year-on-year while net profit fell 9.91%. Their future development remains a space to watch.