Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Grupo Financiero Banorte SAB d / Equity Bottom-Up

Grupo Financiero Banorte SAB d (GFNORTEO MF)

<ul>
<li>Mexican banks and financials' solid share price performance makes the quest for value a tougher proposition</li>
<li>We stick with our positive recommendation on <a href="https://www.smartkarma.com/entities/gentera-sab-de-cv" target="_blank" data-smartkarma-citation="entities:27889:1" rel="noopener">Gentera SAB De CV (GENTERA* MM EQUITY)</a>, on the back of good fundamentals in 3Q19 and further potential for improving results in Peru as well as in Mexico</li>
<li>We believe that the <a href="https://www.smartkarma.com/entities/grupo-financiero-banorte-o" target="_blank" data-smartkarma-citation="entities:24780:1" rel="noopener">Grupo Financiero Banorte-O (GFNORTEO MM)</a> results for 3Q19 are less impressive than at first look, boosted by trading gains, with the efficiency ratio deteriorating and slowing loan growth; we believe that the peak in returns is well discounted, and we would be inclined to take profits on further share price strength</li>
<li>
<a href="https://www.smartkarma.com/entities/banco-santander-mexico-sa-in" target="_blank" data-smartkarma-citation="entities:27672:1" rel="noopener">Banco Santander Mexico-B (BSMXB MM)</a> now has limited free float; post-tender offer by the parent, it is c 92% owned by the parent <a href="https://www.smartkarma.com/entities/banco-santander-sa" target="_blank" data-smartkarma-citation="entities:21296:1" rel="noopener">Banco Santander Sa (SAN SM)</a> and this lack of liquidity largely explains its discount to Banorte, in our view</li>
<li>Value - as measured by PBV versus ROE consensus forecasts - lies in second tier names; <a href="https://www.smartkarma.com/entities/banco-del-bajio-sa" target="_blank" data-smartkarma-citation="entities:28382:1" rel="noopener">Banco del Bajio SA (BBAJIOO MM)</a>  and, despite it challenges, <a href="https://www.smartkarma.com/entities/credito-real-s-a-b-de-c-v" target="_blank" data-smartkarma-citation="entities:28383:1" rel="noopener">Credito Real, S.A.B. De C.V. (CREAL* MM EQUITY)</a>, stand out</li>
<li>Risks to our thesis are better than expected execution at Banorte, and bigger than expected challenges for Gentera operations in Mexico and Peru</li>
</ul>


Mexican banks and financials' solid share price performance makes the quest for value a tougher proposition
We stick with our positive recommendation on Gentera SAB De CV (GENTERA* MM EQUITY), on the back of good fundamentals in 3Q19 and further potential for improving results in Peru as well as in Mexico
We believe that the Grupo Financiero Banorte-O (GFNORTEO MM) results for 3Q19 are less impressive than at first look, boosted by trading gains, with the efficiency ratio deteriorating and slowing loan growth; we believe that the peak in returns is well discounted, and we would be inclined to take profits on further share price strength

Banco Santander Mexico-B (BSMXB MM) now has limited free float; post-tender offer by the parent, it is c 92% owned by the parent Banco Santander Sa (SAN SM) and this lack of liquidity largely explains its discount to Banorte, in our view
Value - as measured by PBV versus ROE consensus forecasts - lies in second tier names; Banco del Bajio SA (BBAJIOO MM)  and, despite it challenges, Credito Real, S.A.B. De C.V. (CREAL* MM EQUITY), stand out
Risks to our thesis are better than expected execution at Banorte, and bigger than expected challenges for Gentera operations in Mexico and Peru


Mexican Banks - A More Demanding Quest for Value; Take Profits on Banorte

Mexico

Banco del Bajio S.A. provides a full range of commercial banking services. The Bank offers mortgages loans, saving, investment option, pension advice, and electronic billing services. Banco del Bajio operates in Mexico.

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Mexican Banks - A More Demanding Quest for Value; Take Profits on Banorte

Mexican banks and financials' solid share price performance makes the quest for value a tougher proposition We stick with our positive...

Victor Galliano