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.

Thematic (Sector/Industry)

<ul>
<li>Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023</li>
<li>Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank</li>
<li>Our key sells are ICICI Bank from India and digital bank Jago from Indonesia</li>
</ul>


Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023
Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank
Our key sells are ICICI Bank from India and digital bank Jago from Indonesia


Equity Bottom-Up

<ul>
<li>The ousting of Peruvian President Pedro Castillo follows his failed attempt to dissolve Congress; Vice-President Dina Boularte was sworn in yesterday as the new first female Peruvian President</li>
<li>Political instability is not uncommon in Peru, but an end to Castillo’s chaotic, market-unfriendly administration with its high turnover in ministerial posts should improve investor sentiment and encourage increased FDI</li>
<li>When we screen Peruvian bell-weather Credicorp against its LatAm peers, we conclude that, although it is not deep value, it is attractive versus its own history and selected peers</li>
</ul>


The ousting of Peruvian President Pedro Castillo follows his failed attempt to dissolve Congress; Vice-President Dina Boularte was sworn in yesterday as the new first female Peruvian President
Political instability is not uncommon in Peru, but an end to Castillo’s chaotic, market-unfriendly administration with its high turnover in ministerial posts should improve investor sentiment and encourage increased FDI
When we screen Peruvian bell-weather Credicorp against its LatAm peers, we conclude that, although it is not deep value, it is attractive versus its own history and selected peers


Credicorp (BAP US); Opportunity to Come from the Peruvian Political Crisis

Event-Driven

<ul>
<li>Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares</li>
<li>We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+</li>
<li>Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote</li>
</ul>


Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares
We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+
Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote


Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

<ul>
<li>The prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF</li>
<li>The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials</li>
<li>Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list</li>
</ul>


The prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF
The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials
Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list


EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective

<ul>
<li>Gilinski’s higher price incremental share bids for both Grupo Suramericana and Nutresa are intended to make Gilinski the largest shareholder in Suramericana and the majority shareholder in Nutresa</li>
<li>We maintain that this strategy is the next step in Gilinski’s plan to gain control of BanColombia indirectly, and also gain control of Suramericana’s interests in asset management and pensions</li>
<li>We see further upside potential for Grupo Suramericana shares, as well as BanColombia shares; the latter are attractively valued versus LatAm peers</li>
</ul>


Gilinski’s higher price incremental share bids for both Grupo Suramericana and Nutresa are intended to make Gilinski the largest shareholder in Suramericana and the majority shareholder in Nutresa
We maintain that this strategy is the next step in Gilinski’s plan to gain control of BanColombia indirectly, and also gain control of Suramericana’s interests in asset management and pensions
We see further upside potential for Grupo Suramericana shares, as well as BanColombia shares; the latter are attractively valued versus LatAm peers


Grupo Gilinski Ups the Ante on Grupo Suramericana with Enhanced Bids

United States

Bancolombia S.A. attracts deposits and offers retail and commercial banking services. The Bank offers automobile, personal, and education loans; credit and debit cards; securities brokerage services; fund transfers; lease and foreign trade financing; insurance; and pension funds. Bancolombia and its subsidiaries serve Colombia, Panama, Cayman Islands, Puerto Rico, El Salvador, and Miami.

Bancolombia SA (CIB US)

GEM Banks; Conviction Calls for 2023

Our core buys are Bank Mandiri, Hana Financial, China Construction Bank and BanColombia; we also have special mention for Banco Itau and Nubank;...

Victor Galliano

Credicorp (BAP US); Opportunity to Come from the Peruvian Political Crisis

The end of Castillo’s chaotic, market-unfriendly government should lead to improving investor sentiment; Peruvian blue-chip Credicorp is...

Victor Galliano

Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

Gilinski’s “indirect activism” towards BanColombia is focusing management to deliver improved performance, with political risk potentially...

Victor Galliano

EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective

Potential Russian shares exclusion from indices is real, with Asian EMs set to gain big, but do not disregard LatAm; our preferred financials are...

Victor Galliano

Grupo Gilinski Ups the Ante on Grupo Suramericana with Enhanced Bids

Gilinski upped the bids on Sura & Nutresa, with the end-game being to gain control of BanColombia & merge it with Gilinski-controlled Banco GNB...

Victor Galliano