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.

Event-Driven

<ul>
<li>The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos</li>
<li>This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management</li>
<li>BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell</li>
</ul>


The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos
This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management
BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell


Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

Thematic (Sector/Industry)

<ul>
<li>We examine key balance sheet ratios of the Latam banks looking into liquidity, credit quality and capital adequacy, at a time of investor nervousness and concern</li>
<li>Based on our screening, our positive value picks are Bradesco and BanColombia, with Banco de Chile, BanBajio and BanRegio composing our positive high quality picks</li>
<li>Our bearish picks are Banorte and BCI; Banorte is strong in terms of capital adequacy and credit quality, but is exposed in terms of its big securities portfolio</li>
</ul>


We examine key balance sheet ratios of the Latam banks looking into liquidity, credit quality and capital adequacy, at a time of investor nervousness and concern
Based on our screening, our positive value picks are Bradesco and BanColombia, with Banco de Chile, BanBajio and BanRegio composing our positive high quality picks
Our bearish picks are Banorte and BCI; Banorte is strong in terms of capital adequacy and credit quality, but is exposed in terms of its big securities portfolio


LatAm Banks – Liquidity, Solvency and Credit Quality in Focus in a Crisis

<ul>
<li>For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)</li>
<li>Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA</li>
<li>BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x</li>
</ul>


For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)
Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA
BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x


Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

<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>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

Colombia

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 (PFBCOLO CB)

Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

This agreement marks the end of Gilinski’s ambition to control BanColombia, as well as Gilinski exerting activist shareholder influence over the...

Victor Galliano

LatAm Banks – Liquidity, Solvency and Credit Quality in Focus in a Crisis

Focus on LatAm banks liquidity, solvency and credit quality; we like Bradesco and BanColombia as value plays with Banco de Chile, BanBajio &...

Victor Galliano

Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

Gilinski's activist style is putting pressure on GEA management, especially BanColombia, to improve returns; the higher ROE in 1Q22 and 2Q22 has...

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

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