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>We stick with our core theme for exchanges of growing post-trading revenues, as well as capitalising on “big data” in financial transactions and data services, as we head into 2023</li>
<li>We identify four relative value opportunities in exchanges; HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams</li>
<li>We stick with Coinbase as the exchange to avoid, in our view; its revenue streams are heavily exposed to low volumes of crypto transactions, and recent events highlight counterparty risk</li>
</ul>


We stick with our core theme for exchanges of growing post-trading revenues, as well as capitalising on “big data” in financial transactions and data services, as we head into 2023
We identify four relative value opportunities in exchanges; HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
We stick with Coinbase as the exchange to avoid, in our view; its revenue streams are heavily exposed to low volumes of crypto transactions, and recent events highlight counterparty risk


Global Exchanges – Conviction Picks for 2023

<ul>
<li>Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services</li>
<li>We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams</li>
<li>Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions</li>
</ul>


Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services
We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions


Global Exchanges – The Quest for Recurring Revenues

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. As of April 2022, Upbit had more than 70% market share in the cryptocurrency trading market in Korea.</li>
<li>Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and operating profit surged from 86.6 billion won in 2020 to 3.3 trillion won in 2021.</li>
<li>In January 2022, Dunamu was last valued Dunamu at nearly 15 trillion won. However, due to major decline in crypto prices in 2022, Dunamu's valuation has declined significantly. </li>
</ul>


Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. As of April 2022, Upbit had more than 70% market share in the cryptocurrency trading market in Korea.
Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and operating profit surged from 86.6 billion won in 2020 to 3.3 trillion won in 2021.
In January 2022, Dunamu was last valued Dunamu at nearly 15 trillion won. However, due to major decline in crypto prices in 2022, Dunamu's valuation has declined significantly. 


Dunamu: Operator of Upbit - The Number One Cryptocurrency Exchange in Korea

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.</li>
<li>Besides the impairment charges, the increase in Q1'22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.</li>
<li>Coinbase's earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets. </li>
</ul>


Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.
Besides the impairment charges, the increase in Q1'22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.
Coinbase's earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets. 


Coinbase Q1’22: A Deeper Look Into the Operating Expenses

Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>
<a href="https://www.smartkarma.com/entities/carsome-group" target="_blank" data-smartkarma-citation="entities:35913:1" rel="noopener">Carsome (CARSOME1 SP)</a>, Malaysia's used-car eCommerce/technology unicorn, has reportedly submitted a confidential IPO filing for a dual listing on Nasdaq and <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange</a>.</li>
<li>Carsome has a great ESG story to tell, but needs to be less humble about telling it because pre-IPO ESG messaging can impact IPO valuations, especially for transportation-related deals.</li>
<li>The centerpiece of Carsome's ESG story should be the important (but underappreciated) role of used car markets in decarbonising road transportation, a leading source of carbon emissions.</li>
</ul>



Carsome (CARSOME1 SP), Malaysia's used-car eCommerce/technology unicorn, has reportedly submitted a confidential IPO filing for a dual listing on Nasdaq and Singapore Exchange.
Carsome has a great ESG story to tell, but needs to be less humble about telling it because pre-IPO ESG messaging can impact IPO valuations, especially for transportation-related deals.
The centerpiece of Carsome's ESG story should be the important (but underappreciated) role of used car markets in decarbonising road transportation, a leading source of carbon emissions.


Carsome: A Paradigm of Circular Economy and Unsung Hero in the Decarbonisation of Transportation

United States

Coinbase Global, Inc. provides financial solutions. The Company offers platform to buy and sell cryptocurrencies. Coinbase Global serves clients worldwide.

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Coinbase Global (COIN US)

Global Exchanges – Conviction Picks for 2023

Our 2023 picks of HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying...

Victor Galliano

Global Exchanges – The Quest for Recurring Revenues

We identify MexBolsa, B3 and Deutsche Borse as exchanges that feature positively multiple times in our value screens and that are diversifying away...

Victor Galliano

Dunamu: Operator of Upbit - The Number One Cryptocurrency Exchange in Korea

Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and...

Douglas Kim

Coinbase Q1’22: A Deeper Look Into the Operating Expenses

A major reason why COIN reported weak Q1'22 earnings was also due to the increase in operating expenses. We will take a deeper look into the...

Alec Tseung

Carsome: A Paradigm of Circular Economy and Unsung Hero in the Decarbonisation of Transportation

Carsome has reportedly filed for an IPO (dual Nasdaq/SGX listing), and has a great ESG story to tell investors including the role that used car...

Kyle Rudden

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