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

<ul>
<li>We re-instate our buy on Inter for its healthy credit quality credentials, improving operating returns and its attractive valuations to premium earnings growth potential</li>
<li>Nubank remains a neutral - due to valuation - but is one to watch for its strong operational returns supported by its high activity rate; Kakaobank is also on watch</li>
<li>PicPay is deep value but its rapid deterioration in credit quality and cost of risk are serious challenges; we believe that recent IPO Agibank is another relatively challenged Brazilian neobank</li>
</ul>


We re-instate our buy on Inter for its healthy credit quality credentials, improving operating returns and its attractive valuations to premium earnings growth potential
Nubank remains a neutral - due to valuation - but is one to watch for its strong operational returns supported by its high activity rate; Kakaobank is also on watch
PicPay is deep value but its rapid deterioration in credit quality and cost of risk are serious challenges; we believe that recent IPO Agibank is another relatively challenged Brazilian neobank


EM Neobanks – Re-Instating the Buy Rating on Inter (INTR US)

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>This report looks at SaaS-Software versus Hyperscalers. Which group is getting cheapest and is attractive? Is the steep Software correction justified by SaaSpocalypse? I add FinTech and eComm. </li>
<li>The overall market’s direction says that it’s not time to buy anything. However, we still can think about the merits, risk/reward, valuations/growth of different sectors. </li>
<li>Conclusions 1) SaaS-Software has derated to a level consistent with earnings growth 2) Hyperscalers tend to outperform with lower volatility 3) a couple of FinTechs are interesting.</li>
</ul>


This report looks at SaaS-Software versus Hyperscalers. Which group is getting cheapest and is attractive? Is the steep Software correction justified by SaaSpocalypse? I add FinTech and eComm. 
The overall market’s direction says that it’s not time to buy anything. However, we still can think about the merits, risk/reward, valuations/growth of different sectors. 
Conclusions 1) SaaS-Software has derated to a level consistent with earnings growth 2) Hyperscalers tend to outperform with lower volatility 3) a couple of FinTechs are interesting.


Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/paypay-corporation" target="_blank" data-smartkarma-citation="entities:35269:1" rel="noopener">PayPay (PAYP US),</a> Japan’s leading financial technology company, is seeking to raise about US$1.1 billion through a Nasdaq IPO.</li>
<li>I previously discussed the IPO in <em><strong><a href="https://www.smartkarma.com/insights/paypay-ipo-payp-us-the-investment-case" target="_blank" data-smartkarma-citation="insights:222670" rel="noopener">PayPay IPO (PAYP US): The Investment Case</a></strong></em>. </li>
<li>In this note, I present my forecasts and valuation. My analysis suggests that the IPO price range is attractive. The pricing date is 11 March.</li>
</ul>



PayPay (PAYP US), Japan’s leading financial technology company, is seeking to raise about US$1.1 billion through a Nasdaq IPO.
I previously discussed the IPO in PayPay IPO (PAYP US): The Investment Case. 
In this note, I present my forecasts and valuation. My analysis suggests that the IPO price range is attractive. The pricing date is 11 March.


PayPay IPO (PAYP US): Valuation Insights

<ul>
<li>Our initial PicPay report assumed a post-money IPO valuation of USD2.5bn; the disclosed price range implies an IPO valuation of USD2.07bn to USD2.53bn, with between USD365m and USD500m being raised</li>
<li>The key challenge we see for PicPay is credit quality; stage 3 loans to total loans have risen fast, despite secured loans accounting for 70%+ of the total</li>
<li>We believe that PicPay is more comparable to Banco Pan not Inter and certainly not Nubank; therefore, we see more appropriate IPO pricing at the bottom of the range (USD16)</li>
</ul>


Our initial PicPay report assumed a post-money IPO valuation of USD2.5bn; the disclosed price range implies an IPO valuation of USD2.07bn to USD2.53bn, with between USD365m and USD500m being raised
The key challenge we see for PicPay is credit quality; stage 3 loans to total loans have risen fast, despite secured loans accounting for 70%+ of the total
We believe that PicPay is more comparable to Banco Pan not Inter and certainly not Nubank; therefore, we see more appropriate IPO pricing at the bottom of the range (USD16)


PicPay Pre-IPO Revisited – Further Thoughts on Valuation

<ul>
<li>PicPay is a Brazilian fintech offering a range of digital banking and financial services including payments to consumer and small and medium business clients</li>
<li>No valuation range has been released yet for PicPay’s IPO, but press reports indicate a USD500m potential offering; we assume a post-money market capitalisation at IPO of USD2.5bn</li>
<li>PicPay is higher quality than Banco PAN, especially in terms of NPL ratio, but PicPay falls short, in terms of its operating metrics, versus Inter and well short of Nubank</li>
</ul>


PicPay is a Brazilian fintech offering a range of digital banking and financial services including payments to consumer and small and medium business clients
No valuation range has been released yet for PicPay’s IPO, but press reports indicate a USD500m potential offering; we assume a post-money market capitalisation at IPO of USD2.5bn
PicPay is higher quality than Banco PAN, especially in terms of NPL ratio, but PicPay falls short, in terms of its operating metrics, versus Inter and well short of Nubank


PicPay Pre-IPO Research – Initial Thoughts on Its Valuation Versus LatAm Fintechs

Brazil

Nu Holdings Ltd. is a Brazilian financial technology firm that offers digital banking services, including credit and debit cards, mobile payment solutions, and investment platforms. The company provides spending, transactional, savings, investing, borrowing, and protection solutions for individuals and businesses across Brazil, Mexico, and Colombia. Nu Holdings Ltd. was founded in 2013 and is headquartered in São Paulo, Brazil.

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Nu Holdings (NU US)

EM Neobanks – Re-Instating the Buy Rating on Inter (INTR US)

Upgrading Inter to buy for its sound credit quality and valuations-to-growth, global benchmark Nubank is one to watch; PicPay and Agibank face NPL...

Victor Galliano

Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

Nicolas Baratte

PayPay IPO (PAYP US): Valuation Insights

PayPay has priced its IPO at US$16 per ADS, below the US$17.00 to US$20.00 range, to raise US$880m, presumably due to the market turmoil. However,...

Arun George

PicPay Pre-IPO Revisited – Further Thoughts on Valuation

PicPay's IPO valuation ranges from USD2.07bn to USD2.53bn, with credit quality as a key concern; we see Banco Pan as its key comparable, and...

Victor Galliano

PicPay Pre-IPO Research – Initial Thoughts on Its Valuation Versus LatAm Fintechs

We base Brazil fintech PicPay's initial IPO valuation on those of LatAm fintech peers. We see it as higher quality than Banco PAN but it lags...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

EM Neobanks – Re-Instating the Buy Rating on Inter (INTR US)

​Upgrading Inter to buy for its sound credit quality and valuations-to-growth, global benchmark Nubank is one to watch; PicPay and Agibank face NPL...

Victor Galliano

Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

​Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

Nicolas Baratte

PayPay IPO (PAYP US): Valuation Insights

PayPay has priced its IPO at US$16 per ADS, below the US$17.00 to US$20.00 range, to raise US$880m, presumably due to the market turmoil. However,...

Arun George

PicPay Pre-IPO Revisited – Further Thoughts on Valuation

​PicPay's IPO valuation ranges from USD2.07bn to USD2.53bn, with credit quality as a key concern; we see Banco Pan as its key comparable, and...

Victor Galliano

PicPay Pre-IPO Research – Initial Thoughts on Its Valuation Versus LatAm Fintechs

We base Brazil fintech PicPay's initial IPO valuation on those of LatAm fintech peers. We see it as higher quality than Banco PAN but it lags...

Victor Galliano

Upgrading Inter to buy for its sound credit quality and valuations-to-growth, global benchmark Nubank is one to watch; PicPay and Agibank face NPL...

Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

PicPay's IPO valuation ranges from USD2.07bn to USD2.53bn, with credit quality as a key concern; we see Banco Pan as its key comparable, and...