Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

<ul class="">
<li>The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit cards</li>
<li>De-regulation and new entrants have brought challenges for the incumbents, especially for the largest player <a href="https://www.smartkarma.com/entities/24750" target="_blank">Cielo SA (CIEL3 BZ)</a>, with the challengers taking market share, squeezing margins and promoting better service for SME merchants in particular</li>
<li>Competitive pressures continue in the Brazil payments market, reflected in the declining merchant discount rate (MDR), lower rental rates and sale prices for POS terminals, as well as pressure on the commissions for early payment of merchant receivables; the near-term prospects for Cielo remain challenging in our view</li>
<li>Due to the ongoing headwinds, we expect Cielo to show negative earnings growth to 2021; management has announced that Cielo will defend its market share against the challengers; we see further downside risk to consensus earnings and the real risk of a greater than consensus 2019 DPS cut</li>
<li>
<a href="https://www.smartkarma.com/entities/27564" target="_blank">StoneCo Ltd (STNE US)</a>and <a href="https://www.smartkarma.com/entities/27939" target="_blank">Pagseguro Digital Ltd (PAGS US)</a> are two of the payment challengers in this de-regulated market, growing faster than the Brazilian non-cash transactions market and taking incumbents' market share; we see StoneCo to be the preferred entity to PagSeguro, based on StoneCo’s higher revenue yielding SME segment of focus and on its more attractive PEG ratio valuation</li>
</ul>


The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit cards
De-regulation and new entrants have brought challenges for the incumbents, especially for the largest player Cielo SA (CIEL3 BZ), with the challengers taking market share, squeezing margins and promoting better service for SME merchants in particular
Competitive pressures continue in the Brazil payments market, reflected in the declining merchant discount rate (MDR), lower rental rates and sale prices for POS terminals, as well as pressure on the commissions for early payment of merchant receivables; the near-term prospects for Cielo remain challenging in our view
Due to the ongoing headwinds, we expect Cielo to show negative earnings growth to 2021; management has announced that Cielo will defend its market share against the challengers; we see further downside risk to consensus earnings and the real risk of a greater than consensus 2019 DPS cut

StoneCo Ltd (STNE US)and Pagseguro Digital Ltd (PAGS US) are two of the payment challengers in this de-regulated market, growing faster than the Brazilian non-cash transactions market and taking incumbents' market share; we see StoneCo to be the preferred entity to PagSeguro, based on StoneCo’s higher revenue yielding SME segment of focus and on its more attractive PEG ratio valuation


Brazilian Payments Report: Cielo on the Defensive Against Disruptive Challengers

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Turmoil in Turkey and a collapsing lira has led to a breakout in the USD and global equity market weakness. Emerging and developed markets outside the U.S. are getting hit considerably harder than the U.S. given concerns over European bank exposure and EM contagion. The absence of international equity market strength remains a top concern for near-term performance of U.S. markets.  In today’s report we highlight attractive Groups within the U.S. Consumer Discretionary and Data Processing &amp; Outsourcing Services areas.

Turmoil in Turkey and a collapsing lira has led to a breakout in the USD and global equity market weakness. Emerging and developed markets outside the U.S. are getting hit considerably harder than the U.S. given concerns over European bank exposure and EM contagion. The absence of international equity market strength remains a top concern for near-term performance of U.S. markets.  In today’s report we highlight attractive Groups within the U.S. Consumer Discretionary and Data Processing &amp; Outsourcing Services areas.

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

In part 4 of this series, I will evaluate the mobile/ e-payment providers on 10 metrics and total their score. Based on their total score, I hope to unveil the region's payment Goliath. This is a continuation of the first three articles featuring six well-known payment providers: Grab, Go-Pay, AirPay, PayPal, Alipay and Wechat Pay. For background reading, please refer to the fork on the right hand side of this article.

In part 4 of this series, I will evaluate the mobile/ e-payment providers on 10 metrics and total their score. Based on their total score, I hope to unveil the region's payment Goliath. This is a continuation of the first three articles featuring six well-known payment providers: Grab, Go-Pay, AirPay, PayPal, Alipay and Wechat Pay. For background reading, please refer to the fork on the right hand side of this article.

Grab, Go-Jek, Alipay, WeChat Pay; Who Will Be the Payment Goliath in Southeast Asia? - Part 4

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

<ul>
<li>The Open Banking initiative in the UK, the PSD2 directive in the EU and a Japanese equivalent are forcing banks to provide third party access via software APIs to customer data and accounts.</li>
<li>In effect, the new regulations will enable a separation of the functions of money i.e. the traditional bundling role of banks is being disintermediated in an ‘open source’ financial data world.</li>
<li>From being financial department stores, banks will have to become more like malls, hosting a range of independent…</li>
</ul>


The Open Banking initiative in the UK, the PSD2 directive in the EU and a Japanese equivalent are forcing banks to provide third party access via software APIs to customer data and accounts.
In effect, the new regulations will enable a separation of the functions of money i.e. the traditional bundling role of banks is being disintermediated in an ‘open source’ financial data world.
From being financial department stores, banks will have to become more like malls, hosting a range of independent…


Payments Battle Goes Global, as Fintech Threat Evolves…

In the earlier part of these series, I have focused on home-grown firms Grab, Go-Jek, and SEA. In part 3, I discuss the context for featuring AliPay, WeChat Pay, and PayPal, before doing a comparison of their strategies and footprints across ASEAN. These payment giants, established players in their own home countries, have already planted flags in various parts of Southeast Asia even as the region's banks and telcos are just getting onto the bandwagon.In the final parts of this series, I will discuss the digital/mobile payment trends and challenges, before providing some thoughts on who I think the winners could be.

In the earlier part of these series, I have focused on home-grown firms Grab, Go-Jek, and SEA. In part 3, I discuss the context for featuring AliPay, WeChat Pay, and PayPal, before doing a comparison of their strategies and footprints across ASEAN. These payment giants, established players in their own home countries, have already planted flags in various parts of Southeast Asia even as the region's banks and telcos are just getting onto the bandwagon.In the final parts of this series, I will discuss the digital/mobile payment trends and challenges, before providing some thoughts on who I think the winners could be.

Alipay, WeChat Pay, PayPal - Who Will Be the Payment Goliath of Southeast Asia? - Part 3

United States

PayPal Holdings, Inc. operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. The Company offers online payment solutions. PayPal Holdings serves customers worldwide.

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Paypal Holdings (PYPL US)

Brazilian Payments Report: Cielo on the Defensive Against Disruptive Challengers

The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit...

Boost Research

USD Breakout; Foreign Markets Reeling

Turmoil in Turkey and a collapsing lira has led to a breakout in the USD and global equity market weakness. Emerging and developed markets outside...

Vermilion Research

Grab, Go-Jek, Alipay, WeChat Pay; Who Will Be the Payment Goliath in Southeast Asia? - Part 4

In part 4 of this series, I will evaluate the mobile/ e-payment providers on 10 metrics and total their score. Based on their total score, I hope...

Valerie Law, CFA

Payments Battle Goes Global, as Fintech Threat Evolves…

The Open Banking initiative in the UK, the PSD2 directive in the EU and a Japanese equivalent are forcing banks to provide third party access via...

Sean Maher

Alipay, WeChat Pay, PayPal - Who Will Be the Payment Goliath of Southeast Asia? - Part 3

In the earlier part of these series, I have focused on home-grown firms Grab, Go-Jek, and SEA. In part 3, I discuss the context for featuring...

Valerie Law, CFA

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