Alpha-Centric ESG Research

Kyle Rudden

If you have never heard of the Long-Term Stock Exchange (LTSE), that is understandable. It is new, and still quite small; in fact, it is the second smallest in the world (for reference LTSE is larger than the Armenia Securities Exchange and considerably smaller than the Bermuda Stock Exchange).But this is about strategy, not size.As the world's first and one-of-a-kind "ESG stock exchange," LTSE's evolution is worth watching. One big milestone came last week when Asana (ASAN US) and <a href="https://www.smartkarma.com/entities/twilio-inc" target="_blank" data-smartkarma-citation="entities:26473:1" rel="noopener">Twilio (TWLO US)</a> began trading; LTSE's first two listings, and solid "anchors" that should give other issuers confidence in LTSE.This Insight provides an overview of LTSE – its ESG business model, history, funding, expertise, and outlook including potential future listings. Not just from the perspective of LTSE, but also in terms of the broader implications for sustainable/ESG investing and capital markets.

If you have never heard of the Long-Term Stock Exchange (LTSE), that is understandable. It is new, and still quite small; in fact, it is the second smallest in the world (for reference LTSE is larger than the Armenia Securities Exchange and considerably smaller than the Bermuda Stock Exchange).But this is about strategy, not size.As the world's first and one-of-a-kind "ESG stock exchange," LTSE's evolution is worth watching. One big milestone came last week when Asana (ASAN US) and Twilio (TWLO US) began trading; LTSE's first two listings, and solid "anchors" that should give other issuers confidence in LTSE.This Insight provides an overview of LTSE – its ESG business model, history, funding, expertise, and outlook including potential future listings. Not just from the perspective of LTSE, but also in terms of the broader implications for sustainable/ESG investing and capital markets.

Asana and Twilio Are First Listings for ESG-Focused Long-Term Stock Exchange (LTSE)

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>Square has been all over the news after its big announcement to acquire Afterpay, a ‘buy now, pay later’ solutions provider in a $29 billion all-stock deal.</li><li>Before this big acquisition announcement, Square reported a decent result with revenues driven by strong momentum across the Cash App ecosystem which added $3.33 billion to the top-line implying a growth of a staggering 177%.</li><li>Bitcoin alone was responsible for revenues of $2.72 billion, up more than 10 times as compared to the 2020 numbers.</li></ul>

Square has been all over the news after its big announcement to acquire Afterpay, a ‘buy now, pay later’ solutions provider in a $29 billion all-stock deal.Before this big acquisition announcement, Square reported a decent result with revenues driven by strong momentum across the Cash App ecosystem which added $3.33 billion to the top-line implying a growth of a staggering 177%.Bitcoin alone was responsible for revenues of $2.72 billion, up more than 10 times as compared to the 2020 numbers.

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 acquisition of <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> by <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>  has been well received by the market</li>
<li>There are great qualities to the deal, including strategic fit and potential synergies</li>
<li>Nonetheless, we believe that there are challenges in the form of credit risks to Afterpay’s Buy Now Pay Later (BNPL) model, as well as increased regulatory scrutiny and oversight</li>
<li>Factoring in these risks, and despite the growth potential, we ask is the price right? We look at a number of valuation metrics including PEG</li>
<li>We remain negative on Square even with the growth potential; we would recommend Afterpay shareholders – the key winners in the deal - to cash in their Square shares post deal</li>
<li>Risks to our negative view include faster than expected revenue growth bringing Afterpay into profit, lower than expected BNPL delinquencies and better than expected synergies</li>
</ul>


The acquisition of Afterpay Touch (APT AU) by Square Inc (SQ US)  has been well received by the market
There are great qualities to the deal, including strategic fit and potential synergies
Nonetheless, we believe that there are challenges in the form of credit risks to Afterpay’s Buy Now Pay Later (BNPL) model, as well as increased regulatory scrutiny and oversight
Factoring in these risks, and despite the growth potential, we ask is the price right? We look at a number of valuation metrics including PEG
We remain negative on Square even with the growth potential; we would recommend Afterpay shareholders – the key winners in the deal - to cash in their Square shares post deal
Risks to our negative view include faster than expected revenue growth bringing Afterpay into profit, lower than expected BNPL delinquencies and better than expected synergies


Square (SQ US) & Afterpay (APT AX): Is the Price Right?

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Last week Square acquired Afterpay for $29B in an all stock deal. Square said the deal would be accretive to gross profit growth in year one after closing, with just a “modest decrease” to adjusted EBITDA in year one. Its shares subsequently added ~$14B market cap…not too shabby.  <div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </div>

Last week Square acquired Afterpay for $29B in an all stock deal. Square said the deal would be accretive to gross profit growth in year one after closing, with just a “modest decrease” to adjusted EBITDA in year one. Its shares subsequently added ~$14B market cap…not too shabby.  Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

Square: Afterpay Acquisition a Master Class in Platform Synergies

Insurance, Fintech & EM-focused Analyst, KT Capital Group, KT Capital Group

Alec Tseung

Insurance, Fintech & EM-focused Analyst, KT Capital Group

Private Capital Markets

For an investment in MoMo, which is a leading e-wallet in Vietnam, our analysis shows that the most sensitive factor that would impact a potential investor's return is the company's take rate.Hence, even if the digital payments and e-wallets sector in Vietnam could present significant growth, the return from investing in MoMo could still be unattractive if its take rate drops in the future, given the sector's intensifying competition.The key to defending its future take rate is diversifying away from e-wallets and payments to become a financial facilitator with a complete ecosystem in the coming 3 – 5 years, like Ant Group in China. This is also the strategy Grab Financial Group is going after.

For an investment in MoMo, which is a leading e-wallet in Vietnam, our analysis shows that the most sensitive factor that would impact a potential investor's return is the company's take rate.Hence, even if the digital payments and e-wallets sector in Vietnam could present significant growth, the return from investing in MoMo could still be unattractive if its take rate drops in the future, given the sector's intensifying competition.The key to defending its future take rate is diversifying away from e-wallets and payments to become a financial facilitator with a complete ecosystem in the coming 3 – 5 years, like Ant Group in China. This is also the strategy Grab Financial Group is going after.  

Vietnam's MoMo: A Venture Capital Investment With Private Equity Return?

United States

Block, Inc. operates as a financial services and digital payments company. The Company develops a payments platform aimed at small and medium businesses that allows them to accept credit card payments and use tablet computers as payment registers for a point-of-sale system. Block also provides financial and marketing services.

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Block (XYZ US)

Asana and Twilio Are First Listings for ESG-Focused Long-Term Stock Exchange (LTSE)

Long-Term Stock Exchange just landed its first two listings, Asana and Twilio. It's a major milestone for this new ESG-focused exchange.

Kyle Rudden

Square Inc. - Investment Thesis

Square has been all over the news after its big announcement to acquire Afterpay, a ‘buy now, pay later’ solutions provider in a $29 billion...

Baptista Research

Square (SQ US) & Afterpay (APT AX): Is the Price Right?

The market is enthusiastic for Square-Afterpay, but we believe prospects are challenged by credit risk combined with fast sales growth, increased...

Victor Galliano

Square: Afterpay Acquisition a Master Class in Platform Synergies

Last week Square acquired Afterpay for $29B in an all stock deal. Its shares subsequently added ~$14B market cap…not too shabby.

Aaron Gabin

Vietnam's MoMo: A Venture Capital Investment With Private Equity Return?

Take rate is the most critical factor that determines the return MoMo could bring to investors. The key to defending its take rate amid intense...

Alec Tseung

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