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 Capital Markets

<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

<ul>
<li>Klarna shares are set to start NYSE trading on 10 September; the issue price range implies a market capitalisation of USD12.8bn to USD13.6bn; we believe that its valuation looks underwhelming</li>
<li>The Klarna IPO valuation versus its peers does, however, show Affirm’s very stretched valuation and we downgrade it to a sell; we upgrade Kakao Pay to a neutral from sell</li>
<li>We keep PagSeguro, PayPal and Nexi on the buy list for their value credentials; we believe that PayPal is also the best value of the major BNPL players</li>
</ul>


Klarna shares are set to start NYSE trading on 10 September; the issue price range implies a market capitalisation of USD12.8bn to USD13.6bn; we believe that its valuation looks underwhelming
The Klarna IPO valuation versus its peers does, however, show Affirm’s very stretched valuation and we downgrade it to a sell; we upgrade Kakao Pay to a neutral from sell
We keep PagSeguro, PayPal and Nexi on the buy list for their value credentials; we believe that PayPal is also the best value of the major BNPL players


Klarna IPO (KLAR US) - Underwhelming Valuations Against Key Comparables

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 Bottom-Up

<ul><li>StoneCo Ltd., a financial technology firm focusing on financial services for micro, small, and medium-sized businesses (MSMBs) in Brazil, recently underwent significant strategic shifts aligned with its core focus.</li><li>The company announced the divestiture of its software assets, including the sale of Linx to TOTVS and SimplesVet to PetLove, aiming to reinforce its focus on payments, banking, and credit, which represent 90% of its total addressable market (TAM).</li><li>With an estimated total value unlocked from these divestitures exceeding BRL 4 billion, the company intends to allocate excess capital in line with shareholder value maximization strategies, primarily through share buybacks if no value-accretive opportunities are found.</li></ul>

StoneCo Ltd., a financial technology firm focusing on financial services for micro, small, and medium-sized businesses (MSMBs) in Brazil, recently underwent significant strategic shifts aligned with its core focus.The company announced the divestiture of its software assets, including the sale of Linx to TOTVS and SimplesVet to PetLove, aiming to reinforce its focus on payments, banking, and credit, which represent 90% of its total addressable market (TAM).With an estimated total value unlocked from these divestitures exceeding BRL 4 billion, the company intends to allocate excess capital in line with shareholder value maximization strategies, primarily through share buybacks if no value-accretive opportunities are found.

StoneCo: An Analysis Of Its TPV Growth, Competitive Dynamics & Growth Catalysts!

<ul>
<li>We introduce our payments scorecard in this report, in which we apply weightings to our metrics of valuation, margins, EBITDA growth estimates and valuation-to-growth to deliver rankings</li>
<li>We keep PagSeguro and Nexi on the buy list, both of these are in the top three in the scorecard; we add PayPal to the buys, replacing the mega-cap Visa</li>
<li>We remove our sell rating on Affirm, replacing it with Kakao Pay; Kakao Pay stock has rallied hard on stablecoin speculation, but our concern is that investors under-estimate regulatory risk</li>
</ul>


We introduce our payments scorecard in this report, in which we apply weightings to our metrics of valuation, margins, EBITDA growth estimates and valuation-to-growth to deliver rankings
We keep PagSeguro and Nexi on the buy list, both of these are in the top three in the scorecard; we add PayPal to the buys, replacing the mega-cap Visa
We remove our sell rating on Affirm, replacing it with Kakao Pay; Kakao Pay stock has rallied hard on stablecoin speculation, but our concern is that investors under-estimate regulatory risk


Payment Companies – Introducing the Sector Scorecard

<ul><li>The first quarter of 2025 has presented a robust performance for StoneCo. The company's financial health is highlighted by a strong year-over-year gross profit growth of 19%, outpacing the 14% guidance for annual gross profit growth.</li><li>This notable growth is attributed mainly to effective repricing execution and a reduction in average funding spreads, bolstered by a significant 36% increase in adjusted EPS.</li><li>StoneCo has emphasized a disciplined execution strategy, which includes repricing initiatives in response to the evolving yield curve.</li></ul>

The first quarter of 2025 has presented a robust performance for StoneCo. The company's financial health is highlighted by a strong year-over-year gross profit growth of 19%, outpacing the 14% guidance for annual gross profit growth.This notable growth is attributed mainly to effective repricing execution and a reduction in average funding spreads, bolstered by a significant 36% increase in adjusted EPS.StoneCo has emphasized a disciplined execution strategy, which includes repricing initiatives in response to the evolving yield curve.

StoneCo: How Product Innovation & Bundled Solutions Are Building Merchant Loyalty!

Brazil

StoneCo Ltd. is a Brazilian financial technology and software solutions provider. The company offers a cloud-based platform for payments, digital banking, and credit solutions primarily to micro, small, and medium businesses (MSMBs). It also provides Point of Sale (POS) and Enterprise Resource Planning (ERP) solutions. Headquartered in George Town, Cayman Islands, StoneCo was founded in 2012.

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StoneCo (STNE US)

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

Klarna IPO (KLAR US) - Underwhelming Valuations Against Key Comparables

Klarna is due to IPO, with its valuation underwhelming relative to peers; we downgrade Affirm to a sell due to very rich valuations, and we stick...

Victor Galliano

StoneCo: An Analysis Of Its TPV Growth, Competitive Dynamics & Growth Catalysts!

StoneCo Ltd., a financial technology firm focusing on financial services for micro, small, and medium-sized businesses (MSMBs) in Brazil, recently...

Baptista Research

Payment Companies – Introducing the Sector Scorecard

We introduce our payments scorecard; PagSeguro and Nexi remain buys, while PayPal replaces Visa. Affirm is replaced on the sell list by Kakao Pay...

Victor Galliano

StoneCo: How Product Innovation & Bundled Solutions Are Building Merchant Loyalty!

The first quarter of 2025 has presented a robust performance for StoneCo. The company's financial health is highlighted by a strong year-over-year...

Baptista Research

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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

Klarna IPO (KLAR US) - Underwhelming Valuations Against Key Comparables

​Klarna is due to IPO, with its valuation underwhelming relative to peers; we downgrade Affirm to a sell due to very rich valuations, and we stick...

Victor Galliano

StoneCo: An Analysis Of Its TPV Growth, Competitive Dynamics & Growth Catalysts!

StoneCo Ltd., a financial technology firm focusing on financial services for micro, small, and medium-sized businesses (MSMBs) in Brazil, recently...

Baptista Research

Payment Companies – Introducing the Sector Scorecard

We ​introduce our payments scorecard; PagSeguro and Nexi remain buys, while PayPal replaces Visa. Affirm is replaced on the sell list by Kakao Pay...

Victor Galliano

StoneCo: How Product Innovation & Bundled Solutions Are Building Merchant Loyalty!

The first quarter of 2025 has presented a robust performance for StoneCo. The company's financial health is highlighted by a strong year-over-year...

Baptista Research

Klarna is due to IPO, with its valuation underwhelming relative to peers; we downgrade Affirm to a sell due to very rich valuations, and we stick...

We introduce our payments scorecard; PagSeguro and Nexi remain buys, while PayPal replaces Visa. Affirm is replaced on the sell list by Kakao Pay...