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>
<a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a>  offer for <a href="https://www.smartkarma.com/entities/tcs-group-holding-plc" target="_blank" data-smartkarma-citation="entities:28148:1" rel="noopener">TCS Group Holding PLC (TCS LI),</a> Tinkoff, values the Russian digital bank at 2021E PBV ratio of 2.8x and 2021E PE ratio of 10x</li>
<li>We believe that the Yandex-Tinkoff deal reflects that TechFin M&amp;A activity is more geared towards the quest for expansion of scope than scale</li>
<li>We see other cases of this type of M&amp;A in other recent transactions, in Brazil; for example, there are the cases of StoneCo-Linx and Nubank-EasyInvest</li>
<li>Tinkoff is a comparable digital bank in Emerging Markets to Brazilian <a href="https://www.smartkarma.com/entities/banco-inter-sa" target="_blank" data-smartkarma-citation="entities:28162:1" rel="noopener">Banco Inter SA (BIDI11 BZ)</a>; we estimate that – based on a per digital account valuation – the Yandex offer values Tinkoff at a 25% premium to Banco Inter</li>
<li>We believe that this deal’s “read-across” is constructive for other digital banks in the main and specifically for Banco Inter’s market valuation, especially after the recent correction in share prices</li>
<li>Risks to our positive view on Banco Inter include lower than expected growth in the digital account base due to increased competition, worse than expected credit quality due to the economic downturn forcing cost of risk higher as well as downward pressure on credit spreads and fees</li>
</ul>



Yandex (YNDX US)  offer for TCS Group Holding PLC (TCS LI), Tinkoff, values the Russian digital bank at 2021E PBV ratio of 2.8x and 2021E PE ratio of 10x
We believe that the Yandex-Tinkoff deal reflects that TechFin M&amp;A activity is more geared towards the quest for expansion of scope than scale
We see other cases of this type of M&amp;A in other recent transactions, in Brazil; for example, there are the cases of StoneCo-Linx and Nubank-EasyInvest
Tinkoff is a comparable digital bank in Emerging Markets to Brazilian Banco Inter SA (BIDI11 BZ); we estimate that – based on a per digital account valuation – the Yandex offer values Tinkoff at a 25% premium to Banco Inter
We believe that this deal’s “read-across” is constructive for other digital banks in the main and specifically for Banco Inter’s market valuation, especially after the recent correction in share prices
Risks to our positive view on Banco Inter include lower than expected growth in the digital account base due to increased competition, worse than expected credit quality due to the economic downturn forcing cost of risk higher as well as downward pressure on credit spreads and fees


Yandex Offer for Tinkoff – TechFin M&A Driven by Quest for Greater Scope, and Brazil “read-Across”

Russia

TCS Group Holding PLC, a digital provider of online financial and lifestyle services via its ecosystem. With no branches, the Group serves all its customers remotely via online channels and a cloud-based call centre.

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TCS Group Holding (TCS LI)

Yandex Offer for Tinkoff – TechFin M&A Driven by Quest for Greater Scope, and Brazil “read-Across”

$yandex offer for Tinkoff values the Russian digital bank at 2021E PBV ratio of 2.8x and 2021E PE ratio of 10x We believe that the Yandex-Tinkoff...

Victor Galliano

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