Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

XP Inc is the largest digital brokerage in Brazil with about 1.5m retail clients and R$350bn in assets under custody. It is a technology driven company focusing on providing financial and brokerage services at low commission/fee rates.XP Inc filed for an IPO on NASDAQ and it is expected to start trading on 11th December 2019. The IPO price range is set at $22.00-25.00 and at the higher end of the IPO price range, XP Inc’s IPO could raise as much as $1.8bn.<table class="table table-striped"><tbody>
<tr>
<td style="width: 142.0pt;">XP Inc</td>
<td style="width: 48.0pt;"> </td>
<td style="width: 48.0pt;"> </td>
</tr>
<tr>
<td style="width: 142.0pt;">IPO Price Range</td>
<td style="width: 48.0pt;">$22.00</td>
<td style="width: 48.0pt;">$25.00</td>
</tr>
<tr>
<td style="width: 142.0pt;">New Shares</td>
<td colspan="2" style="width: 96.0pt;">42.55m</td>
</tr>
<tr>
<td style="width: 142.0pt;">Selling Shareholders</td>
<td colspan="2" style="width: 96.0pt;">29.96m</td>
</tr>
<tr>
<td style="width: 142.0pt;">IPO Size - $m</td>
<td style="width: 48.0pt;">1,595</td>
<td style="width: 48.0pt;">1,813</td>
</tr>
<tr>
<td style="width: 142.0pt;">Overallotment Option</td>
<td colspan="2" style="width: 96.0pt;">10.88m</td>
</tr>
<tr>
<td style="width: 142.0pt;">Shares Outstanding Post IPO</td>
<td colspan="2" style="width: 96.0pt;">551.80m</td>
</tr>
<tr>
<td style="width: 142.0pt;">Market Cap - $m</td>
<td style="width: 48.0pt;">12,140</td>
<td style="width: 48.0pt;">13,795</td>
</tr>
<tr>
<td style="width: 142.0pt;">EV</td>
<td style="width: 48.0pt;">11,542</td>
<td style="width: 48.0pt;">13,070</td>
</tr>
<tr>
<td style="width: 142.0pt;">EV/EBITDA - TTM</td>
<td style="width: 48.0pt;">40.3</td>
<td style="width: 48.0pt;">45.7</td>
</tr>
<tr>
<td style="width: 142.0pt;">PE - TTM</td>
<td style="width: 48.0pt;">65.1</td>
<td style="width: 48.0pt;">74.0</td>
</tr>
<tr>
<td style="width: 142.0pt;">P/B</td>
<td style="width: 48.0pt;">7.6</td>
<td style="width: 48.0pt;">8.0</td>
</tr>
<tr>
<td style="width: 142.0pt;"> </td>
<td style="width: 48.0pt;"> </td>
<td style="width: 48.0pt;"> </td>
</tr>
</tbody></table><div class="content-caption">Source: Company Disclosures</div>Use of Proceeds<ul>
<li>To meet increasing working capital requirements.</li>
<li>To accelerate customer acquisition through increased investments in marketing and advertising.</li>
<li>To invest in human resources.</li>
<li>To add new financial services verticals.</li>
<li>To fund potential future acquisitions.</li>
<li>To fund other general corporate purposes.</li>
</ul>

XP Inc is the largest digital brokerage in Brazil with about 1.5m retail clients and R$350bn in assets under custody. It is a technology driven company focusing on providing financial and brokerage services at low commission/fee rates.XP Inc filed for an IPO on NASDAQ and it is expected to start trading on 11th December 2019. The IPO price range is set at $22.00-25.00 and at the higher end of the IPO price range, XP Inc’s IPO could raise as much as $1.8bn.

XP Inc
 
 


IPO Price Range
$22.00
$25.00


New Shares
42.55m


Selling Shareholders
29.96m


IPO Size - $m
1,595
1,813


Overallotment Option
10.88m


Shares Outstanding Post IPO
551.80m


Market Cap - $m
12,140
13,795


EV
11,542
13,070


EV/EBITDA - TTM
40.3
45.7


PE - TTM
65.1
74.0


P/B
7.6
8.0


 
 
 

Source: Company DisclosuresUse of Proceeds
To meet increasing working capital requirements.
To accelerate customer acquisition through increased investments in marketing and advertising.
To invest in human resources.
To add new financial services verticals.
To fund potential future acquisitions.
To fund other general corporate purposes.


XP Inc IPO: Strong Business but Overpriced

Brazil

XP Inc operates as an investment management company. The Company offers fixed income, equities, investment funds, and private pension products, as well as offers wealth management and other financial services. XP serves customers in Brazil.

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XP (XP US)

XP Inc IPO: Strong Business but Overpriced

XP Inc is the largest digital brokerage in Brazil with about 1.5m retail clients and R$350bn in assets under custody. It is a technology driven...

Oshadhi Kumarasiri

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