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”

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Equity Bottom-Up

<ul>
<li>Ownership levels in Yandex hit all-time highs in EM active portfolios</li>
<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> overtakes <a href="https://www.smartkarma.com/entities/sberbank-of-russia-pjsc" target="_blank" data-smartkarma-citation="entities:24142:1" rel="noopener">Sberbank Of Russia Pjsc (SBER LI)</a> as top overweight</li>
<li>Positioning and momentum levels are among the highest compared to Russian and Communication Services peers.</li>
<li>However, we still the potential for ownership levels to move higher still.</li>
</ul>Taken from our Global Emerging Markets analysis, comprising 248 active GEM funds, combined AUM $360bn.


Ownership levels in Yandex hit all-time highs in EM active portfolios

Yandex (YNDX US) overtakes Sberbank Of Russia Pjsc (SBER LI) as top overweight
Positioning and momentum levels are among the highest compared to Russian and Communication Services peers.
However, we still the potential for ownership levels to move higher still.
Taken from our Global Emerging Markets analysis, comprising 248 active GEM funds, combined AUM $360bn.

<ul>
<li>Ownership levels in Magnit are depressed. Today's average weights and funds held % are at multi-year lows.</li>
<li>Recent sentiment looks positive when compared to other EM stocks, though this is partly a function of low ownership rather then any large scale buying.</li>
<li>Although lightly owned at present, it is a well known stock having being owned by 151 of the 224 in our analysis.</li>
<li>Max ever combined AUM from the funds in our analysis is ~20x the current level, most funds are at their lowest ever levels of ownership.</li>
<li>Prices are highly correlated to EM fund ownership.  Higher ownership levels are likely to drive prices higher.</li>
<li>Given Magnit's strong performance in 2020 relative to broader EM and other favoured Russian stocks, it could be appearing back on the radar of active EM managers. If it does, expect performance to follow.</li>
</ul>


Ownership levels in Magnit are depressed. Today's average weights and funds held % are at multi-year lows.
Recent sentiment looks positive when compared to other EM stocks, though this is partly a function of low ownership rather then any large scale buying.
Although lightly owned at present, it is a well known stock having being owned by 151 of the 224 in our analysis.
Max ever combined AUM from the funds in our analysis is ~20x the current level, most funds are at their lowest ever levels of ownership.
Prices are highly correlated to EM fund ownership.  Higher ownership levels are likely to drive prices higher.
Given Magnit's strong performance in 2020 relative to broader EM and other favoured Russian stocks, it could be appearing back on the radar of active EM managers. If it does, expect performance to follow.


Asia Long-Short PM/Analyst

Curtis Lehnert

<a href="https://www.smartkarma.com/entities/27266" target="_blank" data-smartkarma-citation="entities:27266:1">Opera Ltd (OPRA US)</a> is going for a US IPO amidst the ongoing market volatility and investors love/hate relationship with tech stocks.  As the result of a small deal size and being a browser that is only competitive in certain markets where internet infrastructure is undeveloped, this deal could get overlooked by investors.  I would encourage investors to look at the deal as a whole, weighing fundamentals with market sentiment and updates on how demand builds in the US.

Opera Ltd (OPRA US) is going for a US IPO amidst the ongoing market volatility and investors love/hate relationship with tech stocks.  As the result of a small deal size and being a browser that is only competitive in certain markets where internet infrastructure is undeveloped, this deal could get overlooked by investors.  I would encourage investors to look at the deal as a whole, weighing fundamentals with market sentiment and updates on how demand builds in the US.  

Opera IPO (OPRA US): Let the Book Be Your Guide

Macro Strategist, Saxo Capital Markets

Kay Van-Petersen

Macro Strategist

Saxo Capital Markets

<ul><li>The next two weeks will have some of the most potent events of the 1H of the year</li><li>Weds Apr 29 sees the Fed meeting &amp; 1Q US GDP, Thu Apr 30 is RBNZ &amp; BoJ, with the following Tue &amp; Fri (May 5 &amp; 8) being RBA &amp; US Non-farm payrolls&hellip;</li><li>Once again, with an RBA cut imminent &amp; the Fed set to hike in 2H, AUD above 0.7750 is a screaming short as you have catalysts on both sides of the cross</li></ul>

The next two weeks will have some of the most potent events of the 1H of the yearWeds Apr 29 sees the Fed meeting &amp; 1Q US GDP, Thu Apr 30 is RBNZ &amp; BoJ, with the following Tue &amp; Fri (May 5 &amp; 8) being RBA &amp; US Non-farm payrolls&hellip;Once again, with an RBA cut imminent &amp; the Fed set to hike in 2H, AUD above 0.7750 is a screaming short as you have catalysts on both sides of the cross

THE MACRO TAKE: NEXT 2WKS ARE HIGH OCTANE! FED, US 1Q GDP, RBNZ, BoJ, RBA & US NFP    

Netherlands

Nebius Group is a technology company providing infrastructure and services to AI builders globally. The group's core business, Nebius, is an AI-centric cloud platform built for AI workloads. Nebius Group serves customers worldwide.

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Nebius Group (NBIS US)

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

Yandex: Moves to Top Russia Overweight

Ownership levels in Yandex hit all-time highs in EM active portfolios Yandex (YNDX US) overtakes Sberbank Of Russia Pjsc (SBER LI) as top...

Steven Holden

Magnit PJSC : Mind the Gap.

Ownership levels in Magnit are depressed. Today's average weights and funds held % are at multi-year lows. Recent sentiment looks positive when...

Steven Holden

Opera IPO (OPRA US): Let the Book Be Your Guide

Opera Ltd (OPRA US) is going for a US IPO amidst the ongoing market volatility and investors love/hate relationship with tech stocks. As the...

Curtis Lehnert

THE MACRO TAKE: NEXT 2WKS ARE HIGH OCTANE! FED, US 1Q GDP, RBNZ, BoJ, RBA & US NFP

The next two weeks will have some of the most potent events of the 1H of the year Weds Apr 29 sees the Fed meeting & 1Q US GDP, Thu Apr 30 is...

Kay Van-Petersen

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