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 Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>The pilot launch of the e-CNY, China’s sovereign digital currency effectively competes with domestic mobile payment apps including Alipay, WeChat and Weixin Pay; the e-CNY registered 261m downloads in 2021</li>
<li>Seven domestic commercial banks are included as the e-CNY’s operators, all of which offer extensive branch networks and large bases of retail customers to accelerate the digital currency’s distribution</li>
<li>The e-CNY’s broader digital payments usage should erode Alipay, WeChat and Weixin Pay market shares; yet we believe that the competitive threat is seemingly well discounted in Alibaba share valuations</li>
</ul>


The pilot launch of the e-CNY, China’s sovereign digital currency effectively competes with domestic mobile payment apps including Alipay, WeChat and Weixin Pay; the e-CNY registered 261m downloads in 2021
Seven domestic commercial banks are included as the e-CNY’s operators, all of which offer extensive branch networks and large bases of retail customers to accelerate the digital currency’s distribution
The e-CNY’s broader digital payments usage should erode Alipay, WeChat and Weixin Pay market shares; yet we believe that the competitive threat is seemingly well discounted in Alibaba share valuations


China’s Central Bank Digital Currency; Is It a Major Threat to Non-Bank Digital Payment Providers?

Bond market data and technology, BondEvalue

BondEvalue

Bond market data and technology

BondEvalue is a Singapore-based Fintech that specializes in bond market data and technology. The company's information services business offers bond market data on hard-currency corporate & sovereign bonds across Asia, Middle East, Europe and the Americas. The data, which includes bond prices, yields, news and analytics, is offered to end investors via interactive Mobile and Web Apps. Investors can sign up for a free trial of the service either via the company's website (https://bondevalue.com) or by downloading the BondEvalue Mobile App (http://onelink.to/wej7jq). BondEvalue is also developing an electronic bond exchange, BondbloX in Singapore that allows investors to trade bonds electronically in smaller sizes (US$1,000 or equivalent). For more information, visit https://www.bondblox.com/

Bond Market Data and Technology

Credit

US equity markets mixed with the S&amp;P down 0.1% and the Nasdaq flat. Healthcare led the gainers, up 1% while Industrials led the losers, down 1.2%. US 10Y Treasury yields were down 1bp to 1.76%. European markets were lower with the DAX, CAC and FTSE down 1.1%, 1.4% and 0.5% respectively. Brazil’s Bovespa was down 0.8%. In the Middle East, UAE’s ADX was down 1% while Saudi TASI was up 0.9%. Asian markets have opened mixed – Shanghai and Nikkei were down 0.1% and 0.9% while HSI and STI were up 0.1% and 0.3%. US IG CDS spreads were 0.1bp tighter and HY CDS spreads widened 4.6bp. EU Main CDS spreads were 0.6bp wider and Crossover CDS spreads were 1.3bp wider. Asia ex-Japan CDS spreads widened 1.1bp.

8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a...

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/qingci-games" target="_blank" data-smartkarma-citation="entities:35240:1" rel="noopener">Qingci Games (6633 HK)</a> is a mobile game developer and publisher in China. It aims to raise net proceeds of US$125.5 million at the mid-point of the IPO price range.</li>
<li>In <a href="https://www.smartkarma.com/insights/qingci-games-ipo-future-imperfect-and-tense" target="_blank" data-smartkarma-citation="insights:62199" rel="noopener">Qingci Games IPO: Future, Imperfect and Tense</a>, we stated that it is uncertain if the declining trends in the key title can be offset by a new blockbuster title.  </li>
<li>Our valuation analysis suggests that the IPO price range is unattractive. Consequently, we give the IPO a pass. </li>
</ul>



Qingci Games (6633 HK) is a mobile game developer and publisher in China. It aims to raise net proceeds of US$125.5 million at the mid-point of the IPO price range.
In Qingci Games IPO: Future, Imperfect and Tense, we stated that it is uncertain if the declining trends in the key title can be offset by a new blockbuster title.  
Our valuation analysis suggests that the IPO price range is unattractive. Consequently, we give the IPO a pass. 


Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Postal Savings Bank of China C / Equity Bottom-Up

*Blowout 3Q21 Results: Established in 2007, Postal Savings Bank of China (1658.HK) [PSB], mainland China’s youngest large commercial bank, reported 3Q21 bottom-line results of CNY 23.5 bn – increasing CNY 3.7 bn (18.6%) linked quarter. Much of the improvement at PSB is due to credit leverage, as loss provisions declined CNY 9.3 bn (54.3%); and*Credit Quality Continues Its Positive Turn, But Reserves More Than Adequate: Net new NPLs did increase CNY 7.8 bn or 61.0% annualized versus CNY 14.9 bn or 116.6% at 2Q21. Despite the increase in net new NPLs, it would appear that PSB’s reserves would remain excessive to the tune of CNY 100 bn or about a year of pre-tax profits – begging the question of why not reverse loss reserves?

*Blowout 3Q21 Results: Established in 2007, Postal Savings Bank of China (1658.HK) [PSB], mainland China’s youngest large commercial bank, reported 3Q21 bottom-line results of CNY 23.5 bn – increasing CNY 3.7 bn (18.6%) linked quarter. Much of the improvement at PSB is due to credit leverage, as loss provisions declined CNY 9.3 bn (54.3%); and*Credit Quality Continues Its Positive Turn, But Reserves More Than Adequate: Net new NPLs did increase CNY 7.8 bn or 61.0% annualized versus CNY 14.9 bn or 116.6% at 2Q21. Despite the increase in net new NPLs, it would appear that PSB’s reserves would remain excessive to the tune of CNY 100 bn or about a year of pre-tax profits – begging the question of why not reverse loss reserves?

Postal Savings Bank of China – Reserve Reversals Expected

China Merchants Bank H / Equity Bottom-Up

*3Q21 Bottom-Line Is Not What It Appears: China Merchants Bank (3968.HK) [CMB] reported 3Q21 bottom-line results of CNY 32.7 bn, increasing CNY 3.3 bn (11.3%) linked quarter. However, when we exclude gains and the unreasonable drop in loss provisions, we find that CMB's adjusted core operating result looks something closer to CNY 12.6 bn - declining CNY 8.8 bn or 41.2% over the same period; and*Credit Has Fallen Off Of A Cliff: Unfortunately for CMB, net new problem loans continue to accelerate at Indian bank pace of CNY 23.5 bn or 172.3% annualized. Provided that the accelerated net new NPL trajectory remains, we foresee a significant decline in NPL cover into the 150% territory from nearly 450% – which is lower than the average mainland Chinese bank.

*3Q21 Bottom-Line Is Not What It Appears: China Merchants Bank (3968.HK) [CMB] reported 3Q21 bottom-line results of CNY 32.7 bn, increasing CNY 3.3 bn (11.3%) linked quarter. However, when we exclude gains and the unreasonable drop in loss provisions, we find that CMB's adjusted core operating result looks something closer to CNY 12.6 bn - declining CNY 8.8 bn or 41.2% over the same period; and*Credit Has Fallen Off Of A Cliff: Unfortunately for CMB, net new problem loans continue to accelerate at Indian bank pace of CNY 23.5 bn or 172.3% annualized. Provided that the accelerated net new NPL trajectory remains, we foresee a significant decline in NPL cover into the 150% territory from nearly 450% – which is lower than the average mainland Chinese bank. 

China Merchants Bank – An Optical Illusion

China

Agricultural Bank of China Limited provides a full range of commercial banking services. The Banks services includes RMB and foreign currency deposit, loan, international and domestic settlement, bill discount, currency trading, bank guarantee, and treasury bill underwriting.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Agricultural Bank Of China (1288 HK)

China’s Central Bank Digital Currency; Is It a Major Threat to Non-Bank Digital Payment Providers?

The digital yuan's growth in digital payments usage could erode Alipay and Tencent app market shares; yet we think the competitive threat is...

Victor Galliano

8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a...

US equity markets mixed with the S&P down 0.1% and the Nasdaq flat. Healthcare led the gainers, up 1% while Industrials led the losers, down...

BondEvalue

Qingci Games IPO: Valuation Insights

Our valuation analysis suggests that the IPO price range is unattractive. Consequently, we give the IPO a pass. Pricing is set for 9 Dec and...

Arun George

Postal Savings Bank of China – Reserve Reversals Expected

POSTAL SAVINGS BANK: PSB's QOQ 3Q21 increased 18.6%, due largely to credit leverage and net interest income improvement. PSB’s reserves appear...

Thomas J. Monaco

China Merchants Bank – An Optical Illusion

CHINA MERCHANTS BANK: CMB's QOQ 3Q21 adjusted core operating result declined 41.2%, by our calculation. Net new problem loans continue to...

Thomas J. Monaco

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)