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>PBoC’s regulatory pressure and scrutiny are seemingly coming to a head at <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> </li>
<li>At the China Digital Summit, the disclosure of “co-operation” between Ant Group and regulator implies that PBoC has secured that Ant Group  share their “big data” lake and capabilities with the PBoC</li>
<li>This news regarding big data sharing signals diminishing regulatory risk going forward</li>
<li>Bloomberg Intelligence reported that the Ant Group valuation could be as low as USD29bn; we see this as too bearish, even in the worst case</li>
<li>Even under our “new reality” business valuation, we arrive at an SOTP valuation range – which factors in the cost of capital needs – of USD41bn to USD62bn</li>
<li>We turn constructive on <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>, with a great deal of Ant Group regulatory risk discounted, and given Alibaba’s attractive valuations relative to its peer group</li>
<li>Risks to our constructive view on Alibaba include a bigger than expected capital call as a core shareholder, to capitalise Ant Group’s credit business, and a worse than expected loss of payments market share from e-Yuan introduction</li>
</ul>


PBoC’s regulatory pressure and scrutiny are seemingly coming to a head at Ant Financial Services Group (6688 HK) 
At the China Digital Summit, the disclosure of “co-operation” between Ant Group and regulator implies that PBoC has secured that Ant Group  share their “big data” lake and capabilities with the PBoC
This news regarding big data sharing signals diminishing regulatory risk going forward
Bloomberg Intelligence reported that the Ant Group valuation could be as low as USD29bn; we see this as too bearish, even in the worst case
Even under our “new reality” business valuation, we arrive at an SOTP valuation range – which factors in the cost of capital needs – of USD41bn to USD62bn
We turn constructive on Alibaba Group (BABA US), with a great deal of Ant Group regulatory risk discounted, and given Alibaba’s attractive valuations relative to its peer group
Risks to our constructive view on Alibaba include a bigger than expected capital call as a core shareholder, to capitalise Ant Group’s credit business, and a worse than expected loss of payments market share from e-Yuan introduction


Ant Group-Alibaba (BABA): Are We There Yet?

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

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a> is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.</p></div><div><div><div class="content-highlight"><p>Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In <a href="https://www.smartkarma.com/insights/waterdrop-ipo-initiation-going-for-brokers" target="_blank" data-smartkarma-citation="insights:50610" rel="noopener">Waterdrop IPO Initiation: Going for Brokers</a>, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. In this note, we present our forecasts and take the first look at Waterdrop's potential valuation range. </p></div></div></div>

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. In this note, we present our forecasts and take the first look at Waterdrop's potential valuation range. 

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Thematic (Sector/Industry)

<ul>
<li>Our analysis of China retail sales data for 1Q21 shows online retail spending growth has been big.  If I am looking for an entry point, I would look to take a long position now before the earnings rather than after.   </li>
<li>Online sales growth was strongest for apparel, food, then general merchandise and electronics. </li>
<li>Vipshop (apparel) and PDD (food) should be big winners.   </li>
<li>but Alibaba's 54% revenue growth and JD's 34% is not to be brushed aside.  </li>
<li>Find out why I would still prefer to own Alibaba and JD.com over VIPS and PDD. </li>
<li>More details on China retail sales data breakdown, 1Q21 earnings expectations and valuations comparisons provided in this report. </li>
</ul>


Our analysis of China retail sales data for 1Q21 shows online retail spending growth has been big.  If I am looking for an entry point, I would look to take a long position now before the earnings rather than after.   
Online sales growth was strongest for apparel, food, then general merchandise and electronics. 
Vipshop (apparel) and PDD (food) should be big winners.   
but Alibaba's 54% revenue growth and JD's 34% is not to be brushed aside.  
Find out why I would still prefer to own Alibaba and JD.com over VIPS and PDD. 
More details on China retail sales data breakdown, 1Q21 earnings expectations and valuations comparisons provided in this report. 


China E-Commerce: Robust Consumption Data Hints at Online Spending Spree

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul class="">
<li>The State Administration for Market Regulation (SAMR) began to investigate Meituan.</li>
<li>We believe Meituan must be fined after the investigation.</li>
<li>We also believe Alibaba’s Ele.me will benefit from the investigation and may possibly change its disadvantageous situation.</li>
<li>We set the downside for Meituan between 21% and 23%.</li>
</ul>


The State Administration for Market Regulation (SAMR) began to investigate Meituan.
We believe Meituan must be fined after the investigation.
We also believe Alibaba’s Ele.me will benefit from the investigation and may possibly change its disadvantageous situation.
We set the downside for Meituan between 21% and 23%.


Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba

<p><a href="https://www.smartkarma.com/entities/hello-inc" target="_blank" data-smartkarma-citation="entities:33031:1" rel="noopener">Hello Inc (1883864D US)</a> is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as <em>Hello Bike</em> and <em>Hello e-Bike</em>. It also has a carpooling marketplace known as <em>Hello Carpooling</em>. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports. Hello is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> which owns 36.3% of the outstanding shares. </p><p>The bike-sharing industry has proved to be a challenging market to generate investment returns as evidenced by <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>’s restructuring and impairments related to Mobike. Hello’s investor pitch is that its various businesses create a flywheel effect (a popular term abused by many tech IPO hopefuls) that drives user spending growth with limited user acquisition costs. Hello is suggesting that its core business (shared two-wheeler services) brings a large captive user base to feed its more capital-light and profitable businesses such as carpooling. </p><div class="content-highlight"><p>However, the issue with this rose-tinted view is that Hello remains saddled with a core business that has challenging prospects due to declining growth, low profitability and high cash burn. Also, investors seeking a pure-play on the carpooling market may be better off participating in the <a href="https://www.smartkarma.com/entities/dida-inc" target="_blank" data-smartkarma-citation="entities:29701:1" rel="noopener">Dida (DIDA HK)</a> IPO. Overall, we are inclined to give the Hello IPO a pass.    </p></div>

Hello Inc (1883864D US) is China's third-largest local services platform by transaction volume, according to iResearch. Hello offers bike-sharing and e-bike sharing services known as Hello Bike and Hello e-Bike. It also has a carpooling marketplace known as Hello Carpooling. Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports. Hello is backed by Ant Financial Services Group (6688 HK) which owns 36.3% of the outstanding shares. The bike-sharing industry has proved to be a challenging market to generate investment returns as evidenced by Meituan (3690 HK)’s restructuring and impairments related to Mobike. Hello’s investor pitch is that its various businesses create a flywheel effect (a popular term abused by many tech IPO hopefuls) that drives user spending growth with limited user acquisition costs. Hello is suggesting that its core business (shared two-wheeler services) brings a large captive user base to feed its more capital-light and profitable businesses such as carpooling. However, the issue with this rose-tinted view is that Hello remains saddled with a core business that has challenging prospects due to declining growth, low profitability and high cash burn. Also, investors seeking a pure-play on the carpooling market may be better off participating in the Dida (DIDA HK) IPO. Overall, we are inclined to give the Hello IPO a pass.    

China

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

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

Ant Group (6688 HK)

Ant Group-Alibaba (BABA): Are We There Yet?

The level of regulatory pressures and scrutiny on Ant Group impacts its valuation, but it is not as bad as recent estimates suggest; with the worst...

Victor Galliano

Waterdrop IPO: Valuation First Look

Waterdrop is pre-marketing an NYSE IPO with a placeholder amount of $100 million. In this note, we present our forecasts and take the first look at...

Arun George

China E-Commerce: Robust Consumption Data Hints at Online Spending Spree

China retail sales data hints at a big online spending quarter. Vipshop and PDD are expected to be big winners, but find out why you should jump...

Mitchell Kim

Meituan (3690 HK): Forthcoming Punishment Will Benefit Alibaba

State Administration for Market Regulation (SAMR) began to investigate Meituan. We believe penalty must follow. We also believe Alibaba’s Ele.me...

Ming Lu

Hello IPO Initiation: Goodbye

Hello is seeking to raise $1 billion through a Nasdaq listing, according to press reports. Overall, we are inclined to give the Hello IPO a pass.

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)