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.

Thematic (Sector/Industry)

<ul>
<li>Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023</li>
<li>Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank</li>
<li>Our key sells are ICICI Bank from India and digital bank Jago from Indonesia</li>
</ul>


Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023
Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank
Our key sells are ICICI Bank from India and digital bank Jago from Indonesia


Event-Driven

<ul>
<li>The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos</li>
<li>This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management</li>
<li>BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell</li>
</ul>


The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos
This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management
BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell


Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

<ul>
<li>We examine key balance sheet ratios of the Latam banks looking into liquidity, credit quality and capital adequacy, at a time of investor nervousness and concern</li>
<li>Based on our screening, our positive value picks are Bradesco and BanColombia, with Banco de Chile, BanBajio and BanRegio composing our positive high quality picks</li>
<li>Our bearish picks are Banorte and BCI; Banorte is strong in terms of capital adequacy and credit quality, but is exposed in terms of its big securities portfolio</li>
</ul>


We examine key balance sheet ratios of the Latam banks looking into liquidity, credit quality and capital adequacy, at a time of investor nervousness and concern
Based on our screening, our positive value picks are Bradesco and BanColombia, with Banco de Chile, BanBajio and BanRegio composing our positive high quality picks
Our bearish picks are Banorte and BCI; Banorte is strong in terms of capital adequacy and credit quality, but is exposed in terms of its big securities portfolio


LatAm Banks – Liquidity, Solvency and Credit Quality in Focus in a Crisis

Equity Bottom-Up

<ul>
<li>The ousting of Peruvian President Pedro Castillo follows his failed attempt to dissolve Congress; Vice-President Dina Boularte was sworn in yesterday as the new first female Peruvian President</li>
<li>Political instability is not uncommon in Peru, but an end to Castillo’s chaotic, market-unfriendly administration with its high turnover in ministerial posts should improve investor sentiment and encourage increased FDI</li>
<li>When we screen Peruvian bell-weather Credicorp against its LatAm peers, we conclude that, although it is not deep value, it is attractive versus its own history and selected peers</li>
</ul>


The ousting of Peruvian President Pedro Castillo follows his failed attempt to dissolve Congress; Vice-President Dina Boularte was sworn in yesterday as the new first female Peruvian President
Political instability is not uncommon in Peru, but an end to Castillo’s chaotic, market-unfriendly administration with its high turnover in ministerial posts should improve investor sentiment and encourage increased FDI
When we screen Peruvian bell-weather Credicorp against its LatAm peers, we conclude that, although it is not deep value, it is attractive versus its own history and selected peers


Credicorp (BAP US); Opportunity to Come from the Peruvian Political Crisis

<ul>
<li>For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)</li>
<li>Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA</li>
<li>BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x</li>
</ul>


For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)
Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA
BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x


Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

Colombia

Bancolombia S.A. attracts deposits and offers retail and commercial banking services. The Bank offers automobile, personal, and education loans; credit and debit cards; securities brokerage services; fund transfers; lease and foreign trade financing; insurance; and pension funds. Bancolombia and its subsidiaries serve Colombia, Panama, Cayman Islands, Puerto Rico, El Salvador, and Miami.

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Bancolombia SA (BCOLO CB)

GEM Banks; Conviction Calls for 2023

Our core buys are Bank Mandiri, Hana Financial, China Construction Bank and BanColombia; we also have special mention for Banco Itau and Nubank;...

Victor Galliano

Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

This agreement marks the end of Gilinski’s ambition to control BanColombia, as well as Gilinski exerting activist shareholder influence over the...

Victor Galliano

LatAm Banks – Liquidity, Solvency and Credit Quality in Focus in a Crisis

Focus on LatAm banks liquidity, solvency and credit quality; we like Bradesco and BanColombia as value plays with Banco de Chile, BanBajio &...

Victor Galliano

Credicorp (BAP US); Opportunity to Come from the Peruvian Political Crisis

The end of Castillo’s chaotic, market-unfriendly government should lead to improving investor sentiment; Peruvian blue-chip Credicorp is...

Victor Galliano

Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

Gilinski's activist style is putting pressure on GEA management, especially BanColombia, to improve returns; the higher ROE in 1Q22 and 2Q22 has...

Victor Galliano

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