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>We stick with our core theme for exchanges of growing post-trading revenues, as well as capitalising on “big data” in financial transactions and data services, as we head into 2023</li>
<li>We identify four relative value opportunities in exchanges; HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams</li>
<li>We stick with Coinbase as the exchange to avoid, in our view; its revenue streams are heavily exposed to low volumes of crypto transactions, and recent events highlight counterparty risk</li>
</ul>


We stick with our core theme for exchanges of growing post-trading revenues, as well as capitalising on “big data” in financial transactions and data services, as we head into 2023
We identify four relative value opportunities in exchanges; HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
We stick with Coinbase as the exchange to avoid, in our view; its revenue streams are heavily exposed to low volumes of crypto transactions, and recent events highlight counterparty risk


Global Exchanges – Conviction Picks for 2023

<ul>
<li>Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services</li>
<li>We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams</li>
<li>Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions</li>
</ul>


Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services
We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions


Global Exchanges – The Quest for Recurring Revenues

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. As of April 2022, Upbit had more than 70% market share in the cryptocurrency trading market in Korea.</li>
<li>Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and operating profit surged from 86.6 billion won in 2020 to 3.3 trillion won in 2021.</li>
<li>In January 2022, Dunamu was last valued Dunamu at nearly 15 trillion won. However, due to major decline in crypto prices in 2022, Dunamu's valuation has declined significantly. </li>
</ul>


Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. As of April 2022, Upbit had more than 70% market share in the cryptocurrency trading market in Korea.
Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and operating profit surged from 86.6 billion won in 2020 to 3.3 trillion won in 2021.
In January 2022, Dunamu was last valued Dunamu at nearly 15 trillion won. However, due to major decline in crypto prices in 2022, Dunamu's valuation has declined significantly. 


Dunamu: Operator of Upbit - The Number One Cryptocurrency Exchange in Korea

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.</li>
<li>Besides the impairment charges, the increase in Q1'22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.</li>
<li>Coinbase's earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets. </li>
</ul>


Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.
Besides the impairment charges, the increase in Q1'22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.
Coinbase's earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets. 


Coinbase Q1’22: A Deeper Look Into the Operating Expenses

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

<ul>
<li>We said previously that we would remain positive on Monex until there were signs of a crypto currency breakdown. </li>
<li>That now appears to be happening and we are thus leery of the pure long trade here. </li>
<li>However, earnings trends are reasonable and we still like the name so we would examine hedging options.</li>
</ul>


We said previously that we would remain positive on Monex until there were signs of a crypto currency breakdown. 
That now appears to be happening and we are thus leery of the pure long trade here. 
However, earnings trends are reasonable and we still like the name so we would examine hedging options.


Monex – Bitcoin Breakdown Means This Needs a Hedge

United States

Coinbase Global, Inc. provides financial solutions. The Company offers platform to buy and sell cryptocurrencies. Coinbase Global serves clients worldwide.

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Coinbase Global (COIN US)

Global Exchanges – Conviction Picks for 2023

Our 2023 picks of HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying...

Victor Galliano

Global Exchanges – The Quest for Recurring Revenues

We identify MexBolsa, B3 and Deutsche Borse as exchanges that feature positively multiple times in our value screens and that are diversifying away...

Victor Galliano

Dunamu: Operator of Upbit - The Number One Cryptocurrency Exchange in Korea

Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. Dunamu's sales surged by 1996% to 3.7 trillion won in 2021 and...

Douglas Kim

Coinbase Q1’22: A Deeper Look Into the Operating Expenses

A major reason why COIN reported weak Q1'22 earnings was also due to the increase in operating expenses. We will take a deeper look into the...

Alec Tseung

Monex – Bitcoin Breakdown Means This Needs a Hedge

We said previously that we would remain positive on Monex until there were signs of a crypto currency breakdown. With that occurring we are leery...

Mio Kato

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