Quantitative Equity Analyst, DMA

Charlotte van Tiddens, CFA

Quantitative Equity Analyst

Technology-First Company

DMA is a technology-first company that provides an end-to-end SaaS solution to institutional investors. DMA enables regulated entities like asset managers, wealth managers, investment managers and financial advisors to connect their front and back office, break silos and reduce headcount.

Event-Driven

<ul><li>Naspers and Prosus reported H1 FY24 results last week Wednesday before the open.</li><li>No major surprises, all three discounts closed slightly lower. We see room for further narrowing as the consolidated ecommerce businesses approach profitability ahead of the initial target.</li><li>Prosus is still trading below the value of its Tencent stake.</li></ul>

Naspers and Prosus reported H1 FY24 results last week Wednesday before the open.No major surprises, all three discounts closed slightly lower. We see room for further narrowing as the consolidated ecommerce businesses approach profitability ahead of the initial target.Prosus is still trading below the value of its Tencent stake.

NPN X PRX Discount Update + Key Takeaways H1 FY24 Results

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

B3  - Brasil Bolsa Balcao / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ),</a> the Brazilian exchange, continues to benefit from sustainably lower domestic benchmark rates, and bullish investor sentiment towards EMs</li>
<li>B3's performance, in terms of EBITDA margin, is highly correlated to the equity market's direction and volume traded, as well as the domestic derivative markets in FX and interest rate futures; all are benefiting from the pro-market agenda of the Brazil government</li>
<li>Consensus estimates see scope for further EBITDA margin expansion into 2020 and beyond, and a premium 2018-2021E EBITDA CAGR of 28%</li>
<li>Equities and derivative contracts on interest rates and currencies account for two thirds of gross revenues, and since 2016, the growth in volumes in both equities and derivatives has more than offset the erosion of equities margin and rate per contract in derivatives</li>
<li>B3 seems attractive on PEG and EVG ratios; however, this requires B3 to deliver on EBITDA growth in line with or better than the bullish consensus estimates, which imply by far the highest EBITDA CAGR to 2021 in the listed exchanges universe</li>
<li>We expect reduced volatility in benchmark interest rates going forward, and we believe that the recent increase in equities volume largely reflects the sustainably lower rate environment; on a three to six month horizon, we believe <a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ)</a> has EBITDA and earnings risks to the downside
</li>
<li>
We prefer <a href="https://www.smartkarma.com/entities/bolsa-mexicana-de-valores-sab" target="_blank" data-smartkarma-citation="entities:24766:1" rel="noopener">Bolsa Mexicana De Valores Sab (BOLSAA MM)</a> and, for the brave, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/bolsas-y-mercados-espanoles-sh" target="_blank" data-smartkarma-citation="entities:21254:1" rel="noopener">Bolsas Y Mercados Espanoles Sh (BME SM)</a>  is now in play, and still an attractive value with potential for a counter-offer
</li>
<li>Risks to the upside on B3 include continued growth in equities volumes traded, and growth in derivative contracts especially in the case of interest rates given the potential for sustainably low rates in Brazil</li>
</ul>



B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ), the Brazilian exchange, continues to benefit from sustainably lower domestic benchmark rates, and bullish investor sentiment towards EMs
B3's performance, in terms of EBITDA margin, is highly correlated to the equity market's direction and volume traded, as well as the domestic derivative markets in FX and interest rate futures; all are benefiting from the pro-market agenda of the Brazil government
Consensus estimates see scope for further EBITDA margin expansion into 2020 and beyond, and a premium 2018-2021E EBITDA CAGR of 28%
Equities and derivative contracts on interest rates and currencies account for two thirds of gross revenues, and since 2016, the growth in volumes in both equities and derivatives has more than offset the erosion of equities margin and rate per contract in derivatives
B3 seems attractive on PEG and EVG ratios; however, this requires B3 to deliver on EBITDA growth in line with or better than the bullish consensus estimates, which imply by far the highest EBITDA CAGR to 2021 in the listed exchanges universe
We expect reduced volatility in benchmark interest rates going forward, and we believe that the recent increase in equities volume largely reflects the sustainably lower rate environment; on a three to six month horizon, we believe B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ) has EBITDA and earnings risks to the downside


We prefer Bolsa Mexicana De Valores Sab (BOLSAA MM) and, for the brave, HKEX (388 HK) 

Bolsas Y Mercados Espanoles Sh (BME SM)  is now in play, and still an attractive value with potential for a counter-offer

Risks to the upside on B3 include continued growth in equities volumes traded, and growth in derivative contracts especially in the case of interest rates given the potential for sustainably low rates in Brazil


Curb Your Enthusiasm on B3 (B3SA3 BZ) - Look to Other Value Opportunities in Exchanges

South Africa

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JSE Ltd (JSE SJ)

NPN X PRX Discount Update + Key Takeaways H1 FY24 Results

Naspers and Prosus reported H1 FY24 results last week Wednesday before the open. No major surprises, all three discounts closed slightly lower.

DMA

Curb Your Enthusiasm on B3 (B3SA3 BZ) - Look to Other Value Opportunities in Exchanges

B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ), the Brazilian exchange, continues to benefit from sustainably lower domestic benchmark rates, and bullish...

Victor Galliano

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