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 Capital Markets

<ul>
<li>Nubank’s shares are above the issue price post-IPO, with investors buying into the digital banking opportunity in Brazil as well as Mexico and Colombia</li>
<li>The bulls argue that the growth potential is not yet reflected in valuations; it has very low costs, and its positive returns will follow from greater loan and product penetration</li>
<li>Nubanks’s valuation is very stretched; good customer penetration does not yet equal deep product penetration which drives revenue growth, and new markets – Mexico and Colombia – will pressure costs</li>
</ul>


Nubank’s shares are above the issue price post-IPO, with investors buying into the digital banking opportunity in Brazil as well as Mexico and Colombia
The bulls argue that the growth potential is not yet reflected in valuations; it has very low costs, and its positive returns will follow from greater loan and product penetration
Nubanks’s valuation is very stretched; good customer penetration does not yet equal deep product penetration which drives revenue growth, and new markets – Mexico and Colombia – will pressure costs


Nubank (NU US) – IPO Done, Now Comes the Hard Part

<ul>
<li>Nubank has revised down its IPO pricing range by close to 20% to USD41.5bn, driven largely by challenging market conditions; this verifies our negative valuation opinion in our previous report</li>
<li>The revised prospectus includes Softbank as Nubank’s new potential cornerstone investor; this is putting pressure on the shares of digital challenger Banco Inter, in which Softbank has a 15% stake</li>
<li>The revised Nubank pricing range narrows the valuation gap with other digital and commercial banks; yet Nubank’s premium valuations need to be justified by medium term super premium earnings growth</li>
</ul>


Nubank has revised down its IPO pricing range by close to 20% to USD41.5bn, driven largely by challenging market conditions; this verifies our negative valuation opinion in our previous report
The revised prospectus includes Softbank as Nubank’s new potential cornerstone investor; this is putting pressure on the shares of digital challenger Banco Inter, in which Softbank has a 15% stake
The revised Nubank pricing range narrows the valuation gap with other digital and commercial banks; yet Nubank’s premium valuations need to be justified by medium term super premium earnings growth


Nubank’s Revised IPO Pricing Range, and the Emergence of a New Potential Cornerstone Investor

Brazil

NU Holdings Ltd. of the Cayman Islands operates as a holding company. The Company, through its subsidiaries, provides loans and digital banking services, as well as issues, administrates, processes, and transfers payments to post-paid credit cards and equity investments in other entities. NU Holdings serves clients worldwide.

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NU Holdings (NU US)

Nubank (NU US) – IPO Done, Now Comes the Hard Part

More than other digital banks, Nubank suffers from a disconnect between size of customer base & loan & deposit balances; also, we estimate that...

Victor Galliano

Nubank’s Revised IPO Pricing Range, and the Emergence of a New Potential Cornerstone Investor

Post the price reduction, the jury is still out on the after-market in Nubank shares; Banco Inter is nearing attractive value territory even if...

Victor Galliano

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Market Cap (USDm)

P/E

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