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

<ul>
<li>SoftBank group’s headline NAV discount is over 50%, factoring in the T-Mobile shares windfall at December-end</li>
<li>SoftBank Corp is looking to IPO digital payments company PayPay, which should also be a positive driver for SoftBank Group shares going forward, but only a marginal one</li>
<li>Arm shares have been defying gravity, but we see downside risk going forward, as well as questions over SVF1 and SVF2 private company valuations; and the threat of JPY appreciation</li>
</ul>


SoftBank group’s headline NAV discount is over 50%, factoring in the T-Mobile shares windfall at December-end
SoftBank Corp is looking to IPO digital payments company PayPay, which should also be a positive driver for SoftBank Group shares going forward, but only a marginal one
Arm shares have been defying gravity, but we see downside risk going forward, as well as questions over SVF1 and SVF2 private company valuations; and the threat of JPY appreciation


Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

Oil and Gas, Mint Finance

Suhas Reddy

Oil and Gas

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Thematic (Sector/Industry)

<ul>
<li>Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.</li>
<li>Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.</li>
<li>Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.</li>
</ul>


Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.
Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.
Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.


Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

<ul>
<li>Softbank’s exposure to WeWork continues to haunt it beyond the close of 2QFY23, due to its credit support agreements</li>
<li>Aside from WeWork, we continue to see risks to valuations supporting the NAV; in particular, Arm Holdings and SVF2 which accounted for 45% of group equity value</li>
<li>Softbank shares trade at a 45% discount to the stated NAV yet there is downside risk to Arm’s valuation along with questions over private company valuations at SVF1 and SVF2</li>
</ul>


Softbank’s exposure to WeWork continues to haunt it beyond the close of 2QFY23, due to its credit support agreements
Aside from WeWork, we continue to see risks to valuations supporting the NAV; in particular, Arm Holdings and SVF2 which accounted for 45% of group equity value
Softbank shares trade at a 45% discount to the stated NAV yet there is downside risk to Arm’s valuation along with questions over private company valuations at SVF1 and SVF2


Softbank (9984 JP): WeWork Hangover and Other Challenges

<ul>
<li>WeWork appears to be approaching bankruptcy; we expect SoftBank’s exposure to be at least USD1.4bn including credit lines</li>
<li>Arm Holdings post-IPO performance has been lacklustre, but we continue to believe that it remains dangerously over-valued against peers – and Arm provides 30% of the group’s equity value</li>
<li>We believe that JPY depreciation has supported SoftBank Group’s share price (given the high share of USD-denominated portfolio assets); in addition, we still see risks to current private company valuations</li>
</ul>


WeWork appears to be approaching bankruptcy; we expect SoftBank’s exposure to be at least USD1.4bn including credit lines
Arm Holdings post-IPO performance has been lacklustre, but we continue to believe that it remains dangerously over-valued against peers – and Arm provides 30% of the group’s equity value
We believe that JPY depreciation has supported SoftBank Group’s share price (given the high share of USD-denominated portfolio assets); in addition, we still see risks to current private company valuations


SoftBank Group (9984 JP): Results Preview, Key Topics

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

It's official: <a href="https://www.smartkarma.com/entities/the-we-company-wework" target="_blank" data-smartkarma-citation="entities:28061:1" rel="noopener">The We Company (WeWork) (WE US)</a> has decided to <a href="https://www.bloomberg.com/news/articles/2019-09-16/wework-is-said-to-likely-delay-ipo-after-valuation-plummets" target="_blank" rel="noopener">pull its IPO for now, but still expects to complete it by yearend.</a>Don't hold your breath.This comes just days after WeWork <a href="https://www.businessinsider.com/the-we-company-ipo-wework-confirms-nasdaq-listing-governance-changes-2019-9?utm_source=notification&amp;utm_medium=referral" target="_blank" rel="noopener">filed an amended S-1</a> announcing plans to list its new shares on the Nasdaq index even as its IPO valuation continues to dissolve. Reuters had reported on Friday that deal insiders were considering an implied equity valuation of <a href="https://www.reuters.com/article/us-wework-ipo-valuation-exclusive-idUSKCN1VY1PB" target="_blank" rel="noopener">just $10-12 billion,</a> a stunning 78% drop versus the extravagant $47 billion floated since January. My analysis shows even $10 billion is too high.So it's not surprising that long-term backer and top investor <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>, arguably the most responsible for WeWork's incredible equity valuations, had <a href="https://www.ft.com/content/111f8e00-d346-11e9-8367-807ebd53ab77" target="_blank" rel="noopener">urged the company to scuttle the IPO</a> given the "cool reception" it's been getting.Yet WeWork is compelled to push on regardless, seemingly <a href="https://www.ft.com/content/f28474a2-d57e-11e9-a0bd-ab8ec6435630" target="_blank" rel="noopener">ready to concede to any terms</a>to get a deal done, because its financial condition is much more fragile than it has been trying to project. It has little time to waste and few alternatives.That means Plan B must already be in the works.Either way, risk has intensified for WeWork's overpriced bonds.Read on for Bond Angle analysis: How did WeWork get so expensive and What's next? Plus a new WeWork model, equity valuation and forecast, and more.

It's official: The We Company (WeWork) (WE US) has decided to pull its IPO for now, but still expects to complete it by yearend.Don't hold your breath.This comes just days after WeWork filed an amended S-1 announcing plans to list its new shares on the Nasdaq index even as its IPO valuation continues to dissolve. Reuters had reported on Friday that deal insiders were considering an implied equity valuation of just $10-12 billion, a stunning 78% drop versus the extravagant $47 billion floated since January. My analysis shows even $10 billion is too high.So it's not surprising that long-term backer and top investor Softbank Corp (9434 JP), arguably the most responsible for WeWork's incredible equity valuations, had urged the company to scuttle the IPO given the "cool reception" it's been getting.Yet WeWork is compelled to push on regardless, seemingly ready to concede to any termsto get a deal done, because its financial condition is much more fragile than it has been trying to project. It has little time to waste and few alternatives.That means Plan B must already be in the works.Either way, risk has intensified for WeWork's overpriced bonds.Read on for Bond Angle analysis: How did WeWork get so expensive and What's next? Plus a new WeWork model, equity valuation and forecast, and more.

Gravity Works As WeWork Doesn't; Now Plan B

United States

WeWork Inc. provides co-working spaces for individuals and entrepreneurs. The Company offers private offices, office suites, headquarters, and custom build out options to fit a variety of office needs, as well as desk spaces and conference rooms. WeWork serves customers worldwide.

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WeWork (WEWKQ US)

Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...

Victor Galliano

Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

US CRE shows bleak prospects for 2024 due to structural demand decline for office space. CRE loan delinquency on the rise for five sequential...

Mint Finance

Softbank (9984 JP): WeWork Hangover and Other Challenges

Softbank's exposure to WeWork is well chronicled, but other investments - namely Arm and SVF2's portfolio - pose risks to its asset value and...

Victor Galliano

SoftBank Group (9984 JP): Results Preview, Key Topics

WeWork bankruptcy looms, SBG's exposure at $1.4bn. Arm Holdings overvalued, providing 30% of group's equity. JPY depreciation boosts SoftBank's...

Victor Galliano

Gravity Works As WeWork Doesn't; Now Plan B

WSJ reports that WeWork will file bankruptcy next week, pending ongoing discussions with its beleaguered creditors. Surprised? You shouldn't be....

Vicki Bryan

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Market Cap (USDm)

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Dividend (Yield)

Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

​SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...

Victor Galliano

Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

US CRE shows bleak prospects for 2024 due to structural demand decline for office space. CRE loan delinquency on the rise for five sequential...

Mint Finance

Softbank (9984 JP): WeWork Hangover and Other Challenges

​Softbank's exposure to WeWork is well chronicled, but other investments - namely Arm and SVF2's portfolio - pose risks to its asset value and...

Victor Galliano

SoftBank Group (9984 JP): Results Preview, Key Topics

​WeWork bankruptcy looms, SBG's exposure at $1.4bn. Arm Holdings overvalued, providing 30% of group's equity. JPY depreciation boosts SoftBank's...

Victor Galliano

Gravity Works As WeWork Doesn't; Now Plan B

WSJ reports that WeWork will file bankruptcy next week, pending ongoing discussions with its beleaguered creditors. Surprised? You shouldn't be....

Vicki Bryan

SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...

Softbank's exposure to WeWork is well chronicled, but other investments - namely Arm and SVF2's portfolio - pose risks to its asset value and...

WeWork bankruptcy looms, SBG's exposure at $1.4bn. Arm Holdings overvalued, providing 30% of group's equity. JPY depreciation boosts SoftBank's...