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

Energy Transition | AI | Shifting World Order, Mint Finance

Suhas Reddy

Energy Transition | AI | Shifting World Order

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

<ul>
<li>Softbank and the Vision Fund’s exposure to WeWork – estimated at USD1.8bn – look increasingly to be at risk of being written off</li>
<li>Masa’s debts to SoftBank stand at USD5.1bn at 1QFY23 end and we believe that private company valuations are vulnerable, especially in the light of the recent Union Square Ventures write-downs</li>
<li>Softbank shares trade at a 36% discount to the stated NAV; with Alibaba gone, the potential Arm IPO valuation is critical but SVF1 and 2 private company valuations remain questionable</li>
</ul>


Softbank and the Vision Fund’s exposure to WeWork – estimated at USD1.8bn – look increasingly to be at risk of being written off
Masa’s debts to SoftBank stand at USD5.1bn at 1QFY23 end and we believe that private company valuations are vulnerable, especially in the light of the recent Union Square Ventures write-downs
Softbank shares trade at a 36% discount to the stated NAV; with Alibaba gone, the potential Arm IPO valuation is critical but SVF1 and 2 private company valuations remain questionable


Softbank (9984 JP): WeWork on the Brink and Other Factors

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

Softbank (9984 JP): WeWork on the Brink and Other Factors

Despite the Arm IPO potential, we continue to be cautious on Softbank due to its WeWork exposure, the risk of over-valuation of private companies...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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

Softbank (9984 JP): WeWork on the Brink and Other Factors

Despite the Arm IPO potential, we continue to be cautious on Softbank due to its WeWork exposure, the risk of over-valuation of private companies...

Victor Galliano

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...