Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Victor Galliano is an experienced equity banks analyst, having covered Latin America banks and non-bank financials for over 12 years, as well as more recently covering the Italian banks. He has worked in sell side equity research for 30 years in a career spanning Barclays, HSBC, BBVA LatInvest, Barings and NatWest.
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.

Financials & FinTech research

Alibaba (BABA) Fine – Close, but No Cigar

Alibaba (BABA US): Record Fine - Grin and Bear It as Better Days Are Ahead

Ant Group: Regulatory Pressures Drive the State’s “big Data” Grab, and a Revised SOTP Valuation

Ant Group: IPO Suspension and the Big Data Angle

China Non-Bank Finance Companies (NBFCs); Ant’s Loss, Their Gain

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

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Globally, banking regulators are upping their scrutiny of Big Techs in finance, with China at the forefront of the regulatory effort to “level the playing field” between Big Techs and its banks</li>
<li>China stands out globally for the broad and rapid establishment of its Big Techs across the domestic finance ecosystem, led by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> </li>
<li>Regulatory constraints on Ant Group’s online finance operations could potentially curtail the growth of its credit business; yet it has recently been reported that Ant is calling for a higher share of commissions from transactions on its payments platform</li>
<li>This could provide Ant with a revenue boost to its payments business, but we still see the big risk to Ant’s prospects (and its revised valuation) coming from tighter restrictions to its lending business and possibly the asset management arm, as well as the introduction of the e-Yuan eroding its leadership in digital payments</li>
<li>Consequently, we remain cautious on <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>, and we stick with our view that key beneficiaries are smaller FinTechs like <a href="https://www.smartkarma.com/entities/lexinfintech-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26036:1" rel="noopener">Lexinfintech Holdings (LX US)</a> and, in the bank sector, the domestic bank <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a>
</li>
<li>Risks to our view include lighter touch regulation from PBoC on the large FinTechs including Ant; another risk is Ant Group being able to avoid a meaningful loss of market share in payments and being able to deliver stronger than expected returns from asset management operations to more than offset the restrictions on credit operations</li>
</ul>


Globally, banking regulators are upping their scrutiny of Big Techs in finance, with China at the forefront of the regulatory effort to “level the playing field” between Big Techs and its banks
China stands out globally for the broad and rapid establishment of its Big Techs across the domestic finance ecosystem, led by Ant Financial Services Group (6688 HK) 
Regulatory constraints on Ant Group’s online finance operations could potentially curtail the growth of its credit business; yet it has recently been reported that Ant is calling for a higher share of commissions from transactions on its payments platform
This could provide Ant with a revenue boost to its payments business, but we still see the big risk to Ant’s prospects (and its revised valuation) coming from tighter restrictions to its lending business and possibly the asset management arm, as well as the introduction of the e-Yuan eroding its leadership in digital payments
Consequently, we remain cautious on Alibaba Group (BABA US), and we stick with our view that key beneficiaries are smaller FinTechs like Lexinfintech Holdings (LX US) and, in the bank sector, the domestic bank Postal Savings Bank of China (1658 HK)

Risks to our view include lighter touch regulation from PBoC on the large FinTechs including Ant; another risk is Ant Group being able to avoid a meaningful loss of market share in payments and being able to deliver stronger than expected returns from asset management operations to more than offset the restrictions on credit operations


Alibaba Group Holding

Ant Group: Alibaba’s Albatross?