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

XP (XP US) – Modal Acquisition Edges the Needle Higher on AuC, but It Is No Bargain

XP (XP US) – Less Demanding Valuations, but the Overhang Still Weighs

Itausa (ITSA4 BZ) – Historically Wide, and Potentially Understated, NAV Discount

XP (XP US) Follow-On Issue Highlights Over-Hang, Potential for More Share Sales Post Itaú Spin-Off

LatAm Financials Review: Focus on the Value Opportunities

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

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>
<a href="https://www.smartkarma.com/entities/xp-inc" target="_blank" data-smartkarma-citation="entities:28619:1" rel="noopener">XP Inc (XP US)</a>’s 1Q21 results were solid, with an improving take rate and good cost control especially relating to Independent Financial Advisors (IFAs) in the quarter</li>
<li>XP’s valuations are underpinned by its growth story, and the ability to take market share in Brazilian wealth management from the incumbents, these being the large established banks</li>
<li>The reality is that other disruptors in wealth management are competing aggressively for IFAs and new clients, namely <a href="https://www.smartkarma.com/entities/banco-btg-pactual-sa" target="_blank" data-smartkarma-citation="entities:28665:1" rel="noopener">Banco BTG Pactual SA (BPAC11 BZ)</a>, Modal and EasyInvest to name but a few</li>
<li>In particular, the IFA network “arms race” is intensifying, especially between the leaders XP and BTG Pactual; XP is allegedly taking legal action against an IFA group switching to BTG Pactual</li>
<li>This is negative for XP’s earnings and returns prospects, in our view, in terms of lost retail revenue and increased opex pressure, with XP, on its premium valuations, potentially harbouring more downside risk</li>
<li>Risks to our view include XP’s ability to better contain cost pressures as well as its ability to deliver revenue growth from institutional and issuer services segments</li>
</ul>



XP Inc (XP US)’s 1Q21 results were solid, with an improving take rate and good cost control especially relating to Independent Financial Advisors (IFAs) in the quarter
XP’s valuations are underpinned by its growth story, and the ability to take market share in Brazilian wealth management from the incumbents, these being the large established banks
The reality is that other disruptors in wealth management are competing aggressively for IFAs and new clients, namely Banco BTG Pactual SA (BPAC11 BZ), Modal and EasyInvest to name but a few
In particular, the IFA network “arms race” is intensifying, especially between the leaders XP and BTG Pactual; XP is allegedly taking legal action against an IFA group switching to BTG Pactual
This is negative for XP’s earnings and returns prospects, in our view, in terms of lost retail revenue and increased opex pressure, with XP, on its premium valuations, potentially harbouring more downside risk
Risks to our view include XP’s ability to better contain cost pressures as well as its ability to deliver revenue growth from institutional and issuer services segments


XP (XP US): The IFA “arms Race” Is Turning Nasty