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

Mexican Banks: Stay the Course with Our Two Key Positive Picks, Cautious on SanMex

Mexican Banks Continue to Address NPL Issues in May

Mexican Banks ROE Recovery Continues into June

Mexican Banks; an Early Look at 2021 Data

Santander Parent for SanMex Offer Update; Wooing the Minorities?

Santander's All-Share Offer for SanMex; Scooping up Minorities for a Modest Premium

Gravity Works As WeWork Doesn't; Now Plan B

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/banco-santander-sa" target="_blank" data-smartkarma-citation="entities:21296:1" rel="noopener">Banco Santander Sa (SAN SM)</a>  is to offer MXN24 per share for the 8.3% of <a href="https://www.smartkarma.com/entities/banco-santander-mexico-sa-in" target="_blank" data-smartkarma-citation="entities:27672:1" rel="noopener">Banco Santander Mexico-B (BSMXB MM)</a>  held by minorities</li>
<li>Based on consensus estimates, the offer values SanMex at USD7.5bn (€6.4bn) and on a 2021E PBV ratio of 1x and a 2021E PE multiple of 8.8x</li>
<li>Santander estimates an outlay of €550m for full take up of the offer, with a positive impact to Santander Group EPS of 0.8% in 2023</li>
<li>Santander originally made an all share offer for minorities in April 2019, of Santander parent for SanMex shares; nearly two years later it is offering to sweep up the remaining minorities at an estimated 37% discount to its 2019, admittedly all share, offer</li>
<li>The offer is at least all cash, but we see it as an opportunistic offer by the parent  - SanMex is cheap relative to its LatAm peers and sister banks - to “tidy up” the shareholder structure</li>
<li>All the same, we do not believe that minorities have much bargaining power to oppose this, and based on the closing price of the 26<sup>th</sup> March, there is still 5.6% upside potential to the cash offer price</li>
<li>Our preferred name in Mexico remains <a href="https://www.smartkarma.com/entities/grupo-financiero-banorte-o" target="_blank" data-smartkarma-citation="entities:24780:1" rel="noopener">Grupo Financiero Banorte-O (GFNORTEO MF)</a> </li>
<li>Risks to our positive view include that Santander group withdraws its offer for the minorities, or that it does not gain regulatory approval in Mexico</li>
</ul>



Banco Santander Sa (SAN SM)  is to offer MXN24 per share for the 8.3% of Banco Santander Mexico-B (BSMXB MM)  held by minorities
Based on consensus estimates, the offer values SanMex at USD7.5bn (€6.4bn) and on a 2021E PBV ratio of 1x and a 2021E PE multiple of 8.8x
Santander estimates an outlay of €550m for full take up of the offer, with a positive impact to Santander Group EPS of 0.8% in 2023
Santander originally made an all share offer for minorities in April 2019, of Santander parent for SanMex shares; nearly two years later it is offering to sweep up the remaining minorities at an estimated 37% discount to its 2019, admittedly all share, offer
The offer is at least all cash, but we see it as an opportunistic offer by the parent  - SanMex is cheap relative to its LatAm peers and sister banks - to “tidy up” the shareholder structure
All the same, we do not believe that minorities have much bargaining power to oppose this, and based on the closing price of the 26th March, there is still 5.6% upside potential to the cash offer price
Our preferred name in Mexico remains Grupo Financiero Banorte-O (GFNORTEO MF) 
Risks to our positive view include that Santander group withdraws its offer for the minorities, or that it does not gain regulatory approval in Mexico


Grupo Financiero Banorte SAB d (GFNORTEO MF)

Santander Mexico (BSMXB MM) – Opportunistic Cash Offer for Minorities