Emerging markets, hated market and cheap.

I have never seen a cheaper environment for good stocks in Emerging Markets and serial acquirers, similar to cheap stocks in Europe in 2020-21 like Banks and Oil companies. (Repsol and Bank of Ireland my winners in that space).

We have a company that multiplied revenues by five since 2020, trades as an ADR, but is valued at four times forward earnings.

The market sees a risky company in a risky country.

I see a solid business that is slowing down after a large expansion phase. As a Financial company, I know that you do not invest for one year of profit and one year of growth, but for profitability over the cycle.

Despite being in a tough point of the cycle, we have a totally depressed valuation and profits deployed into capital returns.

We have a perfect macro backdrop which I will detail below in the short presentation. As this is a buy alert to inform my readers on time, a full investment analysis is not yet done.

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It follows the Amazon business model, even though the founder claims that they don’t and that they have a unique philosophy. Sure, the competitive environment in China is more difficult than the Amazon competition in the west.

Nevertheless, the valuation was ridiculous and the company remains impossible to displace.

The stock is slightly down over the period. It is fair that I review the company results and developments.

As a reminder, JD is a Chinese e-commerce company that is not number one in the market (Alibaba and PDD plus Tiktok shop), but has an integrated, high quality and fast delivery business model.

In my article, I argued that an older, richer China will eventually tend to favor this type of shopping experience over “the scrape for pennies” and gamified gaming of PDD and the less quality controlled Alibaba.

China still has a lower GDP per capita than Mexico and sits between Malaysia and Argentina.

Imagine the potential. Investors already tend to see China as a no growth developed country and this is a big misconception.

In Q2, JD grew revenues at a 12% CAGR in the past five years, and saw a decrease in 2026.

Net revenue was down -2.9% Yoy in Q2 2026.

• JD Retail is -5%, with a small decrease in operating income.

• JD Logistics is a good growth story, with 24% growth and a 16% increase in operating income (I reviewed JD Logistics last week).

• New business was down 45% but the loss, still important, is down 33% but remains substancial at 9,9 Billion RMB.

There was a reclassification of new business to JD logistics, therefore the decrease is lower in reality.

If we look at specifics, it is impacted by a subsegment: electronics and appliances.

The appliance revenues benefited from government subsidies in Q2 2025, therefore having revenues go down in this segment is normal, after the government subsidies.

New business:

When I reviewed JD, the new business of food delivery was not even really started. It had a dramatic rise but created huge losses due to competition in food delivery. I did not like it, but it does not affect the long term of the company.

The food delivery is JD entering not only into food delivery but instant commerce, with orders delivered within 30 minutes. This creates huge losses in the short term but also brings new active users to the ecosystem.

In Q2, New business had a more than 50% reduction in losses in food delivery. The company is “confident that the food delivery business will continue to see meaningful year-on-year loss reduction throughout the rest of the year.”

Joybuy, the competitor to Amazon in western Europe, “delivered encouraging sequential revenue growth in Q2 as our overseas supply chain strength and differentiated service offerings continue to gain traction among European consumers. While absolute operating loss expanded as Joybuy entered a rapid scaling phase, its loss margin narrowed sequentially”.

Joybuy is probably going to be loss making for several years but is building an exciting business. Unfortunately I cannot test it in my country of residence.

Jingxi group buying platform is in its infancy but experiencing strong growth.

Profitability

Recent investments in new businesses reduced the profitability of the group from a peak 4.1% in 2024 to 2.1% in 2025. The profitability is recovering to 2.6% as of Q2 2026, and we expect it to continue to grow in 2026.

“On JD Group’s profitability, Q2 marked a clear inflection in its trajectory, returning to healthy year-on-year expansion. Looking ahead to the second half of the year, supported by core business health and investment discipline, we are confident in driving accelerated profit growth at the group level.”

Investing in a long term growth company like JD is not an investment in quarters. It is an investment in decades. This is similar to an investment in Walmart or Amazon. I don’t want to predict that JD will be as successful as Amazon, but it is a similar investment, with a strong core retail business and many start up businesses that are starting now, with aims to become profitable in 5, in 3 or even 10 years only.

Shareholder returns:

On buybacks, we have repurchased around 17% of our outstanding shares since 2023.

Conclusion and investor psychology

When investing like this, you need to remember to have infinite patience and a cool head.

In the mean time, enjoy the shareholder returns in terms of dividends, and benefit from the buybacks.

The valuation is at 7 times forward earnings, despite losses in new initiatives. 4.3 times EV/EBITDA A complete bargain for a great business.

I heard many people saying “BUT.. BUT”. I hear these people all the time.

There is always a “BUT” when people are not value investors but trend followers.

The value investor buys when it is cheap. Holds, and has a large winner when the narratives turn from fear to apathy.

I have many such winners that were hated at the bottom. After they double or triple, they are not hated anymore but seen as regular stocks, and nobody talks about them anymore.

There are many other investments with similar risk rewards in my portfolio and premium section of the newsletter: it is available for upgrade below.

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I don’t really have too much things to write about JD, the thesis was the same 5 years ago, 1 year ago and it will be the same in 5 years. Entry valuation matters as much as holding philosophy.

Disclaimer: This is not an investment recommendation. Please do your own due dilligence before taking any investment decision.

• Stock market: Hong Kong

• Symbol: 2618

• Market Cap: $12 Billion USD

Focusing on JD logistics, the company is on the forefront of AI and robotisation.

JD has listed its logistic arm in 2021 and the stock is down 65% since the IPO.

I became interested in 2025-2026 as I constantly track the cheapest growth companies in emerging markets and worldwide. (upgrade to follow all of my work).

Unfortunately, as you can see in the end of the chart, it rebounded in 2026 before I could analyse the company.

Nevertheless, I see a 10 times multiple, 8.5 forwards, and earnings growth rates of 12% approx expected in 2027 and 2028, with leading AI and robotics technology. This is on top of a rebound in 2026 expected by analysts.

Let’s dive in what could be a massive opportunity.

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I saw a tweet saying that various of these AI companies are at 40 times sales and 200 times earnings or whatever. The meltdown coming is similar to the one we saw in Peleton and Zoom in 2022 after they were bubbles during covid.

Meanwhile, South East Asia contains some of the cheapest stock markets in the world, and investors going for Emerging markets will be making bank and in the hall of fame after it’s too late for the herd to follow.

5-Sea Limited.

(Nasdaq)

Sea limited is an e-commerce company with business in South East Asia and Latin America. It also owns video game assets like Garena Fire.

A fast growing fintech arm completes the lot.

Contrary to most of the deep value names in this list, it is a fast growing company.

In Q1 revenues were up an astonishing 46.6%.

However net income was only up 6%.

This is because the company is in the growth phase of its lifecycle. For example the ebitda of the E-commerce segment is down 15% in Q1.

SEA has 666 million quarterly active users.

The best way to valuate this company is by EV/SALES which is at 1.7 times, and EV/EBITDA at 13.3 times.

I think it is not the cheapest company, but it has fast growth and it is an essential holding if you want exposure to South East Asia. It is also cheap on an EV/Sales and on market cap (61 billion USD) vs (666 million) active users.

“We have had a strong start to the year. 2026 is a year where we are leaning in to deepen our competitive moats, while maintaining financial discipline. Our strong revenue growth reflects the effectiveness of these investments, and we are already seeing unit economics start to improve for some of these initiatives. We believe this is the right approach to maximize long-term value, given the significant runway for growth still ahead of us in our markets,” said Forrest Li, Sea’s Chairman and Chief Executive Officer.

Who is ready for my other top picks? They are not growth companies, but Illiquid defensive companies under 5 times earnings. Things that nobody wants but I hold. I have added two of the ideas this year. Subscribe for the Emerging value portfolio.

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A Tech and AI company at ten times earnings.

Whether It is a AI winner or loser remains to be seen in the long term, but AI is creating more competition for Text.

It is a former market darling from Poland that I keep an eye on.

This is a company known for integrating text chat boxes into your websites or apps, and now AI into the workflows.

But before that, a word about last week article. It contained an error in the way I understood the NAV calculation page, and I have corrected it. The opportunity is more at 8 times earnings rather than 5 times earnings. The writing on the company materials does not have the clarity that we need as investors. I am however happy to hold or add.

I was lately doing a survey of the Agentic AI marketplace for professional needs and went back to look at what the major AI companies can do: short answer: not so much yet. Agentic is definitely overhyped since what I found is that it remains inferior to old school automation (Zappier/Python/Javascript). The reason why it is inferior is probably not technological. It is that the AI companies are limiting processing available to users. Prompts are just getting refusals: “no I won’t do all this work”. Or worse “I did this work” - “Well no actually, I didn’t and invented the outcomes”.

We have the technology to control screens and operate actions with screen image analysis. But it is inefficient compared to running code that connects services through APIs, or analyses data in the database itself, and will always remain inefficient unless Ram and processing power drops like 1000x in price. The takeway is that Memory and efficiency is a real bottle neck, and that manual orchestration of automation will remain key in the future due to the need for efficiency.

Back to Text SA:

Text Allows you to integrate Chatboxes onto your website, use AI chatbots, have a ticketing system, all integrated with automation and reporting.

Before AI, Text was not unique but more a rarer type of company as it focused on seamless integration with different backend workplaces and websites, to allow your agents to talk to customers and help with service or ordering.

Now the field is seeing an explosion of startups.

Text rebranded, with a new website, a new ugly unreadable logo and a newer positive focus on sales increase rather than customer service.

They claim that adding these chatboxes with AI or human agents increase conversion on websites. It’s pretty obvious. The problems are however numerous: product offering, competition and go to market. We will see that later.

Let’s review the latest KPIs for the company and the competitive environment.

After quarters of declining MRR or monthly recurring revenue, the most recent update showed an increase. This was not by a growth in customers but rather by a discontinuation of legacy pricing.

The share of customers with high MRR is growing while small customers are dropping in terms of MRR.

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The market is changing, my articles are changing. The opportunities are more clear.

They don’t need very long articles.

Tencent is the company behind Wechat in China. This includes WechatPay and many services.

I never claim to be a China expert. I am a numbers guys and big picture thinker.

The number and big picture are clear: This company is a monster.

• Fintech: 1st in China and the world by active users.

• Social networks: 1st in China by number of users.

• Games: 1st in China by users and revenue, and globaly by revenue.

• Video, Music: first by paid subscribers

• Cloud: Here the company is not first but it remains a large player in a key growing industry.

You can see an overview of Tencent positioning in the following slide from the investor presentation.

Sometimes, you feel that a company is too big to be analysed in details. This is definitely the case with Alphabet and Tencent.

The revenue growth year on year is a solid 10-12% on average.

Social networks are about 16% of revenues as of Q1, gaming 33%, marketing services 19%, Fintech and business services 31%.

The company is powering the Chinese online communications, and being invested in it is investing in the Chinese online ecosystem. It will provide services and collect revenues from the long term growth drivers of the Chinese online economy. And of course from the AI economy in China and abroad.

The installed user base, the network effects and the AI engine ensure continued success in this sector.

I expect China to lead on AI due to higher innovation rate and lower cost of chips and eventually memory too in a few years.

Tencent is investing in AI heavily, with its own cloud operations and LLMs.

I always believed that AI in itself is not going to be a moat, but AI applications and applications to users and data at scale will be a moat. Tencent has everything to be a key player in AI, and workbuddy for example can generate extra revenue, even globally. The key advantages of Tencent AI will be the automation of workloads within the Tencent ecosystems, which is facing customers daily.

The best way to understand where Tencent is is through the annual report introduction:

We sustained healthy growth rates in 2025, as AI capabilities improved our ad targeting and supported more engagement with our games, and as our cloud business delivered improving revenue growth and profit at scale. Our highly resilient and cash-generative core businesses provide us with the resources to fund our increasing investments in AI, including recruiting top-tier AI talent and upgrading our AI infrastructure. The increasing intelligence of our HY 3.0 large language model, and the utility of our AI products such as Yuanbao, WorkBuddy, and QClaw, are encouraging early signs that these investments will unlock new opportunities. People enjoy consuming and being entertained, and derive satisfaction from creating and being productive, and it is Tencent’s privilege to provide AI services that can enhance our users’ capabilities across these dimensions.

Like Meta, AI is improving the core business ad targeting and engagement. The cloud business is growing. The company is in an AI investment phase. It will roll out AI within wechat and it will increase costs, while making the service even better, soon becoming a real life personal assistant of sorts.

Goldman Sachs has developed a bottom-up estimation framework that, by assessing the daily average token consumption of WeChat’s AI agents, estimates that if fully rolled out, the incremental inference costs would amount to roughly 5% to 17% of Tencent’s forecasted adjusted operating profit for the fourth quarter of 2026.

What is interesting is that the capital expenditures did not grow too much like the hyperscalers in 2025:

In Q1, Capex was up 16%.

Investment portfolio:

Tencent maintains a large investment portfolio compassing leading tech companies worldwide, and earns good returns on it historically:

As at 31 December 2025, our investment portfolio amounted to approximately RMB957,219 million or $141.25 billion USD — or 26% of the market capitalisation as of July 12.

We can see PDD, Sea limited, Spotify, Kuaishou (content platform), Reddit, etc, and many startups in the portfolio;

How about buying all of this at a crazy discount? Is it worth it? Searching for the cheapest EM stocks is what I do at the emerging value newsletter.

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I am starting to see good value in Poland again.

Regarding Central Asia, the Uzbek sovereign wealth fund was IPOed and listed in the London stock exchange but it does not trade at a discount and is not interesting right now, on top of having heavy politicised companies.

5-Allegro (Poland).

The Amazon/Ebay of Poland

The Q1 results were very satisfying with grow on all sides, leading to a 24% Adjusted EBITDA Growth. The international segment is still loss making.

Allegro started AI initiatives including a partnership with OpenAI to enable AI powered search and shopping experience.

Allegro entered health services and package travel markets: having such a large customer base enables the company to offer more services at a low acquisition cost: A core thesis to many of my investments in superapps.

As noted in my analysis, Allegro Pay fintech is a huge opportunity for a relatively small market capitalisation with a large customer base: we saw continued growth in this segment.

Loan origination up 37% YoY to PLN 3.9bn in Q1

Consumer loans contributed PLN 48m to Other Operating Income in Q1, up 125% YoY, as the share of self-funded loans grew up to 59% (+8pp YoY), reaching PLN 1.2bn

On June 25, it announced a share buyback program.

“25 June, 2026 | Allegro.eu announces the implementation of the Share Buyback Program (Phase 1) via open market transactions, for the purpose of share cancellation and reduction of the Company's share Capital”

The stock rebounded and is in my opinion set to become a darling of the polish stock market, after a disappointing IPO. While not extremely cheap at 18 forward times earnings, it is cheap on a market cap basis compared to the user base, especially considering the fintech business that is just starting out.

https://about.allegro.eu/wp-content/uploads/2026/05/Allegro-investor-presentation-Q1-2026.pdf

4-Halyk bank (Kazakhstan)

Listed in London, the second largest bank of Kazakhstan trades at 4 times earnings and an approx estimated yield of 12-14%.

To adjust for the economic cycle, we see that the price to book value is 1.1, reasonably in the cheap range but not ultra cheap. These Kazakh banks seem to be over earning compared to the rest of the world.

It has a super app with 8 million monthly active users, but most of the income is net interest income, with b2b income very important at 57% of loans, providing exposure to the energy and mining focused economy.

I did not release a deep dive of Halyk. If you are interested, I am sure you could find articles and reviews online.

Below are 3 quality companies, each time under 10 times earnings. This is what I do at emerging value. I find and buy the cheapest earnings out there.

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Market cap: 2.4 billion USD

Price: 5.30 USD

Brazil is one of the most exiting Emerging market in the world valuation wise. I reviewed companies like Sendas Distribuidora, Pics, and Brookfield corporation lookalikes such as Patria and Vinci.

All these companies are quality financial businesses with growth and deep discounts to global peers.

Today, I want to review Inter&Co, a another Brazilian Fintech, similar to the company reviewed two weeks ago, Pics NV.

As a prelude to this review, at emerging value, I focus on valuation first rather than narrative. I don’t hype companies that have XX% growth and extrapolate this growth infinitely in the future. I try to have a cautious view and take into consideration bearish arguments. I look for investments where the growth is the extra bonus that provides optionality.

Inter&Co is one of many that have these characteristics in Emerging Markets at the moment. While everyone looks at “1999 tech bubble 2.0 stocks”, the rest of the market in quality, growth and quality growth in Emerging markets is incredible. I don’t invest for anything else than shareholder yield and these yields only are bargains.

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History

Inter&Co was started in 1994, which is old for a fintech. This is because it was not a fintech but a financial institution that was originally part of a larger group. It started offering business loans, payroll credit.

In 2002 it left the larger group, and in 2008 it received a bank licence in Brazil.

In 2012 it formed Inter Group with the company Inter Seguros (insurance).

2015 was a milestone when Inter launched the first digital checking bank account in the country.

in 2016 the app was launched, and branded cards appeared.

in 2018 Banco Inter was IPOed in Brazil.

It raised money again in 2019 and 2020 and moved towards a super app.

in 2022, it moved to the Nasdaq and started offering services in the USA.

Along the way, there have been small tuck in acquisitions to acquire assets and product offerings.

This historical development was successful in terms of active clients additions.

In terms of financials, it is only since 2024 that Inter&Co reached the scale to enable full profitability.

Business overview

Similar to Pics, Inter&Co is a Brazilian fintech, an online bank.

It offers accounts for buyers and merchants, together with credit cards.

It also offers savings and investing products, and generates interest income from credit given to customers.

A home page could look like this (they are personalised for the clients), with Pix (P2P payment network in Brazil), Pagar (Pay), Cartoes (cards), some news feed with social features, an investing tab, a shopping tab.

Inter&Co intents to become a super app.

The app is personalised based on client activity, asset base and product activations.

Now that we know the basics about the business, let’s review the historical revenue development. Inter&Co shows strong growth quarter on quarter.

Net interest income is 77% of revenue, and fees are 23% of revenue. In the interest income side, that includes revenue from customer loans and revenue from investments held by the company.

For example in Q1, it held 46 billion in loans to customers and 27 billions in securities, as well as 4 + 4 billion in cash and funds due from financial institutions.

Inter&Co claims to focus on what they call sustainable lending: loans with lower interest rate than Card revolving credit and personal loans that can carry outrageous 100% and more interest rates in Brazil.

Like Pics, it is now turning more more on Secured loan markets: car loans, payroll and mortgages.

Beyond the positive self description of the business, we can look at the latest financials (Q1 2026) to see the composition of the loan portfolio:

• Mortgages are 24.5%

• Home equity is 10.3%

• Payroll+Personal loans : 25.6%

• Credit Card: 31.3%

• Small and Medium businesses: 8.3%

Together, 67% of the loan portfolio is secured.

The company is moving towards a super app strategy, with shopping, insurance, investing and many other functions. It has an integrated loyalty program.

Like Pics, the extra products carry frequency, offer monetisation opportunities, and the Inter&co customer base is still not fully penetrated (44 million clients).

None of these Fintech super apps are very differentiated. All the Brazilian players are trying to become superapps and I don’t see Inter&Co becoming a monopoly or a duopoly. Nevertheless, even if no winner takes all, Inter&Co and other fintech can take marketshare away from traditional banks and offline financial services.

Strategy

The main focus is to increase the client base, and to sell more products to the existing client base. For example it has only 9 out of 44 million clients who have credit products.

There remains ample potential to convert the other 35 million clients to credit products, as well as onboard new clients.

However, the Brazilian customer is reported to already be over leveraged, and this is going to be the difficult to fill that gap.

The plan to increase the credit penetration is supported by the following products:

The ROE is at 15.5%, but they plan to improve this ratio to 28% by 2029, notably by improving underwriting, increasing leverage, cost efficiency, growth, etc.

(Pics plans to get the ROE to 30% in comparison - this shows that similar business models can aim for similar profitability targets and to me validate their targets).

International expansion: Inter expanded to the US first because there was a need from their clients to have a USD global saving account and investing account. 5 million customers already use this account. Brazilian expats in the US also use it, and Inter got the naming rights for a Orlando MLS club (soccer) stadium and is actively expanding across the Miami region with sponsorship activities.

In the mid term this global account capacity can attract customers in neighbouring countries, as heard in a recent CEO interview.

Capital allocation: Inter is focusing on growing its loan portfolio, but still pays a fast growing but small annual dividend.

Management and shareholding

This is another family owned company. Here, the Menin family.

The controlling group controls 26% of economic ownership, and 78% of voting power. Softbank has 13.70% of economic ownership but only 4% voting power.

The other investors own 56% of the company but only 17% of voting power.

We have here a company completely controlled by Costellis International Limited, the (Controlling Group).

Before being led by Joao Vitor Menin, it was led by the Co-Founder Rubens Menin. The Menin family ownership led the large growth in revenue and net income over the past decade and it’s fair to say that they have been excellent in execution.

There is no recent insider buying.

Risk

Risk 1-credit losses

As with any credit institution, the risk is that non performing loans -NPLs- eat the net income and make the bank loss making.

And we saw in Q1 2026 the NPL increase a lot, especially 15 to 90 days. It was officially driven by private payroll growth and seasonality. Seasonality that we can confirm on the chart.

Cost of risk if nevertheless rising: “Cost of Risk -- CFO Santiago Stel said, “we are expecting something closer to six percent [for the year]” compared to previous guidance of “five percent–five point five percent.” The company adds that this increase of cost of risk is also caused by a voluntary push into some products.

Read more on risk here:

Risk 2-macro economy: here is a copy and past of my section on Pics reviewed two weeks ago: note that macro economy is not what I view as my specialty as it is widely unpredictable, according to the GOAT Warren Buffett.

-Macro economic view: I view the Brazilian interest rate as too high for the past two years, caused by a public deficit and to defend the currency. However, this is causing a slow down in the economy and a wave of stress for companies and customers. I am expecting some stress to continue until the central bank decides to cave in an reduce the central bank rate or SELIC rate.

The central bank has indeed started cutting rates in 2026, but the war on Iran is hurting this normalisation route. In any case, a worsening of default rate and economy would lead to rate cuts. Rate cuts in the USA would also impact.

Net interest margin is very high because interest rates are high in Brazil. I expect that rates could go down, or stay high depending on war on Iran and public spending. Brazil has a leftist president with Lula.

However, funding costs will also decrease when interest rates go down and net interest margins should decrease but not that much. Credit losses should also decrease when rates are lowered to 10 or 5%.

A lower interest rate should make savings accounts offered by Inter less interesting, which is a negative. I see in reviews of Inter and competitors, that Brazilians are very focused on earning high interest rates. In Europe here nobody cares about earning 2% and focus on the stock exchange more. On the other hand, a lower interest rate will send all Brazilian stocks higher due to a search for yield.

Quipus Capital discussed the macro economic impact of Fintech in Brazil of interest rate changes, in an interview I posted on the newsletter in February. I really like this clear summary from the interview, from someone who has studied Brazilian economics extensively. I recommend his publication.

I

Risk 3-Competition

What I wrote about Pics also applies here: this is a very competitive industry in Brazil.

Valuation

Let’s review the Brazilian Fintech peers and some regional banking peers: (June 20)

The whole sector appears undervalued. Nu Holdings is standing out as the clear leader in Brazil and Latam fintech. The price to book reflects the superior profitability and the price to earnings a premium.

In my opinion Inter&co and Pics Nv represent a much more interesting opportunity due to the large undervaluation.

Valuation for a growing online bank like this could be on P/E ratio, but there is a certain cyclicality in the business.

I like to look at price to book, and at 1.2x, it is reasonable.

looking at P/B is a way to normalise earnings, avoid over earnings, and look at a cycle neutral valuation.

That would be a 10% earnings yield.

Now with P/B of 1.2, the implied P/E could be 10 with a ROE of 12% for example. But our ROE is at 15% already!

I explained how a company with credit card loans like Capital one, although not perfect, is an interesting financial peer, because we see that in a stress scenario, ROE drops to 0% but for a very small time period before recovering.

I expect the ROE to touch the 29% goal and even go higher, but with temporary crisis in between when there are non performing loans.

Therefore, I view the long term conservative ROE for Pics (And Inter) conservatively in the 20% range and the corresponding valuation should be 20 times earnings and two times book value: This should be around 9$ for the price to book or 15$ for the price to earnings, since the price to earnings (Forwards) is at 6.5.

Looking at projected earnings growth, earnings per share are planned to grow 40% in 2026, then 30% in 2027. In 2025, it grew 45%.

I am not certain that the fast earnings growth we saw in the past five years can continue very far after this, due to the macro economic situation and the market saturation with fintechs, but this represent extra bonus upside.

Conclusion

I am not here to take some earnings slides that show 40% growth and be over enthusiastic and tracing a trendline into infinity.

I want to have a more nuanced view. After reviewing the company, I am only able to project that type of growth for 1-2 years due to market and credit saturation hitting soon, default risks, and a potential for a lower interest rate in Brazil.

However, I think that the risks are pretty priced in at low price to book, while the opportunities are completely ignored by the current price: future credit growth, customer expansion, international expansion and continued gain of marketshare versus legacy banks. A double in long term earnings totally possible, followed by lower growth.

At 6.5 times forward, it is a bargain.

Long Inter, Pics

Note: this is not financial advice, but my opinion on the company. Anyone should do their own due diligence to confirm a company thesis presented and form their independent opinion.

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• Pics: NASDAQ

• Price 10.82

• Market cap 1.42 Billion USD.

It has already halved in value since the IPO. The market has been brutal for Brazil, for Fintech, and for Brazil Fintech in the past months.

Now valued at 1.4 billion USD, PICS has 44 million active clients. Just looking at these two metrics, it seems like the deal of a lifetime. Is it really?

History

Pics was founded in 2012 in Vitoria, ES:

I also thought it’s Vitoria, España, but ES means Espirito Santo and it is here on the right above Rio:

Anderson Chamon, who is now also vice president of PicPay, was 31 years old at the time and had many annoyances when making payments on a daily basis. Each place had a different logic: some only accepted cash, others only credit and debit cards , and some even preferred checks (this was twelve years ago!).

The idea behind PicPay was simple: pay for everything with your cell phone just by scanning a code

Anderson (Chamon), que hoje é também vice-presidente do PicPay, tinha 31 anos na época e muitos incômodos na hora de fazer pagamentos no dia a dia. Em cada lugar, era uma lógica diferente: alguns só aceitavam dinheiro, outros só cartão de crédito e débito, e alguns preferiam até cheques (isso já faz doze anos!).

A ideia por trás do PicPay era simples: pagar tudo pelo celular só ao escanear um código

So, PicPay was created in Central Brazil by three entrepreneurs. It was a pioneer in P2P QR code payments, B2B money transfers.

And growth was slow. very slow. “Among the few people who already knew the app, Chamon knew everyone’s name.

Many of the users were customers of a café in Vitória, which was the first establishment in the city to accept PicPay as a form of payment: Café Bamboo.”

In 2017 it became part of J&F Group, after the first investments in 2015. The J&F Group is one of the largest business conglomerates in Brazil, present in many industries such as meatpacking, media, infrastructure, energy, etc.

In 2020 it got a payment institution licence that enabled it to launch credit cards and credit products.

Pix was launched on the same year. Pix is a Brazil based payment system, and it is not related to Picpay or Pics NV the company.

2021: Guiabolso acquisition: the company then ceased to be a standalone offer and the products were integrated into PicPay.

2022: PicPay became a financial institution, giving it more option to offer loans.

2023: BX blue acquisition: another fintech specialised in payroll loans, and integration of Banco Original retail customer base, as it was facing more and more non performing loans, as a move to streamline operations and cut costs.

2025: Kovr acquisition: a digital insurance company.

2026: IPO on the Nasdaq, raising 490 million $.

The revenue and income development has been a large success:

Business overview

So after avoiding Nubank, Inter&Co for years, am I excited or not? We will see in my review below:

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I did a summary of the emerging market online companies, mostly in E-commerce and Fintech.

This did not include Tencent or Baidu in China as I mostly focused on e-commerce and fintech. I included MakeMyTrip in India because we don’t have any other Indian Tech ADR.

In this list I wanted to look at global commerce companies with another lens than the classic price to earnings ratio, which I used in the past to find good bets in the sector. (I point you to my analysis and portfolio reviews).

This list was tailored by me, pre-populated by claude AI, corrected manually for some datapoints and cleaned, before I asked claude AI to generate simple charts instead of doing them myself in sheets (same result but better looks).

I believe that we have to work with AI now and not pretend we do not use it and get along with the times.

If you liked this article please share it. Please note that not all data in the charts will be exact to the last decimal, but good enough to see the big picture. I am not S&P Global. Thank you, and let’s go.

Also the article was prepared before delivery hero is entered into a bidding war and is rising another 10% on Monday.

1-overview of the group of companies and Market cap ranking.

We can clearly see that Jumia in Africa is the smallest while Chinese giants Alibaba and PDD dominate the market cap ranking.

Two Brazilian Fintech, PicPay and Inter&Co, are among the smallest market capitalisations in the ranking. This could highlight an opportunity.

Another point I notice is that the vast majority of these companies are under the 100 billion USD market capitalisation figure, which is quite stunning giving the size of the opportunity, and many are under 50 billions.

2-Companies per revenue

In terms of revenue we can see again the Chinese e-commerce giants being heads and shoulders above the rest.

JD.com is first, but revenue is not the best way to compare JD, Alibaba and PDD. JD operates on a first party business model and sells the merchandise itself, while the others let third party merchants and only take a fee on the sale. GMV would be the best comparative between the three.

We have a group of companies under 10 billion in revenue, and these are companies early in the development cycle.

3-Companies per active users:

(Ecommerce branch for Sea limited).

Again, China is number one. This is truly another scale.

Sea limited (E-commerce branch) comes as second behind China in South East Asia.

Latin American countries are behind, and last are Eastern Europe and Africa.

4-Total Addressable market

Next is the population total addressable and reached:

Note that here for PDD and Alibaba, I put the almost the whole world at 6 Billion people, due to them being offensive with Temu, Aliexpress, and for Alibaba local acquisitions in Turkyie and South East Asia.

We see the scale of China. What shows up is that JD and Sea limited are much closer to their total adressable markets than the others. It’s difficult to see Coupang, but it’s well penetrated too.

This leads us to our next chart: the percentage penetrated: note that kids are not ordering on e-commerce platforms with their own accounts, so 70-80% of the population is probably the ceiling.

Sea limited is at a high percent, but I did not include Brazil here in the definition of TAM. Nevertheless it is very well penetrated in terms of TAM.

Mercado Libre is very under penetrated, which kind of surprised me as it has a large user base and market capitalisation, but Latin America has over 700 million people.

Delivery Hero is small in terms of penetration.

Makemytrip too, and the winner is Jumia, which has penetrated a tiny tiny part of the African population.

Pure fintech like Nu, Picspay and Inter&Co may never reach 80% of the population as people don’t use fintech as much as they use dominant e-commerce websites. They stuck to one or a few online banks.

5-Price to TAM

When looking at the price to TAM or the total addressable market, it tells us how much we pay for the total addressable market. This is more of a ratio to compare companies than a number that can be exploited.

Coupang is the most expensive because Korea and Taiwan are quite small countries, and the value of the market cap is quite high related to this population of 75 millions.

We find that Mercado Libre or Kaspi and Allegro are not cheap on these metrics. The cheapest are the un penetrated African and Indian consumer businesses Jumia and MakeMyTrip.

The brazilian fintech are also cheap here, PicPay and Inter&Co. But pure fintech is not e-commerce and we cannot expect all the companies to reach a 80% penetration. In e-commerce it is more common to have several memberships versus in fintech, but it could happen.

6-Price per active user

The market cap per active user is showing the cheapest stocks per active users.

We can see that Picpay is the cheapest on price per active user, and other Brazil Fintech Inter&Co is also low. This is reflected in the lower monetization of users when a product or service is of lower usage and average revenue per user is lower.

On the other hand, Mercado Libre (price has fallen a bit since then) and Coupang are the most expensive per user. This means that the market is willing to pay a higher price for users who are very active and bringing a lot of revenue.

This leads to our next chart:

7-Revenue per user

Coupang has a lot of revenue per user due to its dominance in South Korea and first party commerce sales too.

Mercado Libre and Kaspi are doing very well here.

Nu is impressive for a fintech.

We have then a group of companies, Jumia, Grab, Inter, PDD, with different business model and low revenue per user.

Makemytrip, at 14$ seems very low, and it’s either an error, or something due to some customers just using it for bus and train tickets, or cheap hotels in a country with a very low GDP per capita.

8-Valuation for price to sales

First party companies like JD, Coupang and Delivery hero are the cheapest.

On the other hand, less proven business models like Grab and Jumia and MakeMyTrip carry a growth potential premium.

Claude reviewed my internal comments and left the following ones on valuation

9-Combining price to sales and low penetration

Here, ideally you want the company at the bottom left corner: low price to sales and low population penetration. But it’s not easy as price to sales could mean a first party retail model.

Delivery hero is a food delivery company and now quick commerce also business that may not be able to penetrate the whole population. Delivery hero is subject to take over rumours from Uber and others at the moment. It was even cheaper when I built my position (see my article from last summer) and last follow up with better understanding of the business.

On the other side, Sea limited is very penetrated in South East Asia, but has buyers in Brazil that are impacting the penetration on the chart.

10-Conclusions and next steps for research.

What companies that I don’t own interest me the most?

What do I want to see in each company ranked attractively to make it a compelling investment?

Plus, I also charted the companies by a subjective “Market dominance ratio” from 1 to 5, versus price to sales. This next part is for premium subscribers only, but I hope that the above free research can already give some hints and tracks to explore for every reader.

This is in the premium section of the article. You will also be able to access analysis of some companies in the list such as Jumia and Allegro.

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Some similar tech and platform companies that were not profitable and supposed to never make money started making profits. Such as Grab and Uber.

I remember when there were debates about Uber path to profitability, and nobody really knew if they were going to be profitable ever.

But they did, and Grab too.

Talking about Uber, they just added to their position in Delivery Hero to become a long term shareholder of Delivery hero a few days ago:

Delivery hero is a leading delivery company, traded in Germany but whose main markets are in Asia. It leads in some markets while is behind in other smaller markets.

Delivery hero is also turning profitable.

I think that all these tech platforms can end up with a decent profitability: more than 10% adjusted net margins.

Therefore, it makes sense that mature tech companies end up with valuations over 1 times sales or even 2 times sales.

This corresponds to 10 times long term earnings power or 20 times earnings (Assuming 10% net margin, no huge debt costs).

Delivery hero? 0.35 times sales.

With the EV, adding the debt: 0.6 times sales.

Is this the best delivery business in the world? No

Will they figure things out? I believe so.

So it’s all about patience. Platform companies eventually figure profitability out.

Sometimes there are price wars, promotions, investment years, but 5, 10 years down the line, they always mature.

In this review, I wanted to see how safe it is to add to my position, and how big is the opportunity, after Delivery Hero posted the 2025 annual results and announced perspectives for 2026.

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We have seen how Chinese companies in various industries took the world by storm.

First we had electric cars with BYD. We had retail with Miniso. We had the Deepseek moment where AI models made in China competed effectively with US models. This is also true with Baidu and Alibaba’s models. We have seen Chinese tech companies like Temu and Shein take over marketshare globally.

There is no doubt that China will dominate the world’s economy more and more.

That isn’t to say that the west does not keep some dominance in key sectors, such as AI with Alphabet or ASML, or fashion and culture, and healthcare with decades of experience. But the world is now multipolar.

Therefore I have increased my interests in China. I don’t want to say that I am an expert in China, not at all, but I do have some experience in deep value investing.

This is how you avoid micro analysing quarters and products, generating noise that blurs the big picture.

A few years ago Alibaba was winning everything, then it was JD, then it was PDD, now PDD is retreating a bit, and every time, Chinese experts told us to buy the hot company of the day and ignore the others.

The results of these calls were not great to say the least, because the hot company was already well valued by the market, or because the hot company was just about to discover the biggest force of capitalism: competition and imitation.

So take a seat and enjoy the 8 following picks:

But first, word from my sponsor, Rebound Capital:

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1.Haier Smart Home (Trading in Germany)

Shares of equipment maker Haier dropped in Hong Kong and the company now trades at 9 times earnings.

This is a growing company with a long term track record in appliances, and a growing focus on HVAC.

The German listing on the XETRA trades at a 18% discount (8 times earnings) and offers a 8% dividend yield.

The last results are not great but ok.

5% basic EPS growth for 2025 is not that great, but Haier has been a long term compounder with M&A, organic growth and local demand and should continue to do so, on top of a good dividend.

2-Miniso Group

Ah, the little retail company that is growing like weeds and building a scale moat across the world. Its ability to collaborate with IP owners like Disney or Kuromi and roll out items worldwide is unmatched. It has strong China exposure at 54% of sales in Q4.

Let’s review the last earnings:

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I always stayed away from Nubank and Inter & Co, due to high interest rates and a consumer credit under more and more pressure in Brazil. I could not get comfortable with that.

I could get comfortable with a much more defensive business model, at cheaper valuations:

Sendas distribuidora is a retailer in Brazil. It is only available on the OTC market and in the Brazilian stock exchange.

Market cap: 13 billion BRL.

This company represents a very interesting set up to invest in a forever defensive asset at low valuations.

But first, a clarification. The company name is Sendas Distribuidora, while the business is called Assai Atacadista. This is a bit confusing. For clarification, I will use the name “Sendas” everywhere in the article.

History

The company was started with one store in Sao Paulo as a wholesaler for retailers in 1974. The name Assai comes from the Japanese Asahi · Rising sun.

Fast forward to 2007, where the company has only 15 stores. GPA took control of 60% of Sendas. GPA was itself controlled by the French Casino group, a company that was a major french retailer and is now insolvent.

GPA allowed for growth and entry into the consumer retail segment.

• 2008 - 28 stores

• 2010 - 57 stores

• 2011 -58 stores and fully owned by GPA

• 2017 - 127 stores and launch of the Passai card.

• 2017 - 166 stores

• 2021 - 212 stores - Spin off from GPA, and the purchase of Extra Hiper stores is announced, which will be converted into Assaí, through a transaction worth R$4.2 billion.

• 2022 - 263 stores

• 2023 - 288 stores

• 2025 - 312 stores, 10 new during the year.

• 2026 - Sale of financial services firm FIC

We can see that there was an acceleration in number of stores post 2021 followed by a slowdown post 2023. This is not an accident.

This is because of high debt and an increase in the Brazilian central bank interest rate and the end of cheap credit.

Here we are in 2026, with 313 stores and a relatively high leverage ratio.

The company managed fast revenue growth since 2019.

Business overview

Sendas owns and exploits 313 stores in Brazil.

It is “a Brazilian wholesale company that serves small and medium-sized businesses and consumers looking for savings, product variety, and good customer service.”

The stores look like the first picture of my article above. Sendas offers low prices by focusing on the large volume model.

They mostly don’t use distributors but deal directly with the food and products producers. The pallets with high ceiling model allows for cheaper storage and low in store labor costs.

58% of sales are B2C and 42% B2B (Food service and resellers). B2B sellers mean that they also move inventory faster compared to a traditional supermarket.

All these points together, the classic cash and carry model, allows for Sendas to offer cheaper prices due to cheaper operating costs.

Most of the stores are in the Sao Paulo and southeast area, with a population of over 50 million people. This is closely matching the GDP and population map of Brazil, with maybe some absence in the Southern and western part of Brazil. There remains room for a lot of expansion.

High leverage: the curse and the opportunity

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Another difficult week in the markets and in geopolitics. Meanwhile, we are still shareholders of businesses.

As a reminder, JD.com is one of the big e-commerce companies in China, with 700 million active customers and a market capitalisation of less than 40 billion USD!

But first, a word from our sponsor: Rebound Capital.

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Just last year, they identified ASML (up 58%), Google (up 40%), and AMD (up 61%) as ideal rebound prospects.

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Back to JD.com:

Since I wrote up JD.com in summer, the Chinese e-commerce Giant has accelerated the food delivery war in China and has increased losses.

The JD core business keeps executing as normal.

Q4 profits were null, as the new business (food delivery) caused major losses, compensating all the earnings from the rest of the business.

The food delivery business has losses equaling revenue, because of cost of revenues matching or exceeding revenue (selling items at a loss), combined with operating expenses equals to revenues.

New business

Contrary to what the management says, new business losses are not really narrowing, they decreased in Q4 but not compared to Q2.

While the management talks about loss reduction from the last quarter, it is an exageration as shown in the chart above. The reduction is insignificant.

The government stepped in in January 2026 to reduce unfair competition towards restaurants and shops: https://www.chinadaily.com.cn/a/202601/09/WS6960d0e7a310d6866eb32f68.html

The company says that food delivery investments will reduce next year.

Delivery will continue to prioritize healthy volume growth while improving its unit economics at a greater level. We expect investment efficiency in food delivery to improve further this year compared to 2025 levels.

JD communicated the 2026 targets for food delivery:

As we enter 2026, our priority for food delivery remains to drive healthy order volume while deepening synergies with our core retail business. We believe investment in food delivery has peaked in 2025 and will trend downward this year if market competition trends towards becoming more rational

Seriously? They have no idea if investment has peaked. I take a wait and see approach to 2026.

Looking at this year, 2026, we'll continue to strengthen our capabilities and onboard more quality merchants and products and enhance user experience. At the same time, we'll begin generating revenue through offering merchant services, achieving an orderly and rational monetization.

It remains to be proven. Over the long term, I am optimistic that this business will at least not lose money.

Active customers:

The yearly active customers grew a lot but it did not show much positive effect on JD retail:

Our totally active customers grew by 30% year-over-year in Q4, capping a year where we exceeded 700 million annual active customers.

While the management talks about increased active users and synergies from the food delivery business to the main retail business, we see no sales impact on the main business.

The active customer growth is surely from food delivery, and could include many duplicates.

Main business: (JD Retail)

The main business is doing fine, but not showing a huge growth on par with a 30% growth in customer base.

The product revenue is down in Electronics and home appliances are down due to large public subsidies last year. Logistics and service, and general merchandise are well up.

Marketplace and marketing revenues are also well up. The flywheel continues well in the main business.

Q4 sales and operating income showed no improvement from last year and are worsening sequentially.

It is likely a seasonal issue with JD that is also validated in 2022 and 2023: The Q4 operating margins are lower. This is due to intensive retail competition and subsidies, hiring of temporary fulfilment staff, and larger mix of electronics.

Joybuy:

JD has launched Joybuy in Europe in March. This is an ambitious business.

Joybuy is JD’s push into Europe with 1-2 days delivery and local stock. This is the answer to Aliexpress and Temu.

This is done with integrated logistics within Europe and with good synergies since JD bought in 2025 the European retailer Mediamarkt.

Joybuy has received a very positive user feedback, especially on the performance side. Logistics experience will be a key differentiator for Joybuy. We are building our own delivery network in Europe, and JoyExpress has been launched recently. It provides same and next day delivery in major cities across the U.K., Germany, France and the Netherlands, along with services such as door-to-door delivery. We welcome all analysts and investors to try out our services.

We will see what happens. Capturing new large markets in Western Europe will take time and not be cheap, but JD is a very patient player.

Conclusion:

I remain invested in JD. This is cheap and has a lot of cash and cash Equivalents (EV of 26 Billion USD versus market cap of 37 Billion USD), as well as a dividend and buyback program (6.3% repurchased in 2025).

But I do not like the continued heavy spend in Food delivery. I thought that it would be over after Chinese regulators issued warnings, but I was wrong. The good thing is that JD could decide to stop these losses almost instantly.

Earnings estimates are likely too optimistic and I do not think that JD forward PE of 9.3 is accurate. I expect the company to earn very little money again in 2026, until Alibaba stops the fight.

A catalist would be a further drop in Alibaba stock price and hype on Alibaba AI fading away, causing investors to demand profit growth. Alibaba is the main company causing the food delivery war to stay at elevated levels.

The good news is that the food delivery war is not helping Alibaba.

Alibaba is reporting revenues in their quarterly deck first page, cautiously avoiding to mention profits.

However, despite hiding it, non gap net income is down 67%:

Investors have noticed and the price is down in 2026.

A further crash in Alibaba shares would help rationalising this market.

Some key things for companies like JD and Amazon. They share profits with customers, and even in the mature phase, keeping margins quite low. They grow businesses with extreme patience and are ready to lose money on new businesses for years. This is also the case with JD.

But one thing that is important to the thesis is also the catchup in China GDP per capita versus the rest of the world:

This is also core to my emerging markets thesis that I roll out over the years. GDP per capita growth and increased consumption.

If you want to focus on this long term theme, I recommend reading all the articles and portfolio reviews.

Thanks.

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E-commerce, in Africa, this is the basis of Jumia.

But it’s not as easy as it sounds like. Nothing is easy in Africa.

History

Jumia was not created within the continent. It domiciled in Germany.

It was founded in 2012 as a Ebay and Amazon clone and backed up by Rocket Internet, a company whose purpose was to copy American internet portals into Emerging markets. It was also backed up by Pernod Ricard Deutschland. Don’t ask me why. I find that funny. They still own shares as of the latest annual report!

The company was co-founded by two French former McKinsey consultants, Sacha Poignonnec and Jeremy Hodara, who worked closely with the German team at Rocket Internet. While they collaborated with African co-founders (Tunde Kehinde and Raphael Afaedor) to launch operations in Lagos, the corporate structure remained European.

For this reason, Jumia was built with outside capital, with offices in Germany, Portugal and Dubai, and has no real Africanity.

This is well hidden from their website, the website has no history section at all.

It grew with capital until the IPO.

In 2020, Rocket internet exited.

What happened with Jumia is a tale of investing in emerging markets, especially in Africa.

It launched a business that was ambitious in a region that was not ready for it, in terms of market size and affordability. Not to mention the difficulties of logistics and road traffic in Africa.

Since the IPO, another effect took place, the rise of the US dollar and the fall of emerging market currencies caused by the US dollar bubble of 2020-2025.

This caused real sales to stagnate or even go down, worsened by the COVID crisis that damaged the continent’s economy.

The IPO was at the right timing to exit, or at the wrong timing to enter.

Because of these macro factors, Jumia saw no revenue growth since 2020. This is really terrible.

From 2022, we can see that losses have reduced, notably from exiting loss making segments. I see a good proof of recent good execution and discipline. I stayed away from Jumia all this time, as I expressed my bearish stance a few times.

Where is Jumia today? is this going to be the Amazon of Africa? Is it an opportunity now, or down the line? This is what I am trying to uncover in this article.

This article is for premium members only.

We uncover Business overview, strategy, management and shareholding, market and risks, a quick valuation and my conclusion.

Subscribing gives you access to all the past write ups, the emerging market names as well as non US/ non Swedish serial acquirer universe.

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While markets, and arguably the world, are in turmoil due to the war on Iran and Lebanon, there are opportunities in long term compounders and quality companies in various areas of the world.

I don’t know what is going to happen with Iran. I just know that good companies will make more profits in 3 and 5 years.

Long term growth and quality is undervalued by the market. The ability to grow 10-15% or more each year while returning capital via dividends does not make for 6 months 100% returns, but for a double in some 5-7 years depending on valuation, then again, and again. If you buy these at low valuations, the maths are even better.

Actually, I believe that quality growth companies are cheaper than deep value names for the first time since 2007, and that it is now a great opportunity to build into these positions. I am not the only one thinking this, many quality oriented writers call these opportunities as historic, and I have moved my portfolio more towards quality and compounders in early 2026 and 2025.

In this article we will focus on Latin America, based around my current portfolio, and why I am cautious on popular Fintech from Latin America.

7-Ecopetrol (NYSE)

The Colombian oil and infrastructure company has been on a tear year to date, pushed by the rise in oil prices.

I believe that it is now close to fairly valued, with a dividend in the 7% range, but with potential for more. The earnings estimates have not been updated yet with higher oil prices, and it’s unclear what will the prices do over the course of 2026. It remains a solid company to get exposure to oil prices, just like Petrobras.

6-Auna SA (NYSE)

The Latin American hospital operator is struggling with the Mexico operation.

Hospitals are capital heavy and not my favorite businesses. However Auna trades at 6 times estimated next year earnings, but with high leverage (3.1 times Ebitda).

As the company deleveraging cycle concludes, it should produce a lot of FCF relative to market cap. However, I can see that the leverage does not go down in 2025, and the company did not generate real earnings, with large financial costs.

The company posts an adjusted net income, but it does not seem accurate to me with all the extraordinary adjustments and no reduction in leverage.

I would recommend much more DD before going into this. I have not analysed this company, and it is currently a pass for me, and I do not know if the estimates are outdated or current in line of the latests issues in Mexico. Check Ian’s insider corner for coverage on this company and generally of Latin America

5-Coca Cola Femsa (NYSE)

It does not get more quality and safe than Coca Cola. This one is a bottler for Mexico, Central America and Brazil at 13 times forward earnings.

With EPS growth in the 10 to 20% range in the next few years, pushed by good execution and strength in currencies, this is a sleeper compounder.

In the same business but more Chile and Argentina focused, we have Embotelladora Andina S.A at 13 times forward earnings, but with lower growth growing forward.

I do prefer the Coca Cola bottlers to the alcoholic beverage companies who are struggling with higher costs and pricing already elevated. They have outperformed since 2020, and are more expensive than the Coca Cola bottlers,

4-Mercado Libre.

Mercado Libre was quite overpriced in recent times but as the company stock price was nearly halved from the highs, it now trades at 30 times forward earnings but more interestingly 2.4 times sales.

This is cheap for a leader in the region that drove these kind of numbers.

At 87 Billion dollars, it isn’t small market capitalisation anymore and I prefer some other companies, but it is fair valued to undervalued if they can do these numbers for a set of years.

They reported lower net income and margins due to heavy investments in growth, which spooked the market. I would expect a good company to invest heavily for the future, especially in emerging markets.

I did not conduct a deep dive on Meli.

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Market: Poland

Price: 28.6 PLN

Market cap: 8 Billions USD

History

The Allegro group has a long commerce history in Poland. It was started in 1999, which is a very long time ago for an e-commerce website. Since then it followed a classical product expansion in e-commerce.

The corporate structure is a bit unusual, since in 2017 it was acquired by private equity firms Cinven and Permira, and later was IPO’ed on the Warsaw stock exchange in 2020. Cinven and Permira retain a stake.

It went public in 2020, at a lofty valuation. What happened after is a classic tale. Hype, then despair, as a very overvalued stock went public. Since then, investors have marked Allegro down according to earnings and perspectives. There is no more hype. This is where we enter. But back to Allegro History, with a big blunder.

The failed international expansion:

In 2022 it acquired the loss making e-commerce Mall Group, with operations in central Europe. The price paid was 4 billion PLN or 880 million Euros, only for Allegro to take a huge write down a few months later - 2,3 billion PLN. At the time, the idea was to expand TAM, Total addressable market, from 38 million to about 70 million people. It made sense.

They paid 1.0 times LTM GMV and ~7.2 times LTM Gross Profit.

Mall group was break even, and operating under a first party model. I did not like the acquisition at the time due to a high price. It was a disaster.

In 2023 and 2024, Mall losses increased. So much that Allegro is now actively closing Mall group websites and opening Allegro websites in these countries.

The following excerpt explains what happens:

In 2025 Allegro sold the Slovenian and Croatian business. Now, it is closing down the Mall first party businesses and restarting Allegro.cz /.hu / .sk from scratch.

Despite this, the Polish business carries the group forward with EBITDA and net earnings growth:

Here is a summary of the history from the investors presentation.

Business overview

1.Poland

Allegro is a mostly third party or 3p marketplace e-commerce website in Poland that has an estimated 38.8% to 50% share of the total market in Poland.

It is the number one shopping destination, and has over 80 million products with selection being a key feature for buyers.

It has added 600,000 active buyers in Q3, exceeding 15.2 million in November 2025.

The Polish population is estimated to be around 38-40 million people including foreigners, and this shows the scale within the country.

It manages to get deliveries using mostly third party delivery companies within 1 to 2 days. It does not seem very fast, but it seems fast enough for Polish customers.

• First Party business: Less than one percent of GMV

• Third Party business: 99% of GMV. For this part of the business, sellers can offer direct shipping but Allegro has a fulfilment model similar to Amazon FBA: One Fulfilment. It operates warehouses in Poland.

91% of items are delivered within two days.

The marketplace has a “loyalty program” similar to prime, called Smart.

Smart has 7 million members, and it is like Amazon prime. It has third party benefits (Cinemas, Busses, 3 months Disney+, etc).

As you can see anyway, the Allegro business is similar to Amazon except that the logistic is mostly handled by third parties. A high population density and small country size makes that the delivery time is still acceptable even with third parties.

In terms of recent results, GMV is up 10% in Q3 2025 and EBITDA 24%, notably pushed by advertising at 32% year on year growth.

The total GMV in 2024 was 15 billion USD out of a potential of 350 billion USD of retail sales in the region, leaving room for growth.

Competition:

In terms of Competition, Amazon launched in Poland in 2021 only.

Amazon ramped up investments with 8 Billion PLN capex in 2024, and has 11 fullfilment centres. It has 6.45 million users and decreasing, maybe from Temu’s pressure.

Temu has now 20 million users, more than Allegro, but you know how we use Temu in Europe (or Aliexpress), a few gadgets here and there due to distance and quality issues.

It seems to me that Allegro already has convenience and items, but could be beaten on delivery speed if Amazon ramps up the logistics. But Allegro understands this and is working on Logistics with it’s own delivery lockers, along with Partners.

2.International business: The mess

We already covered the blunder that is the international expansion and the related losses.

Nevertheless, let’s explore the prospects for this segment.

Allegro bought Mall North in 2022, only to discontinue it partially (the first party sales at least) in 2025. The active buyers have decreased for the Mall segment and are being replaced by Allegro Marketplace. Mall North will close in Q2 2026.

We can clearly see in the chart above that Allegro is replacing Mall North legacy operations with international marketplaces.

International marketplaces are third party items fueled. They cost less to operate than first party business Mall websites, and they also allow for these Central European buyers to buy items from Allegro Poland sellers, creating a virtuous circle.

The transformation: integrate for synergies, replace Mall and CZC websites to include them as merchants on Allegro.

Adjusted EBITDA for international operations is PLN -356.1m in 9M 2025, a 12% lower loss than the previous year.

I think that with 4.2 million active users on the new “Allegro” marketplaces, for a region of 15 million people, that new new marketplaces have reached sufficient scale to operate with good profit within two years.

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The region is set to create huge value for investors with GDP growth amongst the highest in the world, coming from very low starting points.

6-Jardine Matheson

Jardine Matheson is a global holding company with assets in Chinese real estate, Indonesian Automotive, Energy, Finance, Retail, Hotels and many semi defensive businesses. The stock went up a lot since my entry last year after a change of CEO, buybacks, and momentum.

Everyone was saying that the stock is dead but this is deep value. Momentum now pushes the stock. It is a long term holding company in Asia with a Berkshire Hathaway type business goals, but not everyone is Berkshire, it has less quality in businesses.

The capital allocation is rational, with many buybacks at the subsidiaries level (it owns listed subsidiaries) and at the holding level.

At 13.8 times forward earnings, I rank this at a hold at best.

5-Jardine Cycle and Carriage

The Indonesian - mostly automotive subsidiary of Jardine Matheson trades at 10.6 forward PE. While more cyclical in a way, it is exposed to only the Indonesian and Vietnamese business.

I think it is more attractive in the long term as it is exposed to a pure Indonesian and Vietnamese growing economies, not having the slow growth Real estate exposure of the parent.

I would not be surprised if it is taken private at a premium by Jardine Matheson.

4-Grab Holdings

The Uber like company of South East Asia has a market capitalisation of 17 billion USD.

It trades at a forward EV/Sales of 3.3 and P/E of 49. Not a bargain.

Grab posted 19% revenue growth and 21% GMV growth in Q4.

One concern is that Shopee is implementing Shopee food and becomes the leading super App of the region.

With a target of 2028 “Adjusted Ebitda” of 1.5 Billion on a 17 Billion market capitalisation, Grab is a decent value proposition for the long term.

That said, I am not an expert on the name, and if you are interested look for coverage by Gabgrowth.

3-Thai Beverage

This is a company that I sold in order to be more growth oriented in my portfolio, but it remains defensive and cheap.

Thai Beverage is a drinks and also food conglomerate whose majority of profit comes from hard liquor, with beer, non alcoholic and also food businesses. It is expanding to the whole of South East Asia.

At 10.6 forward PE it is cheap for a beverage business with defensive characteristics, especially that in Q1 26, it showed good growth in Spirits and beer, something rare in the world, but affected by other beverages decrease.

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This is not a sponsored article, no funds were exchanged. Rather I view it as a win-win. Quipus Capital can gain subscribers and we gain knowledge on the subject.

Quipus Capital

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1-Hello, you are from Argentina, can you present yourself?

Hi Olivier! Thanks for having me.

My name is Tomás (Tommy for simplicity), indeed I’m from Argentina, and I write Quipus Capital (which originally was entirely inspired by Emerging Value, so thank you for that).

I’m 29 and I have always been a bookworm obsessed with economics, industry, culture, history, and languages. My motto is ‘Homo sum, humani nihil a me alienum puto’, or ‘I’m a man, nothing human is alien to me’. While finishing school around five years ago I found that finance and investing were fields almost tailored to these passions, and I jumped right in.

After some time I discovered the tenets of value investing and I knew right away that it fitted my intellectual makeup. Since then, I have been doing fundamental research, first at Seeking Alpha, and for the last two years in Quipus Capital, where I focus on materials, industrials, cyclicals, and emerging markets.

2-You have written extensively about Brazil industries on your substack, why is that? Can you present the series?

Indeed! I have written several extensive primers and deep dives on Brazilian banks, financials, payments, brokers, meatpackers, and education, along with long-form macro analysis, including an Intro to Brazilian Equities, a Macro Review, and a Monetary Review.

Apart from this, I have covered other LatAm countries like Chile, Argentina, and Mexico, and cyclical industries like chemicals, lithium, and salmon.

The reason behind my Brazilian fever is simply value. When I started Quipus, Brazil was considered uninvestable, along with most countries in LatAm, and most industries in commodities and cyclicals. Because of this general despair, I found leading global companies, and well run operations, trading at MSD digits. Because of certain historical factors, Brazil’s return on equity is relatively high, and companies need to allocate capital fairly efficiently, while paying returns to shareholders. This was all hidden under existential dread about the leftist government running the country.

Brazil, LatAm and commodities have been a barrel full of fish, to use Munger’s analogy.

3-I have notably avoided the Brazilian fintech space despite low valuations, Nu bank and especially Inter and Co. How are they affected by the possible decrease in Central bank interest rate?

Brazil is one of the pioneer global markets in fintech. One of the reasons is that it previously had a virtual oligopoly among five huge banks (Itau, Banco do Brasil, Caixa, Bradesco and Santander). These banks made (and still make) a lot of money with captive affluent-class populations and outdated services, so aggressive new players like Nu, Inter, Pagseguro, or Stone, were able to grow a lot, particularly among underserved groups like small merchants, young people in the informal economy, etc.

Today, that blue ocean is a little more crowded, and the incumbent banks have upped their game in terms of digital service. In order to grow, I think the fintechs are now becoming more aggressive in their lending standards, at a time when the credit cycle in Brazil seems to be worsening, with growing NPLs.

Regarding interest rate cuts, their effect will depend a lot on the credit cycle. Bank spreads do not move much with moves in interest rates, because Brazilians are used to using time deposits and other remunerated forms of banking. However, if rates decrease because the economy is cooling, and credit is tightening, then some of these banks may face higher delinquencies. If, on the contrary, the lower rates help the economy accelerate a little, then banks will continue growing credit, potentially even more aggressively.

4-Brazil new fintechs seem to push very high credit loans and a lot of credit volume. Is the customer really struggling to need to use that much costly credit? Would an economic boom reduce the need for these sorts of payday loans?

Credit has historically been extremely costly in Brazil, for almost everyone, except some specific groups that receive subsidized lending (agriculture, some SMEs and corporations, mortgages). Consumer credit (credit cards, payroll loans, vehicle financing) is expensive for everyone, even people with good credit.

What the new fintech players added were products for underserved groups and subprime borrowers, and a full concentration on consumer credit. They even created a category, which cannot be called loans, but rather micro-loans. These micro-loans help delay expenses by a few days, at a cost that seems low on a transaction basis but that adds up. If you divide Nu’s loan and credit card book by its Brazilian customers, the average is less than R$1,500 (<$300), and a big part is due within 30 days. If you buy R$100 in a supermarket, and delay the payment by 15 days, even if I charge you 70% a year, you will only see the price increase by R$2. The customer probably has the money to pay cash, but the interest is well hidden in the micro-transactions, to make it seem like it’s a smart way to keep money in your pocket while doing purchases. It is a little predatory on financial illiteracy.

5-Would high competition not reduce interest rate and margins? Brazil has a lot of fintech investment. My best ever finance investment was in Ireland where major banks pulled out, reducing competition. Should we favor countries with duopolies?

I think competition will eventually pressure on margins, but so far, the demand for these financial products is very resilient, probably because it is a whole new category of lending. Where I see more volatility across the cycle is in the willingness to extend credit. If NPLs grow rapidly, a lot of these fintechs may have to add write-downs at the same time as their growth stalls because they need to be more conservative on lending.

Banking is a commodity industry, in a way, so I totally agree that, ceteris paribus, less competition is always better. The combination of high growth and banking has tended to be risky, also.

6-StoneCo and Pagseguro are being left for dead and very cheap. However I have never looked much at them, because they do not seem to have a strong competitive position versus Nu and Inter. Do you see value there or risks?

StoneCo and Pagseguro have a fantastic, extremely low risk business, which is payments. The business is great because it also has a high-cost micro-transaction. When the merchant receives a credit card payment he can pay a small fee to receive the payment instantly, which carries a large interest rate. This high-cost loan is hard to discern for small merchants. The component that makes the business even better than Nu’s or Inter is that this micro-loan is virtually risk-free for Pagseguro or Stone, because it is guaranteed by the issuer bank and the card network.

Unfortunately, payments is fairly mature and not growing. In particular, the micro-transaction model only works with small vendors. An SME with a financial or accounting analyst will rapidly notice the amount paid on those pre-payments and either ask for a rebate or manage its working capital more efficiently.

So far, there has not been aggressive competition on pricing (reducing the hidden rate), but that may ensue. That is the biggest risk. Another developing risk is that in order to keep selling growth, these companies are entering other forms of unsecured lending, like working capital, payrolls, credit cards. This adds credit risk, and these companies have little experience managing that.

Are they value today? Less so than a year ago. They are not particularly pricey, but not left for dead anymore either.

7-Do you see value in the traditional banks in Brazil?

In general, yes. I do not buy the fintech competition argument. I think it would be harder for a Nu or Inter to replicate their current economics if they moved to mortgages, auto lending, investment products, insurance, SME and corporation credit, investment banking, etc. The traditional banks in Brazil are massive operations spanning the whole financial stack, and yet they historically earn a good return on equity.

However, I have not really done the work on these banks to be convinced with a buy and hold strategy. I tend to be a little more cyclical. They can go out of fashion domestically because of bad credit cycles, and they can go out of fashion internationally because their balance sheets are full of BRL and sometimes that depreciates in foreign currency. Therefore, they periodically present opportunities to buy at sometimes mid-teens or higher earnings yields, or below book value, at times of bad credit and currency depreciation, which begets good credit and currency appreciation.

8-Do you invest in Argentinian stocks? What areas of the markets do you like?

I invested in Argentinian assets, mainly energy stocks, and government bonds, plus some small incursion in banks, from around 2021/22 to early 2024. In energy I found quality names, like Vista, or TGS (quality for a frontier market commodity company, I should clarify, haha). In bonds, I found a cyclical trade. Argentina is the mother of cyclical markets, going from absolute despair to buoyant euphoria, from Dhaka prices to Zurich prices, in a span of four years, like clockwork.

Following that logic, I sold at the beginnings of the Milei government, and started shorting at the end of his first year of government, covering at the deeps of despair following the recent election. I currently don’t own any Argentinian name, and I am short GGAL via being long puts.

For long-term holders, or for people interested in doing work for when things get hairy again, energy is the best sector, in my opinion. Argentina has natural advantages, and the whole political spectrum is fairly constructive with the sector. Of course, energy adds cyclicality on top of cyclicality, so things can get very pricey or very cheap very fast.

Banks, by being huge bags of Argentinian pesos, are probably the best way to speculate on the appreciation/depreciation cycle on which the country has been living since the times when the Pampas were full of feral cows and my forebears first set foot in this beautiful garden (I’m not kidding).

9-Is there a wide argentinian stock market with small caps?

No, the Argentinian market has less than 100 stocks, in total. Most of the large companies are ADRs. The rest cannot be accessed easily through traditional foreign brokers. I haven’t done much work in Argentinian small-caps.

10-How is local life changing with the Milei economic policies?

I don’t see many structural changes, for good or worse.

I guess deep cultural/behavioural changes, like becoming more entrepreneurial as a society, would take more than two years. We have, I believe, become a little less concerned with politics.

In economic terms, there has been really little investment anywhere outside of O&G and mining. Even the traditional agricultural sector is down thanks to appreciated FX (see BIOX for an example).

Most people are not booming, nor are they struggling, with the balance probably tilted towards lower real income today than a few years ago. At the same time, it is very sad to see a lot of people that fell from the system, with all Buenos Aires streets full of beggars of all kinds. That was not a usual sight in Argentina, even though it is common in other corners of Latin America.

On a longer term basis, I am concerned that this mild stagnation happens during a relatively positive economic, financial and FX context, that tends to be short-lived in Argentina. Last year alone, the ‘incredible’ Milei model was about to blow up. It is after the blow up that the true scary sightings emerge in Argentina, and I am worried that we might head there, especially because the governments did not learn last year’s lesson and keeps applying the same FX appreciation + debt plan.

Thanks for the answers Tomás. For more details, be sure to subscribe to Quipus Capital.

Quipus Capital

Global investment knowledge repository

In other news, I was contacted to exchange recommendations by Nikola Vuković. His newsletter is about investing and building in sports, so I don’t feel that it is adequate for a cross recommendation. Nevertheless, I think that the topic is unique and interesting so I give his newsletter, which has less than 1000 subscribers, a shout out:

“Sport has become an investable asset class and a hot new area for investors, for better or worse. The sports investment landscape is maturing rapidly, spanning leagues, teams, media rights, real estate, and stadium infrastructure. As a former private equity investor and a lifelong sports fan, I bring those two worlds together.”

Nikola Vuković's Newsletter

Writing about investing and building in sports.

By Nikola Vuković, CFA

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7-Allegro (Poland)

The Polish Ecommerce company trades at 14 times future earnings.

It is a market leader, beating Amazon and Shopee in Poland, and now developing the fintech business from a low base of clients. Allegro also has currently loss making operations in Hugary, Slovakia, and Czechia. This is not a huge market but with around 60 million people, it presents sufficient size to justify a much higher valuation.

Indeed, the company started buybacks in 2025.

6-Tencent Holdings (HK)

The Chinese super app ecosystem with huge moat trades at 16.5 times forward earnings.

Tencent Dominates messaging, advertising, gaming and is also strong in cloud. I believe that it belongs firmly in a Quality list.

5-Miniso (China/HK)

The retail company is growing so fast that it looks too good to be true. And it may be a fad. Or it may be the leading experience commerce company in the world.

See, when convenience commerce moved largely online, a void was left. E-commerce could not deliver the fun discovery and touching experience of real commerce.

At 12 times forward profits, Miniso is the leader in this new consumption method.

The only question is the durability of the model. Will customers desert experience shopping in the future? Is this a fad?

4-Sanlam (South Africa)

The South African economy is not growing, is badly managed, ok, I get it. Is it going to collapse? I don’t think so. It is already functioning without the state for a large part (energy, security).

But Sanlam has also exposure to the whole of Africa and to India with foreign subsidiaries.

Most countries in Africa have a 1 to 3% insurance penetration rate.

Buying exposure to this with the continent leader at 10 times earnings with top notch South African management? Sounds like a good deal to me.

3-Patria Investments (NASDAQ)

The other Brazilian Nasdaq Listed asset manager trades at 10 times forward earnings and just posted 17% growth in fee related earnings.

It has a 4% dividend yield.

There was a recent short thesis on Patria based on the fact that their main private equity fund is using very aggressive mark to market valuations and could have problems realising exits. I kind of agree and private equity makes 27% of the portfolio.

However, the Brazilian interest rate is very high currently, and it should reduce in the future because it does not really make sense economically to have these high rates. With a very high rate it impacts leveraged companies disproportionately with higher interest payments, but I don’t view this economic situation as durable.

It concluded 3 acquisitions since the end of 2025.

It is not higher in the list due to the recent short case. I remain optimistic on the long term prospects of asset management in latin America.

2-Vinci compass investments (NASDAQ)

The Brazilian but Nasdaq listed asset manager is expected to go earnings fast in the next few years, trades at 12.7 times forward earnings and pays a 4.8% dividend.

In the last quarter, adjusted earnings per share are up 7%, quite low on a per share count, but the growth is expected to accelerate in 2026.

Vinci continued the acquisitions at rapid pace, just like Patria.

The company targets a 26% CAGR fee related earnings with 10 points of margin improvements, however it depends also on the number of shares they could sell for acquisitions.

1-Sendas Distribuidora (Brazil - bought on the NYSE)

Hypermarkets, Brazil.

The Brazilian company is the cash and carry leader and trades at 15 times forward earnings. On top of that, earnings are expected to nearly double in the next two years as they are recovering from a high interest rate, high debt situation in Brazil. This would put the multiple to 8 times earnings.

Note that the ranking is tentative since it is hard to know in advance which companies perform better.

Others, with developed markets included:

PayPal (Nasdaq): The financial metrics are these of a quality company, but they are guiding for negative profit growth in 2026. I think that it is due to mismanagement and a bad choice of new CEO rather than business troubles, but for now, it is not in the quality list due to terrible management and board of directors, and I will focus more on geography based discounts than US companies.

My last super app company ($) mentioned last week at a value multiple was historically a quality company, but it’s more of a tech transformation than a regular quality company now.

Ambra, from Poland, is a wine company with quality like metrics, but hitting a downturn. At 8 times earnings, it is interesting. The management needs a bit more ambition thought.

Eurofins Scientific, From France. 17 times earnings and growing for a scientific testing company.

I also recently gained exposure to two of the world highest quality companies at discounts thanks to holding company structures: see the post below:

Outside of quality,

I have been looking hard for some super deep value (3-4 times earnings) but I don’t find much of this lately.

Often the ideas that I see are miners at the top-of-the-cycle or small cap energy companies, assets and profits with short life expectancy. I am not interested in companies that have one good puff followed by a crash. The market has been pushing too many of these lately.

I found at least one good case last year, a South African company, and I have a few in the portfolio. Nothing new. I keep searching and adding, but in the mean time, I continue to focus on quality and growth if I do not find much in deep value land.

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