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OCELOT CAPITAL | BUY PAGS | PagSeguro | 200,000 Shares
PagSeguro is a LATAM based financial technology company that offers digital payment solutions, in-person payments and prepaid cards.
Objective: We see high prospects for the digital payments and e-commerce sector in Latin America and PagSeguro is part of that strategic play.
Catalysts: The stock price has fallen in the last month, partially due to the exposure the company had to the Wirecard scandal. Despite these sell-offs, shares are still up 14.5% year to date. On Aug 19, they announced a partnership with TikTok that allows users to check their PagBank balances. Furthermore, they purchased Wirecard's Brazil operations. Financially, their earnings are expected to increase by 77% indicating a bullish future.
Risks: The current PE ratio is 55.4x which is above the industry average of 31.83x. Hence it is trading at a higher relative price than peers. Furthermore, as a growing startup, it is volatile. However, given our investment in MercadoLibre, we can counteract some of the company-specific risk.
PAGS filed for a secondary offering today of 16.75 million shares, which resulted in a drop of over 16%. We believe that this was an overreaction of the market and that this a great opportunity to purchase additional shares at a very low price.
PagSeguro Digital is a Braziliaan e-commerce service for commercial operations. They are one of the only companies of its kind in Brazil as well as all of South America. CNN Money has projected a $1.22 earnings per share as well as a 36.23% annual growth rate.