Core Thesis - DLocal Limited is viewed positively due to its strong positioning in the payments infrastructure sector for emerging markets, with a current share price of $14.52 and P/E ratios of 25.93 (trailing) and 17.27 (forward) [1][2] Company Overview - DLocal operates a mission-critical payments platform that allows global merchants to transact seamlessly with consumers across over 40 countries, simplifying payment systems and regulatory complexities [2] - The company's "One dLocal" model creates a competitive advantage based on local expertise rather than solely on technology [2] Financial Performance - DLocal has a capital-light and highly profitable business model, achieving a 21.4% EBIT margin on $863.5 million in revenue [3] - The company is monitoring client concentration, with a shift in merchant composition as new enterprise clients are added [3] Valuation Analysis - A 10-year DCF analysis estimates an intrinsic value of $22.49 per share, indicating a 40.5% margin of safety compared to the current price of $13.38 [4] - The model anticipates a 21% revenue CAGR over the next decade, with growth expected to moderate from 37% in FY2025 to 6.5% by Year 10, and EBIT margins stabilizing between 19% and 21% [4] Assumptions and Valuation Metrics - Conservative assumptions include a 20% normalized tax rate, a 1.5% capex-to-revenue ratio, and a WACC of 9.73% [5] - The enterprise value is approximately $6.1 billion, with an equity value of around $6.6 billion, providing a solid valuation base not reliant on aggressive growth [5] Market Outlook - In a bear scenario, the share price is projected at $16.4, indicating limited downside, while the bull case suggests a price of $29.5, presenting significant upside potential [6] - The current market pricing implies a perpetual decline in free cash flow, which is considered an unrealistic assumption for a high-return platform in expanding digital economies [6] Historical Context - The stock has appreciated about 49.07% since a previous bullish thesis in March 2025, which highlighted DLocal's strong positioning in emerging-market payments [7] - The current analysis aligns with previous positive views, emphasizing a detailed DCF-based valuation approach and margin of safety [7]