We got here throughout a bullish thesis on Joint Inventory Firm Kaspi.kz (KSPI) on Substack by Simple Dealer. On this article, we’ll summarize the bulls’ thesis on KSPI. Joint Inventory Firm Kaspi.kz (KSPI)’s share was buying and selling at $94.54 as of April 2nd. KSPI’s trailing P/E was 8.82 based on Yahoo Finance.
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Folks utilizing the Money App paying for items and companies, highlighting the impression the of the corporate’s fee instruments.
Kaspi.kz has emerged as Kazakhstan’s dominant fintech powerhouse, integrating digital funds, e-commerce, and monetary companies right into a single tremendous app. With $5.3 billion in income in 2024—rising 28% year-over-year—and a web margin of 42%, the corporate stays extremely worthwhile and undervalued at a $20 billion market cap. Kaspi’s dual-platform mannequin, consisting of the Kaspi.kz Tremendous App for customers and the Kaspi Pay Tremendous App for retailers, creates a seamless monetary ecosystem embedded into Kazakhstan’s each day financial exercise. Its funds phase processes billions in transactions, its market is the fastest-growing income driver, and its fintech arm leads client lending, making it an indispensable a part of the nation’s monetary infrastructure.
Kaspi’s journey started when Vyacheslav Kim transitioned his electronics retail enterprise into banking with the acquisition of Kaspiskiy Financial institution in 2002. The corporate’s transformation accelerated below CEO Mikhail Lomtadze, introduced in by Baring Vostok in 2007. Kaspi shifted from conventional banking to a tech-driven platform, launching digital funds in 2012, an e-commerce market in 2014, and a cell tremendous app in 2017. This evolution fueled fast growth, resulting in its London IPO in 2020 and subsequent Nasdaq itemizing in 2024, growing its visibility amongst world buyers.
Financially, Kaspi continues to ship excellent efficiency. In 2024, it processed $166 billion in transactions—seven occasions its 2019 quantity—and returned $750 million to shareholders via dividends, demonstrating robust money circulate technology. With working prices under 10% of income, Kaspi operates way more effectively than world fintech friends. Whereas dominating the Kazakhstani market, the corporate is actively increasing into new territories. Its deliberate acquisition of Uzbekistan’s Humo, a state-backed fee system with 10 million customers, indicators its intent to duplicate success past Kazakhstan. The latest buy of Turkey’s Hepsiburada positions Kaspi in a $172 billion retail market, 4 occasions bigger than Kazakhstan’s. Partnerships with Alipay+ and potential multi-language assist additional improve cross-border growth potential.
Nevertheless, Kaspi faces challenges. In September 2024, short-seller Culper Analysis accused the corporate of deceptive buyers about its Russian ties, triggering a 20% inventory drop. Though Kazakhstan’s regulator dismissed the claims, geopolitical uncertainty lingers. Market saturation is one other concern, with rising mortgage charges and competitors from native rivals like ForteBank. Moreover, Kazakhstan’s economic system stays carefully linked to Russia, introducing macroeconomic dangers. Regardless of these headwinds, Kaspi’s model loyalty, technological edge, and entrenched market place create formidable boundaries to competitors. The corporate’s innovation has earned it two Harvard Enterprise College case research, emphasizing its trust-building efforts after a 2014 financial institution run. Its asset-light mannequin, pushed by a 1,200-person tech crew, allows distinctive money technology with out the burden of bodily banking infrastructure. As the primary Kazakhstani firm to listing on Nasdaq, Kaspi stands as a pioneer within the world fintech house.
A reduced money circulate (DCF) valuation suggests Kaspi is deeply undervalued. With projected 2024 free money circulate (FCF) of $2.05 billion, rising at 20% yearly for 5 years, Kaspi is on observe to generate $5.35 billion in FCF by 2029. Making use of a conservative 3% terminal progress charge and discounting at 12% to account for rising market dangers, Kaspi’s enterprise worth reaches $48 billion. Including its $1.2 billion in money and negligible debt leads to an fairness worth of $49.2 billion, or $246 per share—greater than double its present value of round $100. A peer comparability additional helps this undervaluation. Kaspi trades at simply 8.5x 2024 earnings, considerably decrease than fintech friends like PayPal (18x), MercadoLibre (57x), and Sea Restricted (114x). Adjusting for progress, Kaspi’s PEG ratio is simply 0.34, implying a good worth vary of $215 to $535 per share based mostly on fintech {industry} multiples.
Regardless of its stellar financials, the market reductions Kaspi attributable to geopolitical dangers, liquidity issues following its U.S. itemizing, and its 6% dividend yield, which some understand as a sign of maturity quite than excessive progress. Nevertheless, MercadoLibre as soon as confronted comparable skepticism earlier than its inventory was rerated as execution proved profitable. If Kaspi’s worldwide growth, significantly its Hepsiburada acquisition, good points traction, its valuation hole may slim considerably. Even a modest rerating to 40x FCF—much like MercadoLibre—would indicate an $86 billion valuation, or $430 per share.
Kaspi presents a compelling funding alternative. With robust progress, superior margins, and substantial free money circulate technology, the inventory stays deeply undervalued regardless of its industry-leading place. For buyers keen to look previous short-term geopolitical issues, Kaspi affords the uncommon likelihood to purchase a high-quality, high-growth fintech at a fraction of its intrinsic worth. If sentiment shifts and its growth technique succeeds, the inventory may greater than double, making it one of the crucial engaging funding alternatives within the fintech sector immediately.
Joint Inventory Firm Kaspi.kz (KSPI) is just not on our listing of the 30 Most In style Shares Amongst Hedge Funds. As per our database, 27 hedge fund portfolios held KSPI on the finish of the fourth quarter which was 26 within the earlier quarter. Whereas we acknowledge the danger and potential of KSPI as an funding, our conviction lies within the perception that some AI shares maintain larger promise for delivering larger returns, and doing so inside a shorter timeframe. If you’re searching for an AI inventory that’s extra promising than KSPI however that trades at lower than 5 occasions its earnings, take a look at our report in regards to the most cost-effective AI inventory.
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Disclosure: None. This text was initially printed at Insider Monkey.
