Hey folks! I just finished my submission for VIC, but they will be reviewing my research for a few weeks so i think it won't heart to post it here as well:
- Basic description
- Kaspi (KSPI) is Kazakhstan’s largest fintech + retail super-app. Over 20 years it evolved from a bank into a marketplace/financial ecosystem (Payments, Marketplace, Lending). Founders/insiders (Kim & Mikhail) hold ~44%. Primary operations are Kazakhstan-centric with nascent expansion abroad
- Valuation & profitability snapshot: *P/E 6.8; P/B 3.6; EV/EBITDA ~6x. EBITDA margin ~37%, NI margin ~29%, ROE ~68%, WACC(current): 13.4%. Management guides NI +20% (Q2 results, achieved guidance despite macro hurdles)
- Background
- Regional shocks (Ukraine war) and capital flight, combined with a damaging short-report and policy-driven smartphone disruptions, pressured the share price. A large Turkey acquisition paused payouts — funded largely from FCF — which discouraged income-focused investors
- Macro
- Kazakhstan: favorable demographics and ~5% GDP growth, but recent Tenge weakness, tariffs and strong demand pushed inflation ~12% (target 6–8%).
- Turkey: larger addressable market but higher macro volatility; inflation and rates are easing but remain elevated (CB targets ~16–20% by end-2026
- Business segment overview
- Fintech (˜48% revenue): consumer/business loans, deposits, BNPL and merchant working capital — high margin, data-driven lending.
- Marketplace (˜28%): 3P e-commerce (expanding into groceries, auto, travel); embedded fintech and ad products.
- Payments (˜23%): P2P, POS/QR, merchant integrations and B2B services that monetize platform activity.
- Non-monetized government services support engagement and confirm "consumer-first"
- Statements + Yields
- Capital & payouts: Kaspi runs an asset-light, low-leverage model, funding expansion mainly from FCF; the €650 m (6.25%) Hepsiburada debt is an exception. Its strength lies in monetizing users across verticals — converting a single marketplace customer into payment, lending, and deposit activity; it took €650m debt (with 6.5% int.) for the Hepsiburada deal(+plans to invest 300m in the future)
- Pre-acquisition cash returns (dividends + buybacks) were ~3.4–6.1% SY. Post-deal liquidity remains healthy (˜$2b cash)
- Moving Forward plans; Expansions
- Expansion strategy: Kaspi acquired a majority stake in Hepsiburada, aiming to enhance its operations and app performance by providing funding and technical expertise — not by merging user interfaces. Brands will remain distinct with possible fintech+payment integration
- The planned acquisition of Turkish Rabobank (bank license) will enable local fintech operations
- My hunch: after successful horizontal and then vertical expansion for Fintech and Marketplace, there will be third acquisition/launch for payment direction business
- Management’s goal appears to be replicating Kaspi’s ecosystem in Turkey through horizontal marketplace and fintech expansion, rather than migrating the Kazakh super-app itself
- Thesis - Current short–mid term macro headwinds, combined with a short-report and the region’s perceived geopolitical risk, have placed unjustified pressure on the stock. Kaspi remains undervalued relative to its core business quality and earnings power.
- Smartphone registration/tariff changes temporarily depressed marketplace demand; recovery is likely within a few quarters. Meanwhile, Kaspi has sustained vertical expansion and capital return discipline historically, with strong bottom-up growth (TPV/GMV/AMU) and rapid path to profitability in new verticals
- Valuation:
- Kaspi is a hybrid of fintech and e-commerce, complicating valuation. For this report, I use an intuitive, simplified PV approach based on net income. A full FCF, DCF-to-equity, or segment-by-segment model (including HEPS) would overcomplicate the analysis without adding proportionate insight compared to a straightforward sensitivity range of PVs under varying discount rates
"It is better to be approximately right than precisely wrong"
- A 5-year DCF without a terminal phase, assuming 20% annual growth and a 26% discount rate (WACC × inflation adjustment), yields a present value of ~$8.7B vs. current market cap of ~$14B.
- Extending the model with a 4% terminal growth rate (overly conservative) and maintaining the same 26% discount rate increases total equity value to ~$15B. Including the firm’s current equity base (~$3.9B) implies an intrinsic value near $19B.
- Under moderate macro normalization — easing inflation and gradual conflict resolution — intrinsic value could approach ~$22B, driven by a stronger PV phase(high interest rate env also constrains fintech growth & profitability) and lower discount-rate assumptions.
- Still, the thesis doesn’t rely on macro recovery — it’s grounded in execution. Over the past few years Kaspi expanded horizontally and vertically across all segments, proving its ability to grow and sustain profitability even in a challenging environment
- The thesis doesn’t rely on macro recovery — it’s grounded in execution. Kaspi’s fundamentals justify an intrinsic value near $17–19B even under current headwinds, with potential to reach ~$22B as inflation and rates normalize, easing valuation pressure and improving fintech margins.
- Price range 97-108.3$. I personally aim for 104.6$
Waiting to discuss it, answer questions and receive criticism, thanks for reading and effort put in future discussions
Finn |
