Joint Stock Company Kaspi.kz (KSPI): A Bull Case Theory

Core Thesis - Kaspi.kz (KSPI) is viewed as a strong investment opportunity due to its dominant position in Kazakhstan's fintech market and robust financial metrics, despite facing some risks related to currency volatility and geopolitical factors [1][5][6]. Company Overview - Kaspi.kz is a leading fintech company in Kazakhstan, operating a widely adopted Super App that integrates various services such as digital payments, online loans, deposits, and e-commerce solutions [2]. - The company has a significant market presence, with nearly every adult in Kazakhstan holding a Kaspi account, which enhances customer loyalty and operational efficiency [2][3]. Financial Performance - Kaspi.kz boasts impressive financial metrics, including a return on equity (ROE) of 67.7% and a return on invested capital (ROIC) estimated above 40% [3]. - The company has a cash-rich balance sheet and is projected to achieve an earnings per share (EPS) growth rate of 31% year-over-year through 2026 [3]. Valuation - The stock is currently trading at a low price-to-earnings (P/E) ratio of 7.66 and a forward P/E of 5.95 for 2026, suggesting potential undervaluation given its growth prospects [4]. - The market dominance and growth profile of Kaspi.kz imply a possible mispricing in the current stock valuation [4]. Expansion Plans - Kaspi.kz is expanding internationally by acquiring a controlling stake in Turkey's Hepsiburada and Rabobank Turkey, aiming to replicate its successful super-app model and increase its total addressable market [4]. - This expansion presents potential upside if the company can successfully navigate the Turkish market [4]. Risks - The volatility of the Kazakhstani tenge poses a risk to dollar-denominated earnings, which could impact returns for global investors [5][6]. - Geopolitical uncertainties, particularly regarding Kazakhstan's regulatory environment and economic ties with Russia, introduce additional risks [5][6]. - The Turkish expansion may face challenges due to a difficult regulatory landscape and high inflation, which could limit predictability [6]. - Market saturation in Kazakhstan and recent allegations of misconduct could also affect the company's reputation and regulatory standing [6].