We came across a bullish thesis on Joint Stock Company Kaspi.kz (KSPI) on Substack by Easy Trader. In this article, we will summarize the bulls’ thesis on KSPI. Joint Stock Company Kaspi.kz (KSPI)’s share was trading at $94.54 as of April 2nd. KSPI’s trailing P/E was 8.82 according to Yahoo Finance.
People using the Cash App paying for goods and services, highlighting the impact the of the company’s payment tools.
Kaspi.kz has emerged as Kazakhstan’s dominant fintech powerhouse, integrating digital payments, e-commerce, and financial services into a single super app. With $5.3 billion in revenue in 2024—growing 28% year-over-year—and a net margin of 42%, the company remains highly profitable and undervalued at a $20 billion market cap. Kaspi’s dual-platform model, consisting of the Kaspi.kz Super App for consumers and the Kaspi Pay Super App for merchants, creates a seamless financial ecosystem embedded into Kazakhstan’s daily economic activity. Its payments segment processes billions in transactions, its marketplace is the fastest-growing revenue driver, and its fintech arm leads consumer lending, making it an indispensable part of the country’s financial infrastructure.
Kaspi’s journey began when Vyacheslav Kim transitioned his electronics retail business into banking with the acquisition of Kaspiskiy Bank in 2002. The company’s transformation accelerated under CEO Mikhail Lomtadze, brought in by Baring Vostok in 2007. Kaspi shifted from traditional banking to a tech-driven platform, launching digital payments in 2012, an e-commerce marketplace in 2014, and a mobile super app in 2017. This evolution fueled rapid expansion, leading to its London IPO in 2020 and subsequent Nasdaq listing in 2024, increasing its visibility among global investors.
Financially, Kaspi continues to deliver outstanding performance. In 2024, it processed $166 billion in transactions—seven times its 2019 volume—and returned $750 million to shareholders through dividends, demonstrating strong cash flow generation. With operating costs below 10% of revenue, Kaspi operates far more efficiently than global fintech peers. While dominating the Kazakhstani market, the company is actively expanding into new territories. Its planned acquisition of Uzbekistan’s Humo, a state-backed payment system with 10 million users, signals its intent to replicate success beyond Kazakhstan. The recent purchase of Turkey’s Hepsiburada positions Kaspi in a $172 billion retail market, four times larger than Kazakhstan’s. Partnerships with Alipay+ and potential multi-language support further enhance cross-border expansion potential.
However, Kaspi faces challenges. In September 2024, short-seller Culper Research accused the company of misleading investors about its Russian ties, triggering a 20% stock drop. Although Kazakhstan’s regulator dismissed the claims, geopolitical uncertainty lingers. Market saturation is another concern, with rising loan rates and competition from local rivals like ForteBank. Additionally, Kazakhstan’s economy remains closely linked to Russia, introducing macroeconomic risks. Despite these headwinds, Kaspi’s brand loyalty, technological edge, and entrenched market position create formidable barriers to competition. The company’s innovation has earned it two Harvard Business School case studies, emphasizing its trust-building efforts after a 2014 bank run. Its asset-light model, driven by a 1,200-person tech team, enables exceptional cash generation without the burden of physical banking infrastructure. As the first Kazakhstani company to list on Nasdaq, Kaspi stands as a pioneer in the global fintech space.
A discounted cash flow (DCF) valuation suggests Kaspi is deeply undervalued. With projected 2024 free cash flow (FCF) of $2.05 billion, growing at 20% annually for five years, Kaspi is on track to generate $5.35 billion in FCF by 2029. Applying a conservative 3% terminal growth rate and discounting at 12% to account for emerging market risks, Kaspi’s enterprise value reaches $48 billion. Adding its $1.2 billion in cash and negligible debt results in an equity value of $49.2 billion, or $246 per share—more than double its current price of around $100. A peer comparison further supports this undervaluation. Kaspi trades at just 8.5x 2024 earnings, significantly lower than fintech peers like PayPal (18x), MercadoLibre (57x), and Sea Limited (114x). Adjusting for growth, Kaspi’s PEG ratio is just 0.34, implying a fair value range of $215 to $535 per share based on fintech industry multiples.
Despite its stellar financials, the market discounts Kaspi due to geopolitical risks, liquidity concerns following its U.S. listing, and its 6% dividend yield, which some perceive as a signal of maturity rather than high growth. However, MercadoLibre once faced similar skepticism before its stock was rerated as execution proved successful. If Kaspi’s international expansion, particularly its Hepsiburada acquisition, gains traction, its valuation gap could narrow significantly. Even a modest rerating to 40x FCF—similar to MercadoLibre—would imply an $86 billion valuation, or $430 per share.
Kaspi presents a compelling investment opportunity. With strong growth, superior margins, and substantial free cash flow generation, the stock remains deeply undervalued despite its industry-leading position. For investors willing to look past short-term geopolitical concerns, Kaspi offers the rare chance to buy a high-quality, high-growth fintech at a fraction of its intrinsic value. If sentiment shifts and its expansion strategy succeeds, the stock could more than double, making it one of the most attractive investment opportunities in the fintech sector today.
Joint Stock Company Kaspi.kz (KSPI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held KSPI at the end of the fourth quarter which was 26 in the previous quarter. While we acknowledge the risk and potential of KSPI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KSPI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.