Digital Payments And E Commerce Expansion Will Support Long Term Earnings Power

Catalysts

About Kaspi.kz

Kaspi.kz operates a multi-vertical Super App ecosystem that combines payments, marketplace and fintech services for consumers and merchants across Kazakhstan and international markets.

What are the underlying business or industry changes driving this perspective?

• Ongoing migration from cash to digital payments and QR-based transactions, including expanding interoperability with seven local banks and Alipay, is expected to continue lifting TPV at high teens rates, while operating leverage supports net income growth.
• A structural shift toward online commerce, reinforced by rapid adoption in categories such as e-Grocery, beauty and apparel, is driving sustained double digit GMV and purchase growth and can support faster consolidated revenue expansion as smartphone headwinds normalize.
• Increasing monetization of merchants through value added services such as advertising, delivery and AI powered content tools is lifting marketplace take rates. This is expected to outpace GMV and translate into structurally higher gross margins and earnings power.
• Scaling of profitable first party e-Grocery and restaurant focused QR and delivery solutions deepens customer engagement and frequency. This can support higher cross sell of payments and fintech products and underpin resilient revenue and net margin trends.
• Growth of lower risk merchant and car lending within the fintech portfolio, alongside high but potentially peaking domestic interest rates, positions the credit business for accelerating revenue and earnings as funding costs ease and provisioning intensity remains contained.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Kaspi.kz's revenue will grow by 22.6% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 44.0% today to 43.0% in 3 years time.
• Analysts expect earnings to reach KZT 1515.4 billion (and earnings per share of KZT 8070.81) by about December 2028, up from KZT 841.4 billion today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 9.2x on those 2028 earnings, down from 12.2x today. This future PE is greater than the current PE for the GB Consumer Finance industry at 6.3x.
• Analysts expect the number of shares outstanding to decline by 0.54% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Smartphone supply disruptions and registration requirements may persist longer than expected or recur, prolonging the 8% GMV and 3% consolidated net income drag from this high ticket category and preventing a full recovery in marketplace revenue and earnings.
• Structurally high or further rising interest rates in Kazakhstan, along with tighter reserve and tax rules on government securities, could keep funding costs elevated and pressure the fintech platform's net interest margin and consolidated net income.
• Rapid expansion of lower margin first party e-Grocery, restaurant payments and delivery solutions, including new dark stores and city rollouts, could outpace efficiency gains and dilute marketplace and group net margins even if GMV and revenue continue to grow strongly.
• Hepsiburada’s strategy of sustained investment in delivery, BNPL options, marketing and user experience may require more capital and time to reach scale profitability than anticipated, weighing on group earnings while the Turkish unit is still operating at lower margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $130.21 for Kaspi.kz based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $159.04, and the most bearish reporting a price target of just $93.01.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be KZT3525.2 billion, earnings will come to KZT1515.4 billion, and it would be trading on a PE ratio of 9.2x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of $120.6, the analyst price target of $130.21 is 7.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.