Cybersecurity Threats And Kazakhstan Exposure Will Stifle Expansion

Key Takeaways

• Heightened regulatory, geopolitical, and competitive pressures could constrain Kaspi.kz's growth opportunities, compress margins, and increase operational risks.
  
• Heavy dependence on Kazakhstan and costly expansion efforts may expose the company to volatile earnings and limit its ability to offset challenges through diversification.
  
• Accelerated expansion across core and new verticals, coupled with underpenetrated markets and successful international integration, supports strong, sustainable revenue and earnings growth.

Catalysts

Provides payments, marketplace, and fintech solutions for consumers and merchants in Kazakhstan, Azerbaijan, and Ukraine.

• The accelerating pace of global cybersecurity threats, combined with greater regulatory scrutiny on data privacy and payments, could significantly increase compliance costs for Kaspi.kz, compress net margins, and expose the company to risks of fines or reputational harm that would undermine earnings growth over time.
  
• Worsening geopolitical tensions and rising economic fragmentation in Central Asia may restrict Kaspi.kz's ability to scale cross-border payments and fuel its regional expansion strategy, effectively capping its addressable market and limiting long-term revenue growth.
  
• Intensifying competition from both domestic fintech entrants and global technology companies threatens Kaspi.kz's current market dominance, raising the prospect of eroding market share, slower user growth, and persistent pressure on net margins as customer acquisition and retention costs climb.
  
• Heavy reliance on Kazakhstan as the core market exposes the company to local economic downturns or political disruptions that could trigger earnings volatility and revenue contraction, with limited short-term ability to offset these shocks through international diversification.
  
• Sustained investment requirements for platform innovation, technology upgrades, and geographic expansion-especially in markets like Turkey where bank license acquisition and ongoing integration pose complex execution challenges-risk eroding operating leverage and stalling compound net income growth even if top-line momentum outwardly remains positive.

Kaspi.kz Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Kaspi.kz compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Kaspi.kz's revenue will grow by 11.5% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 34.3% today to 39.7% in 3 years time.
• The bearish analysts expect earnings to reach KZT 1749.6 billion (and earnings per share of KZT 8864.72) by about August 2028, up from KZT 1091.0 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 6.8x on those 2028 earnings, down from 9.0x today. This future PE is lower than the current PE for the US Consumer Finance industry at 10.1x.
• Analysts expect the number of shares outstanding to grow by 0.4% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.85%, as per the Simply Wall St company report.

Kaspi.kz Future Earnings Per Share Growth

Risks

• Rapid expansion of e-Grocery, restaurant, travel, and other verticals in Kazakhstan is being executed successfully, with many verticals showing over 50% annual growth, which could fuel strong revenue and earnings momentum over the long term.
  
• Take rate improvements driven by value-added services like advertising and delivery, as evidenced by 67% year-on-year growth in ad revenue and higher marketplace take rates, are likely to lead to higher net margin expansion as incremental revenues come at a low marginal cost.
  
• The platform's core markets, particularly in Kazakhstan, remain underpenetrated, with extremely strong growth in categories like clothing, beauty, and home goods, indicating substantial long-term potential to continue scaling user numbers and gross merchandise value, which could underpin sustained revenue growth.
  
• The successful integration and expansion of Hepsiburada in Turkey, combined with the pending acquisition of a banking license and the ability to deploy Kaspi's innovative fintech and marketplace playbook, provide a pathway for geographic and product-driven earnings growth beyond Kazakhstan, supporting long-term earnings compounding.
  
• A commitment to resuming capital returns to shareholders through both dividends and share buybacks, supported by a consistently cash-generative core business, provides a potential floor for the share price and ongoing support for shareholder value through strong capital allocation policies.

Valuation

• The assumed bearish price target for Kaspi.kz is KZT85.53, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Kaspi.kz's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of KZT129.2, and the most bearish reporting a price target of just KZT85.53.
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be KZT4405.0 billion, earnings will come to KZT1749.6 billion, and it would be trading on a PE ratio of 6.8x, assuming you use a discount rate of 9.8%.
• Given the current share price of KZT95.24, the bearish analyst price target of KZT85.53 is 11.3% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
• 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.