I will preface that Kaspi is my biggest holding. You raise several good points. Here are my thoughts:
Kaspi already yields 2% more than the bond yield, as you mentioned, without accounting for any future growth…I will take that optionality. Kaspi has compounded earnings for many years despite different interest rate cycles.
Reserve requirements: These changes will negatively impact Kaspi's banking unit for 2026. However, there could be a benefit as well. Banking risk is reduced, and the rule may curb inflation (which is the stated goal by the government). Lower inflation would mean lower rates, which is a bigger headwind for the company.
Altau Bank is owned by a key Kaspi shareholder and chairman. Altau is a development bank for a planned city, offering real estate loans. Kaspi is a consumer bank offering small personal loans. They don't overlap. The majority of the chairman's net worth is tied up in Kaspi, why would they harm it? In fact, history has shown the opposite. Big owners have sold pieces of their personal businesses to Kaspi (like Magnum groceries), at attractive prices. The “conflict of interest” has been value-added in the past.
The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals. I don't think the impact will be that great, since Kaspi’s strength is it's focus on customer experience. They have the best tech and ecosystem.
Conclusion: Kaspi yields 10% dividends which are secured by a strong moat. It offers significant growth upside in Turkey if their superapp model can be replicated.
(1) Normally, higher rates are good for banks because assets (loans to customers) usually reprice faster than liabilities (deposits from customers).
Hence, I still haven't understood why lower rates would be a headwind for KSPI. Do you have any insights into this?
(2) Given that both Altau and KSPI are banks, why not have KSPI acquire Altau?
This will eliminate any potential conflict of interest
(3) "The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals."
This is new to me. Could you please share the source?
I saw you replied to my note. Let me reproduce your reply here, then I will reply
***START***
Good questions:
1) I think this is not the case for Kaspi according to their earnings calls. Inflation and higher rates are a headwind since they make bigger interest payments on their customer deposits. They do this partially to attract new customers and have more money sitting in their ecosystem. Eventually these deposits are spent in Kaspi marketplace. Their loans are usually short-term consumer loans.
2) That is an option. But Altau is not really relevant to Kaspi's consumer business model, and would tie up a lot of capital.
(1a) You are saying higher interest rates are bad for KSPI. That is what management is also saying.
In KSPI's 2025 earnings call, management estimated the increase in interest rates caused a -4% YoY decline in 2025 net income.
But the appendix shows this -4% impact is calculated only from higher interest expense paid on customer deposits, and ignores the higher interest income on loans.
On page 119 of the 2025 20‑F, KSPI decomposes interest income and expense into volume and rate effects: higher rates added KZT 233bn to interest income and only KZT 61bn to interest expense, i.e. roughly KZT 172bn net benefit from higher rates in 2025.
That’s why I still don’t understand why management and investors say lower rates would be good for KSPI.
Do you have any insight into this?
(1b) I think we both had a small typo in our earlier comments.
You wrote “lower inflation would mean lower rates, which is a bigger headwind for the company,” and I then asked why lower rates would be a “headwind” for KSPI.
I assume you meant “tailwind” rather than “headwind,” and my question should have been why lower rates would be a “tailwind” for KSPI.
(2) You wrote: “Altau is a development bank for a planned city, offering real estate loans. Kaspi is a consumer bank offering small personal loans. They don't overlap.”
Could you please share the source?
Alatau’s financial statements show that 54% of its loan book is retail express loans and 43% is corporate loans (mostly SMEs), while mortgages are only 2%.
Retail express loans are typically small, fast‑approved consumer loans, usually unsecured, with simplified underwriting and disbursement within about 24 hours.
This looks very similar to Kaspi’s consumer lending.
SME lending is also an area Kaspi is trying to grow into.
Altau also earns a low ROE - arguably below the cost of equity capital in Kazakhstan and far below Kaspi's ROE. It seems likely to me that the Altau investment is more a strategic political move by Kim to align some of his interests with an important gov project and gain political standing than it is a direct competitor to Kaspi.
(3) You said "The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals."
Even though processors can still set their merchant discount rate (MDR), I believe KSPI is vulnerable to MDR compression and volume loss.
The market is going from a monopoly dominated by Kaspi to a market that every bank in Kazakhstan has to enter, by law.
I believe that's why KSPI is dragging its feet in joining the national QR system.
That said, I recognise the mitigating factor you highlighted: "Kaspi’s strength is it's focus on customer experience. They have the best tech and ecosystem."
The key question will be how strong is this mitigating factor.
It will be interesting to follow the developments.
Very useful devil’s advocate, thanks. One thought: even absent further growth, the govt bond yield is nominal whereas Kaspi’s earnings yield is real (inflation-linked). In the long term I’d say equities are safer than govt bonds - certainly was the case in Argentina! I take your point, though.
Sorry, that was my bad phrasing. I’ve only seen positive pieces on Kaspi. You yours is a good devils advocate *for me*.
Re: inflation, overall I view equities as inflation linked assets, where as most debt is not. Whether Kaspi specifically is, particularly in the short term, is outside my current circle of knowledge.
To clarify, I am not playing devil's advocate. I am simply sharing the results of my analysis that led to my investment decision
If there is strong evidence that my analysis is wrong, I am ready to change my mind. I have not seen any so far.
(1) Could you please share what makes you think Kaspi's earnings are linked to inflation?
According to Tikr, consensus is forecasting only +3.5% EBIT growth in 2026. This is significantly below the 10% inflation expected in 2026.
(2) Why not look at Springer Nature AG & Co. KGaA (SPG GR)?
It offers NTM earnings yield of 10%. Inflation in Germany will only be ~3% in 2026. I expect EBIT growth ~+2% in 2026 before accelerating to +5% in 2027 and 2028.
Kaspi revenues are linked to inflation because if inflation rises commissions on items sold rise, its that simple. EBIT for one year is affected by one offs and costs like the banking regulations
As you noted, higher inflation usually leads to higher commission on items sold.
But on the other hand, how do you think higher inflation will impact quantity sold?
For example, higher inflation typically reduces consumer spending because real income is now lower.
If central bank raises interest rates to slow inflation, like what is happening now, loans become more expensive. Demand for consumer loans like those offered by Kaspi $KSPI will likely fall.
I am curious to hear your assessment of these volume dynamics. Thanks!
Reading through this is arguably one of the best comment sections Ive seen.
Like others here, I want to say thank you for the perspective you have provided.
My counter points more or less align with the familiar names here, there's one thing I would say:
This business is among only a handful globally in my opinion, where they truly have a cult-like following from their customer base, due to their customer obsession, regardless of trading conditions such businesses fare better than others
(2) On a side note, I also wonder whether being obsessed with customers really provide as big a competitive advantage as it initially appears.
Banking is largely a commodity.
Personally, I deposit my money in whichever bank that offers the highest interest rates and I would take loans from whichever bank that offers the lowest interest rates.
If a competitor offers significantly more favourable rates, I would switch. Customer service is a secondary consideration.
Thank you. I also enjoyed learning about Kaspi $KSPI from the discussions here.
(1) Why do you think they have a cult-like following from their customers?
I ask this because while most English websites like Reddit feature a number of positive reviews, local sites like Отзовик, 2GIS.kz, Bank.kz and Google.kz are dominated by negative reviews.
Common issues include poor customer support, abrupt unexplained account freezes and high interest rates on loans.
Although I am mindful of selection bias, the volume of complaints on local platforms makes me question the idea that KSPI has a cult-like following.
The bond yield is PRE inflation, the earnings yield from a company is POST inflation. meaning your bond yield will likely turn to zero or little if you are unlucky, while your earnings will compound with inflation
(2) Furthermore, it seems to me Kaspi $KSPI's earnings faces structural risks as the payment landscape in Kazakhstan evolves.
The introduction of the national QR system means the market is transitioning from a system dominated by Kaspi to one with mandated interoperability.
We are still early in this transition, and it will be interesting to see how the market prices in the potential for MDR compression and volume loss over time.
Given these adverse regulatory changes, there seems to be a real risk that Kaspi $KSPI's long-term earnings could face unexpected pressure.
I am curious to hear how you assess this risk. Thanks!
Thanks for your comments. Sorry it took me a while to reply.
(1) I believe what you are trying to say is that in a high inflationary environment like today's Kazakhstan, a bondholder will suffer. On the other hand, a Kaspi $KSPI shareholder can benefit from its supposedly ability to grow its earnings with inflation.
That's the theory.
In 2025, KSPI’s EBT growth lagged inflation. This is expected to repeat in 2026.
As you noted, management has attributed these to one‑off external factors such as adverse regulations, rising interest rates, and unfavourable tax changes.
I am cautious when “one‑offs” start to recur. Recurring 'one-offs' become a trend.
The underlying theme behind these "one-offs" is the risk of investing in a frontier market.
Investors should demand meaningful premium for taking on these risks. At the current valuation, KSPI's earnings yield only offers ~2% premium over 10y Kazakhstan government bond, which does not appear enough for me.
The broader market seems to share this view: listed Kazakh equities trade at a median NTM P/E of only ~8x. Against this backdrop, KSPI’s 6x NTM P/E is not an obvious bargain to me.
Another way to think about it: Given what you said about equities being "POST inflation", why are the overall public equities in Kazakhstan trading at a median NTM P/E of only 8x?
I take the view of a long term investor. In the long term, it is impossible that Kaspi earnings continue to be below inflation, because the 1 or 2 years growth slowdown is due to government one off action.
The value of a us dollar since 1900 has decreased by something like 99%, yet the businesses selling groceries or banking thrived.
I dont care at all if the average for a market is 8 times earnings or 10 or 12 times earnings. I want the absolute cheapest multiples when I buy and I assume that over the long term these businesses with pass inflation to the consumers.
If the P/E of 8 for a market is justified, that means that you expect the earnings in dollars to decrease over the long term: this means a nominal GDP crash (This does not happens outside of Venezuela type theft).
Me, as a European, I don’t care if my earnings yield are in Rands or Tenge or USD dollar. I want the cheapest and fastest growing.
I had this lesson clearly displayed to me as I visited millionaire in South Africa whose all earnings were in Rands from people from the townships and surrounding poor/low middle class areas. This man had multiple BMW M3s (back in the days) and properties. If you earn enough or Rands/Tenge/Egyptian pounds and you are rich.
I did not discuss Hepsiburada in this first-take because, after spending two days analyzing KSPI, I had already gathered enough information to justify passing.
That said, you are probably interested in Hepsiburada. So let me share 2 observations that may be helpful to you.
(1) Hepsiburada’s net losses would be ~35% higher if not for hyperinflation.
The company has a net monetary liability in Turkish lira, so when the lira depreciates, the resulting gain on that liability is reported as profits.
(2) Since 2022, Hepsiburada disclosed material weaknesses in their internal controls that render their internal control over financial reporting ineffective.
This does not automatically mean there are material misstatements in its financial statements. But it does mean the probability is higher.
But I do wonder why this material weakness is still unresolved for more than 3 years now.
Finally, I want to clarify that KSPI is paying cash for Hepsiburada. The cash is raised from debt and dividends cut. KSPI did not issue any shares.
I am curious to hear your thoughts on Hepsiburada too
(1) The US ADR merely allows investors to use USD to buy the shares.
A comparison to the 10y Kazakhstan government bond is appropriate because packaging shares in a US ADR does not remove the risks from operating in Kazakhstan.
KSPI earns and pays dividends in KZT. The latest dividend was KZT 850 per ADR (~ USD 1.68). When it listed on NASDAQ, KSPI also declared a dividend of KZT 850 per ADR. This was ~ USD 1.91.
KZT depreciation alone has caused a -12% drop in USD dividend value, despite the KZT dividend being unchanged.
This is just one of the many risks. That's why I believe 2% premium over the 10y Kazakhstan government bond is not attractive enough for me.
I will preface that Kaspi is my biggest holding. You raise several good points. Here are my thoughts:
Kaspi already yields 2% more than the bond yield, as you mentioned, without accounting for any future growth…I will take that optionality. Kaspi has compounded earnings for many years despite different interest rate cycles.
Reserve requirements: These changes will negatively impact Kaspi's banking unit for 2026. However, there could be a benefit as well. Banking risk is reduced, and the rule may curb inflation (which is the stated goal by the government). Lower inflation would mean lower rates, which is a bigger headwind for the company.
Altau Bank is owned by a key Kaspi shareholder and chairman. Altau is a development bank for a planned city, offering real estate loans. Kaspi is a consumer bank offering small personal loans. They don't overlap. The majority of the chairman's net worth is tied up in Kaspi, why would they harm it? In fact, history has shown the opposite. Big owners have sold pieces of their personal businesses to Kaspi (like Magnum groceries), at attractive prices. The “conflict of interest” has been value-added in the past.
The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals. I don't think the impact will be that great, since Kaspi’s strength is it's focus on customer experience. They have the best tech and ecosystem.
Conclusion: Kaspi yields 10% dividends which are secured by a strong moat. It offers significant growth upside in Turkey if their superapp model can be replicated.
Stock Doctor,
Thanks for sharing your thoughts.
(1) Normally, higher rates are good for banks because assets (loans to customers) usually reprice faster than liabilities (deposits from customers).
Hence, I still haven't understood why lower rates would be a headwind for KSPI. Do you have any insights into this?
(2) Given that both Altau and KSPI are banks, why not have KSPI acquire Altau?
This will eliminate any potential conflict of interest
(3) "The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals."
This is new to me. Could you please share the source?
Thank you
Stock Doctor,
Thanks for your reply.
I saw you replied to my note. Let me reproduce your reply here, then I will reply
***START***
Good questions:
1) I think this is not the case for Kaspi according to their earnings calls. Inflation and higher rates are a headwind since they make bigger interest payments on their customer deposits. They do this partially to attract new customers and have more money sitting in their ecosystem. Eventually these deposits are spent in Kaspi marketplace. Their loans are usually short-term consumer loans.
2) That is an option. But Altau is not really relevant to Kaspi's consumer business model, and would tie up a lot of capital.
3) Management as well as news articles.
***END***
Stock Doctor,
(1a) You are saying higher interest rates are bad for KSPI. That is what management is also saying.
In KSPI's 2025 earnings call, management estimated the increase in interest rates caused a -4% YoY decline in 2025 net income.
But the appendix shows this -4% impact is calculated only from higher interest expense paid on customer deposits, and ignores the higher interest income on loans.
On page 119 of the 2025 20‑F, KSPI decomposes interest income and expense into volume and rate effects: higher rates added KZT 233bn to interest income and only KZT 61bn to interest expense, i.e. roughly KZT 172bn net benefit from higher rates in 2025.
That’s why I still don’t understand why management and investors say lower rates would be good for KSPI.
Do you have any insight into this?
(1b) I think we both had a small typo in our earlier comments.
You wrote “lower inflation would mean lower rates, which is a bigger headwind for the company,” and I then asked why lower rates would be a “headwind” for KSPI.
I assume you meant “tailwind” rather than “headwind,” and my question should have been why lower rates would be a “tailwind” for KSPI.
Could you confirm?
Yes, we both had a typo. This is a good question that I have looked into. I think the key is total fintech yield. I will respond in an article soon.
I look forward to your next article
Stock Doctor,
(2) You wrote: “Altau is a development bank for a planned city, offering real estate loans. Kaspi is a consumer bank offering small personal loans. They don't overlap.”
Could you please share the source?
Alatau’s financial statements show that 54% of its loan book is retail express loans and 43% is corporate loans (mostly SMEs), while mortgages are only 2%.
Retail express loans are typically small, fast‑approved consumer loans, usually unsecured, with simplified underwriting and disbursement within about 24 hours.
This looks very similar to Kaspi’s consumer lending.
SME lending is also an area Kaspi is trying to grow into.
See note 18 of Alatau's financial statements: https://alataucitybank.kz/file-server/filename?dir=documents&filename=promezhutochnaya-sokraschennaya-otdel-naya-finansovaya-otchetnost-s-poyasnitel-noy-zapiskoy-k-ney-za-9-mesyacev-zavershivshihsya-30-sentyabrya-2025-goda-en.pdf
As Stock Doctor mentioned - Altau Bank is a development bank.
https://kase.kz/en/listing/issuers/TSBN
Altau also earns a low ROE - arguably below the cost of equity capital in Kazakhstan and far below Kaspi's ROE. It seems likely to me that the Altau investment is more a strategic political move by Kim to align some of his interests with an important gov project and gain political standing than it is a direct competitor to Kaspi.
(3) Thanks for sharing your thoughts.
If I am Kim, I would likely have Kaspi $KSPI acquire Alatau.
Given that KSPI forms the bulk of my wealth, I would benefit from the merger synergies
I would also eliminate any conflicts of interest.
Finally, given that I am the Chairman and major shareholder of Kaspi, I would still have achieved my political goals, if any.
What do you think?
Tyler,
Thanks for sharing the link.
(1) I couldn’t find which anything about Alatau City Bank being a development bank in that link. Could you please clarify?
Stock Doctor,
(3) You said "The national QR payment system still allows payment processors to set their own prices and have their own interface. It just allows interoperability on payment terminals."
Even though processors can still set their merchant discount rate (MDR), I believe KSPI is vulnerable to MDR compression and volume loss.
The market is going from a monopoly dominated by Kaspi to a market that every bank in Kazakhstan has to enter, by law.
I believe that's why KSPI is dragging its feet in joining the national QR system.
That said, I recognise the mitigating factor you highlighted: "Kaspi’s strength is it's focus on customer experience. They have the best tech and ecosystem."
The key question will be how strong is this mitigating factor.
It will be interesting to follow the developments.
In a previous article, I discussed why the national system "may" reduce the payments moat and also how Kaspi is adapting to it.
Very useful devil’s advocate, thanks. One thought: even absent further growth, the govt bond yield is nominal whereas Kaspi’s earnings yield is real (inflation-linked). In the long term I’d say equities are safer than govt bonds - certainly was the case in Argentina! I take your point, though.
Sorry, that was my bad phrasing. I’ve only seen positive pieces on Kaspi. You yours is a good devils advocate *for me*.
Re: inflation, overall I view equities as inflation linked assets, where as most debt is not. Whether Kaspi specifically is, particularly in the short term, is outside my current circle of knowledge.
Building Arks,
No worries. I just wanted to make it clear that I am not targeting Kaspi.
It will be interesting to follow this business.
Cheers!
Building Arks,
Thanks for sharing your thoughts.
To clarify, I am not playing devil's advocate. I am simply sharing the results of my analysis that led to my investment decision
If there is strong evidence that my analysis is wrong, I am ready to change my mind. I have not seen any so far.
(1) Could you please share what makes you think Kaspi's earnings are linked to inflation?
According to Tikr, consensus is forecasting only +3.5% EBIT growth in 2026. This is significantly below the 10% inflation expected in 2026.
(2) Why not look at Springer Nature AG & Co. KGaA (SPG GR)?
It offers NTM earnings yield of 10%. Inflation in Germany will only be ~3% in 2026. I expect EBIT growth ~+2% in 2026 before accelerating to +5% in 2027 and 2028.
You can check out my thesis on SPG GR here: https://angsanaanderson.substack.com/p/thesis-springer-nature-ag-and-co?r=5rl2u5
Kaspi revenues are linked to inflation because if inflation rises commissions on items sold rise, its that simple. EBIT for one year is affected by one offs and costs like the banking regulations
Emerging Value,
As you noted, higher inflation usually leads to higher commission on items sold.
But on the other hand, how do you think higher inflation will impact quantity sold?
For example, higher inflation typically reduces consumer spending because real income is now lower.
If central bank raises interest rates to slow inflation, like what is happening now, loans become more expensive. Demand for consumer loans like those offered by Kaspi $KSPI will likely fall.
I am curious to hear your assessment of these volume dynamics. Thanks!
No impact long term. We have never seen an economy where less items are sold in the long term, except sabotage (Zimbabwe and Venezuela or Argentina)
Thanks
Reading through this is arguably one of the best comment sections Ive seen.
Like others here, I want to say thank you for the perspective you have provided.
My counter points more or less align with the familiar names here, there's one thing I would say:
This business is among only a handful globally in my opinion, where they truly have a cult-like following from their customer base, due to their customer obsession, regardless of trading conditions such businesses fare better than others
UnreasonableAsymmetric,
(2) On a side note, I also wonder whether being obsessed with customers really provide as big a competitive advantage as it initially appears.
Banking is largely a commodity.
Personally, I deposit my money in whichever bank that offers the highest interest rates and I would take loans from whichever bank that offers the lowest interest rates.
If a competitor offers significantly more favourable rates, I would switch. Customer service is a secondary consideration.
UnreasonableAsymmetric,
Thank you. I also enjoyed learning about Kaspi $KSPI from the discussions here.
(1) Why do you think they have a cult-like following from their customers?
I ask this because while most English websites like Reddit feature a number of positive reviews, local sites like Отзовик, 2GIS.kz, Bank.kz and Google.kz are dominated by negative reviews.
Common issues include poor customer support, abrupt unexplained account freezes and high interest rates on loans.
Although I am mindful of selection bias, the volume of complaints on local platforms makes me question the idea that KSPI has a cult-like following.
It has a high net promoter score. If it didn't, 75% of the country wouldn't be using it.
See my new article, I touch on your question regarding the impact of interest rates.
Stock Doctor, thanks for highlighting your new article.
In the Q4'25 earnings call, KSPI estimated higher interest rates caused -4% YoY decline in net income.
Yet, this -4% seemingly only accounts for the higher costs associated with paying higher rates on customer deposits.
Were you able to determine why KSPI didn't factor in the financial boost they receive from charging higher interest rates on loans to customers?
Thanks
The bond yield is PRE inflation, the earnings yield from a company is POST inflation. meaning your bond yield will likely turn to zero or little if you are unlucky, while your earnings will compound with inflation
Emerging Value,
(2) Furthermore, it seems to me Kaspi $KSPI's earnings faces structural risks as the payment landscape in Kazakhstan evolves.
The introduction of the national QR system means the market is transitioning from a system dominated by Kaspi to one with mandated interoperability.
We are still early in this transition, and it will be interesting to see how the market prices in the potential for MDR compression and volume loss over time.
Given these adverse regulatory changes, there seems to be a real risk that Kaspi $KSPI's long-term earnings could face unexpected pressure.
I am curious to hear how you assess this risk. Thanks!
Emerging Value,
Thanks for your comments. Sorry it took me a while to reply.
(1) I believe what you are trying to say is that in a high inflationary environment like today's Kazakhstan, a bondholder will suffer. On the other hand, a Kaspi $KSPI shareholder can benefit from its supposedly ability to grow its earnings with inflation.
That's the theory.
In 2025, KSPI’s EBT growth lagged inflation. This is expected to repeat in 2026.
As you noted, management has attributed these to one‑off external factors such as adverse regulations, rising interest rates, and unfavourable tax changes.
I am cautious when “one‑offs” start to recur. Recurring 'one-offs' become a trend.
The underlying theme behind these "one-offs" is the risk of investing in a frontier market.
Investors should demand meaningful premium for taking on these risks. At the current valuation, KSPI's earnings yield only offers ~2% premium over 10y Kazakhstan government bond, which does not appear enough for me.
The broader market seems to share this view: listed Kazakh equities trade at a median NTM P/E of only ~8x. Against this backdrop, KSPI’s 6x NTM P/E is not an obvious bargain to me.
Another way to think about it: Given what you said about equities being "POST inflation", why are the overall public equities in Kazakhstan trading at a median NTM P/E of only 8x?
I take the view of a long term investor. In the long term, it is impossible that Kaspi earnings continue to be below inflation, because the 1 or 2 years growth slowdown is due to government one off action.
The value of a us dollar since 1900 has decreased by something like 99%, yet the businesses selling groceries or banking thrived.
I dont care at all if the average for a market is 8 times earnings or 10 or 12 times earnings. I want the absolute cheapest multiples when I buy and I assume that over the long term these businesses with pass inflation to the consumers.
If the P/E of 8 for a market is justified, that means that you expect the earnings in dollars to decrease over the long term: this means a nominal GDP crash (This does not happens outside of Venezuela type theft).
Me, as a European, I don’t care if my earnings yield are in Rands or Tenge or USD dollar. I want the cheapest and fastest growing.
I had this lesson clearly displayed to me as I visited millionaire in South Africa whose all earnings were in Rands from people from the townships and surrounding poor/low middle class areas. This man had multiple BMW M3s (back in the days) and properties. If you earn enough or Rands/Tenge/Egyptian pounds and you are rich.
Thank you
Great article, very helpful. Thank you.
Thank you for your kind words!
Great context and analysis! Thanks for spelling out the risks so clearly.
The WACC of Kaspi presented by analysts are less than the Inflation Rate and Fixed Deposit Rate of Kazakhstan, how can that be?
What is the actual cost of equity and cost of capital of Kaspi?
Curious on your thoughts after the recent news this morning on KSPI?
Sunil,
My concerns remain unresolved. Today’s news alone doesn’t seem enough to change my mind.
Baring sold 6 mn shares to Tencent, management and institutional investors. The value is ~USD 518 mn.
This represents ~43% of Baring’s pre-sale holdings.
KSPI did not break down the sale allocation. If we assume Tencent took all the allocation, this will only represent ~0.4% of its investment portfolio.
Ubisoft might be a precedent. Tencent’s investment initially caused a spike, but that alone was not able to sustain a recovery.
What about the turkey expansion? It's not really discussed here other than it was financed with a debt/share deal
Bobk,
I did not discuss Hepsiburada in this first-take because, after spending two days analyzing KSPI, I had already gathered enough information to justify passing.
That said, you are probably interested in Hepsiburada. So let me share 2 observations that may be helpful to you.
(1) Hepsiburada’s net losses would be ~35% higher if not for hyperinflation.
The company has a net monetary liability in Turkish lira, so when the lira depreciates, the resulting gain on that liability is reported as profits.
(2) Since 2022, Hepsiburada disclosed material weaknesses in their internal controls that render their internal control over financial reporting ineffective.
This does not automatically mean there are material misstatements in its financial statements. But it does mean the probability is higher.
But I do wonder why this material weakness is still unresolved for more than 3 years now.
Finally, I want to clarify that KSPI is paying cash for Hepsiburada. The cash is raised from debt and dividends cut. KSPI did not issue any shares.
I am curious to hear your thoughts on Hepsiburada too
I am long this stock, but this analysis is very well done and documented.
I appreciate the kind words!
I'm looking forward to your thesis on Kaspi $KSPI, if you're publishing it
US ADR is in dollars. Gov debt is in Tenge. And you did not account for growth.
Nick,
(2) In 2025, KSPI’s EBT growth lagged inflation.
Given the severe regulatory headwinds highlighted in the post, meaningful real growth is far from assured in the coming years.
I would need to see a significantly wider spread over the 10y Kazakhstan bond before being interested.
Nick,
(1) The US ADR merely allows investors to use USD to buy the shares.
A comparison to the 10y Kazakhstan government bond is appropriate because packaging shares in a US ADR does not remove the risks from operating in Kazakhstan.
KSPI earns and pays dividends in KZT. The latest dividend was KZT 850 per ADR (~ USD 1.68). When it listed on NASDAQ, KSPI also declared a dividend of KZT 850 per ADR. This was ~ USD 1.91.
KZT depreciation alone has caused a -12% drop in USD dividend value, despite the KZT dividend being unchanged.
This is just one of the many risks. That's why I believe 2% premium over the 10y Kazakhstan government bond is not attractive enough for me.
P/E = 1/Bond Yield Ratio?
That's exactly :
EPV
= EPS × P/E
= EPS ÷ Bond Yield Ratio