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Kaspi.kz's Q1 2025: A Fortress of Resilience Amid Global Crosscurrents

Edwin FosterMonday, May 12, 2025 10:22 am ET

20min read

Kaspi.kz’s Q1 2025 results reveal a company navigating a precarious balancing act: leveraging its dominant payments and e-commerce platforms in Kazakhstan while grappling with geopolitical volatility in Türkiye. Despite trimming its 2025 net income guidance to 15% (from 20%), the company’s robust core growth, fortress balance sheet, and attractive valuation metrics make it a compelling contrarian play. For investors willing to look past near-term headwinds, this could be a rare opportunity to buy a regional tech leader at a discount.

Payments Dominance: The Engine of Resilience

Kaspi.kz’s core payments platform remains the bedrock of its success. Transaction Payment Volume (TPV) surged 23% YoY, driven by a 17% rise in transactions and operational efficiencies that boosted profit margins. The Marketplace Platform’s 33% revenue growth—with e-grocery GMV soaring 64%—demonstrates the power of diversification into adjacent services like delivery, classifieds, and advertising. Even in the face of Kazakhstan’s smartphone registration mandate (which temporarily reduced GMV by ~7%), Kaspi’s ecosystem adaptability shone: core merchants pivoted to non-discretionary categories, and its payments segment’s profit margin expansion underscored disciplined cost management.

Türkiye: A Risk-Return Crossroads

The acquisition of Hepsiburada—a $1.1 billion bet on Türkiye’s e-commerce potential—remains a double-edged sword. Q1 reported a consolidated net loss of ~$10.8 million, attributed to “politically driven consumption boycotts” and investments in early-stage fintech products. While this drags on short-term earnings, the strategic rationale is clear: Türkiye’s internet penetration is 60%, yet its e-commerce penetration lags at ~2% of retail sales. kaspi.kz’s plan to acquire Rabobank A.Ş. (subject to regulatory approval) aims to secure a banking license, enabling deposit-taking and deepening its financial services offering—a move that could replicate its Kazakh success.

The risks are undeniable: geopolitical tensions, regulatory hurdles, and cultural adaptation. Yet, the $650 million 6.25% Eurobond issuance—possible only thanks to its investment-grade credit ratings—highlights management’s ability to finance growth at favorable rates. For long-term investors, the question is whether the cost of entry today justifies the prize of owning a dominant platform in a $100 billion+ market.

Valuation: A Bargain at the Crossroads

Kaspi.kz’s valuation metrics are compellingly cheap. With a trailing P/E of 8.69 and a forward P/E of 7.96, the stock trades at a discount to global peers like MercadoLibre (P/E 18.5) or Sea Group (P/E 22.4). Its 7.6% dividend yield—supported by a strong cash flow generation (Kazakhstan net income grew 16% YoY)—adds a defensive kicker. The company’s decision to pause 2024 dividends for reinvestment signals confidence in its growth trajectory, while its $17.94 billion market cap leaves room to scale further.

The Case for Immediate Action

The near-term challenges—Kazakhstan’s regulatory headwinds, Türkiye’s political risks, and rising interest rates—are undeniable. Yet, three factors make this a compelling buy:

Scale and Stickiness: Kaspi’s payments platform processes ~40% of Kazakhstan’s digital transactions, creating a moat against competitors. Its e-grocery dominance (64% GMV growth) positions it to capture secular shifts toward online essentials.
Debt Discipline: The Eurobond’s 6.25% coupon reflects its credit strength. With net debt/EBITDA under 2x, Kaspi retains flexibility to weather macro turbulence.
Pricing Inconsistency: Short interest surged 64% ahead of Q1 results, suggesting pessimism is already priced in. Meanwhile, analysts’ average price target of $183 (vs. a current $90) implies 98% upside.

Conclusion: The Contrarian Play

Kaspi.kz is a rare blend of regional dominance, financial flexibility, and valuation upside. While geopolitical and regulatory risks loom, its core metrics—payments growth, disciplined capital allocation, and fortress balance sheet—position it to outperform once macro conditions stabilize. For investors seeking a leveraged play on digital transformation in emerging markets, this is a buy at these levels.

Rating: Strong Buy
Price Target: $180+
Risks: Türkiye regulatory delays, interest rate shocks, smartphone registration impact persistence.

In a world of macro uncertainty, Kaspi.kz offers a rare combination of resilience and growth. Now is the time to act.

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