Kaspi Investment Thesis Statement
New Addition to the SCRai
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Overview:
This week, Kaspi.kz was added to the SCRai (Schwar Capital Research Asymmetry Index) - the watchlist of companies I believe offer the most attractive risk-reward profiles for my potential future positions.
Here is a business growing revenues at 20%+ annually, generating net income margins north of 25%, and trading at just 6x forward earnings. The market appears to be mispricing what is, in my view, one of the highest-quality Super App ecosystems outside of China.
My investment thesis rests on three key pillars:
Self-reinforcing ecosystem moat creates powerful flywheel effects across Payments, Marketplace, and Fintech.
Multiple growth vectors including international expansion, advertising monetisation, and e-Grocery provide runway for years of compounding.
Market misprices temporary headwinds as structural risks - 6x forward earnings drastically undervalues this business in my opinion.
The following report outlines these pillars in greater detail before presenting fair value calculations and final recommendations. But first, here’s a brief business overview.
Business Description:
Kaspi.kz operates a two-sided Super App ecosystem connecting over 14 million monthly active consumers with hundreds of thousands of merchants across Kazakhstan. Unlike Western fintechs that typically focus on a single vertical, Kaspi has built an integrated platform where Payments, Marketplace, and Fintech reinforce each other - creating network effects that deepen with scale.
The company generates revenue through three platforms:
Payments Platform (~30-35% of revenue): Kaspi Pay has become the dominant digital payments infrastructure in Kazakhstan, enabling peer-to-peer transfers, bill payments, QR transactions, and B2B payments. Transaction Payment Volume grew 18% year-over-year in Q3 2025, with approximately 69% of volumes flowing through Kaspi QR and cards. The take rate currently sits at 1.09%, declining slightly as the mix shifts from higher-margin card transactions toward QR payments - though this is offset by operating leverage that pushed net income growth to 12% despite only 10% revenue growth. The company recently launched Kaspi Alaqan, a pay-by-palm biometric payment system offered free to merchants for three months before a 0.95% take rate applies. Crucially, Kaspi has extended interoperability by integrating with AliPay, O!Bank in Kyrgyzstan, and other regional partners—positioning the platform for cross-border expansion without requiring full market entry.
Marketplace Platform (~45-50% of revenue): This is the largest and fastest-growing segment, combining e-commerce, m-commerce, e-Grocery, Travel, and Classifieds into a unified commerce ecosystem. The platform earned a record 10.3% take rate in Q3 2025 - up meaningfully from prior periods - driven by value-added services rather than fee increases on merchants. Marketplace purchases grew 36% year-over-year while GMV grew 12% (or 20% excluding smartphone disruptions). The segment breaks down into several sub-verticals worth understanding:
E-Commerce: The core marketplace where third-party sellers list products. GMV grew 25% excluding smartphones, with particularly strong performance in Beauty (+69%), Clothing (+51%), and Home (+35%). First-party take rate reached 12.5%.
E-Grocery: One of the standout growth stories, with GMV up 53% year-over-year and 1.3 million active customers. The business is already self-sustaining and profitable, with management investing $10-15 million per dark store to expand capacity.
Travel: Kaspi Tours now represents 10% of the Travel segment’s GMV, with overall growth of 13-17% and take rates expanding 50-60 basis points as Kaspi adds value-added services.
Advertising: Perhaps the most underappreciated growth driver—advertising revenue grew 56% year-over-year as Kaspi leverages its proprietary transaction data for targeted merchant marketing. The company recently expanded to enable merchants to advertise on third-party platforms including Instagram, Facebook, TikTok, and Google, all managed through the Super App.
Delivery: Kaspi Delivery revenue grew 76% year-over-year, with integration into Glovo for restaurant delivery further expanding the logistics ecosystem.
Fintech Platform (~20-25% of revenue): Kaspi operates a full-service digital bank providing consumer loans, merchant financing, BNPL products, and deposit accounts - all integrated into the Super App. Transaction Finance Volume grew 16-17% year-over-year with revenue up 24% (28% adjusted for tax and regulatory effects). The segment maintains exceptional credit quality with a cost of risk of just 0.6% and yields of 16-18%. The loan book composition favours lower-risk products: BNPL loans represent 39% of TFV, while merchant lending grew 30%+ as businesses increasingly rely on Kaspi for working capital. The loan-to-deposit ratio of 97% indicates efficient funding, while the NPL ratio of 5.8% with 82% coverage suggests conservative provisioning. The Basel III capital adequacy ratio of 19.5% provides substantial cushion. Critically, Kaspi’s deposit base funds its lending at low cost - creating a structural advantage over standalone BNPL providers who must access wholesale funding markets.
International Operations: In 2025, Kaspi acquired a 66.35% stake in Hepsiburada, Turkey’s second-largest e-commerce platform, marking its first major expansion beyond Kazakhstan. Q3 2025 showed purchases up 16% and GMV up 15% year-over-year as management applies Kaspi’s playbook around delivery, BNPL, and user experience. While EBITDA declined 74% due to deliberate investment spending, this reflects reinvestment for growth rather than structural issues. Hepsiburada announced a $100 million share capital increase to fund strategic objectives.
Geographic Revenue Mix: Kazakhstan generates approximately 95% of revenues currently. Within Kazakhstan, no single city or region dominates, reflecting broad national penetration of the Super App model.
Unit Economics: The integrated model produces remarkable efficiency. Kaspi’s capex-light approach relies on digital infrastructure over physical assets, enhancing scalability and margins. The company maintains a >60% cost-income ratio advantage versus traditional banking peers. Cross-platform usage data shows merchants using multiple Kaspi services (Advertising, Payments, Delivery) spend approximately 30-40% more within the ecosystem, demonstrating the flywheel’s economic value.
Investment Thesis:
1. Self-reinforcing ecosystem moat creates powerful flywheel effects:
What strikes me most about Kaspi is the depth of integration between its three platforms. This is not a fintech bolted onto a marketplace, nor a payments company with lending tacked on. Each platform feeds the others in ways that create genuine network effects and switching costs.
Consider the flywheel: A consumer uses Kaspi Pay for daily transactions, which builds transaction history that informs credit decisions. That consumer then shops on the Marketplace using BNPL financing, funded by Kaspi’s low-cost deposit base. Merchants accept Kaspi Pay because consumers demand it, then use Kaspi’s advertising tools and merchant financing to grow their businesses. Each new user on either side makes the platform more valuable to the other.
The data moat compounds over time. Kaspi’s AI tools (Kaspi Ai Assistant) automatically generate product listings with photos, infographics, and descriptions that increased merchant clicks by 40% and sales by 53% after AI enrichment. The advertising platform leverages proprietary transaction data to deliver targeting that, as management noted, allows merchants to “launch an advertising campaign with one hand while driving.”
This creates genuine switching costs. Once a merchant integrates Kaspi Pay, adopts advertising, uses delivery services, and relies on merchant financing, leaving the ecosystem becomes extraordinarily painful. The same applies to consumers who have their payment history, credit relationships, and shopping preferences embedded in the Super App.
The numbers demonstrate this stickiness: an ROE of approximately 80% and net margins around 50% - metrics that would be impossible without deep competitive advantages. Unlike Western fintech competitors focused on single verticals, Kaspi’s integrated approach means the marginal cost of adding services approaches zero while the marginal value to users compounds. This is the structural advantage that justifies a premium multiple, in my view.
2. Multiple growth vectors provide extended runway:
Despite already achieving remarkable scale in Kazakhstan, I see several underappreciated growth opportunities that extend the compounding runway.
International Expansion: The Hepsiburada acquisition marks Kaspi’s first major push beyond Kazakhstan into Turkey’s substantial e-commerce market. Management is applying its proven playbook - improving delivery infrastructure, rolling out BNPL, and enhancing user experience - rather than pursuing aggressive market share capture. Early traction with 16% purchase growth suggests the Super App model translates across borders. Turkey represents a genuine option on geographic replication.
Advertising Platform Extension: Kaspi recently expanded beyond its closed advertising ecosystem to enable merchants to advertise on third-party platforms including Instagram, Facebook, TikTok, and Google - all managed through the Super App. This transforms Kaspi into a full-service digital marketing platform for Kazakh merchants, leveraging proprietary transaction data that external ad networks cannot replicate. I expect this vertical to sustain high-teens revenue growth.
E-Grocery Capacity Expansion: Management is investing $10-15 million per dark store to expand capacity, suggesting confidence in continued demand growth beyond the current 53% trajectory. This vertical deepens daily engagement and increases transaction frequency - the lifeblood of any Super App.
Cross-Border Payments: Kaspi extended QR payment interoperability with AliPay and multiple Central Asian banks, enabling two-way cross-border transactions. Consumers can now use Kaspi QR abroad in countries where AliPay operates, while AliPay users visiting Kazakhstan can transact via Kaspi QR. This positions the platform for regional expansion without requiring full market entry - a capital-light approach to internationalisation.
3. Market misprices temporary headwinds as structural risks:
At approximately 6x forward earnings, I believe the market is dramatically mispricing Kaspi. The discount reflects perception-driven concerns rather than genuine structural impairment.
The Bear Case—And Why It’s Overstated:
Kazakhstan country risk: Bears argue proximity to Russia and Central Asian geopolitical exposure warrant a significant discount. However, Kazakhstan’s economy remains the most stable in the region, with over 90% of Kaspi’s revenue generated domestically and zero sanctioned counterparties. The company successfully operated through prior shocks - COVID in 2020, the oil crash in 2022 - with profitability intact. The geopolitical discount likely overstates actual earnings risk since exposures are confined to regulated, high-visibility consumer finance rather than commodity or cross-border trade.
Headline growth distortion: Multiple temporary factors in 2025 created misleading optics. The base rate increase from 15.25% to 16.5% trimmed net income by approximately 4%. A new 10% tax on government securities revenue cut profit by roughly 1%. New reserve requirements reduced returns a further 1%. Smartphone supply disruptions (iPhone registration requirements) reduced GMV by approximately 8%. Combined, reported numbers looked soft - giving short-term investors reason to take profits. But adjusting for these factors, underlying net income growth was 18-20%. These headwinds should normalise by early 2026, providing favourable comparisons. Cyclical noise, not structural impairment.
Hepsiburada execution risk: Conservative investors treat the Turkey expansion cautiously given competitive dynamics against Trendyol and Amazon Turkey, plus currency volatility. But management’s measured, product-centric approach mitigates downside, and early traction suggests the playbook is translating. This is better understood as a growth option than a capital drain.
Liquidity and visibility: Kaspi trades on both AIX and Nasdaq, but U.S. trading volume remains thin. Many institutional mandates exclude frontier exposures, and ETF inclusion is limited. This suppresses demand even as fundamentals improve. The $100 million ADS buyback commencing November 2025 should help address this by improving float dynamics and signalling management’s conviction.
Scalability concerns: Sceptics argue Kaspi’s model may be optimised specifically for Kazakhstan’s concentrated banking system. But the company is proving replicability through Hepsiburada while expanding cross-border payment interoperability with minimal capital requirements.
Why The Discount Should Narrow:
The critical insight is that Kaspi’s structural characteristics - the moat and flywheel mechanics outlined above - provide enormous cushion against the risks bears cite. Even with conservative assumptions, free cash flow comfortably covers expansion and dividends (6.6% yield by the way). The balance sheet carries zero net debt.
For context: Western payment processors trade at 15-25x earnings with lower growth rates. Integrated fintech platforms command even higher multiples. Kaspi’s 6x forward multiple implies either Kazakhstan deserves a 70%+ country discount (it doesn’t in my opinion) or the business faces structural decline (the evidence suggests otherwise).
As transparency improves through the buyback programme and increasing analyst coverage, I expect the multiple compression to normalise. The question is not whether Kaspi deserves a higher multiple but when the market will recognise it.
Financials and Rough Valuation:
Below are our back-of-the-napkin intrinsic value estimates based on a 10% discount rate, a 5-year timeframe, and the relevant exit multiples.
Bull: 18% EPS Growth Rate, 15x PE - $245 per ADS
Base: 14% EPS Growth Rate, 12x PE - $165 per ADS
Bear: 10% EPS Growth Rate, 8x PE - $92 per ADS
Conclusions:
The investment case for Kaspi.kz comes down to a simple observation: here is a business with an 80% ROE, 50% net margins, and 20%+ underlying growth trading at 6x forward earnings.
The market is pricing in risks that, in my view, are significantly overstated. Kazakhstan country risk is real but manageable given domestic revenue concentration and zero sanctioned exposure. Headline growth distortion from smartphone shortages, tax changes, and rate hikes masks underlying strength that should reassert itself by early 2026. Hepsiburada execution concerns ignore early traction and management’s disciplined approach.
What remains after stripping away the noise is a deeply moated Super App ecosystem with multiple compounding growth vectors - payments infrastructure that captures daily transactions, a marketplace with rising take rates, and an integrated fintech generating exceptional returns on a conservatively managed loan book. The flywheel connecting these platforms creates switching costs and network effects that competitors cannot easily replicate.
Fast-growing. Moaty. Cheap. That combination rarely lasts.
Kaspi.kz has been added to the SCRai this week. I will be monitoring for an attractive entry point to potentially initiate a position.
Risks:
Kazakhstan Concentration: Over 95% of revenue from a single emerging market creates geopolitical and macroeconomic exposure.
Regulatory Environment: Changes to taxation, reserve requirements, or fintech regulation could pressure margins.
Currency Exposure: Tenge depreciation affects reported earnings and requires additional macro provisioning.
Hepsiburada Execution: Turkey expansion introduces competitive and integration risks.
Credit Quality: Economic deterioration could impair the loan book despite current low cost of risk.
Smartphone Supply: Continued disruption beyond Q1 2026 would extend marketplace headwinds.
Base Rate Sensitivity: Higher-for-longer rates compress fintech net interest margins.
Liquidity: Thin U.S. trading volumes may limit institutional participation and price discovery.
Disclaimer: The content provided in this newsletter is for informational purposes only and does not constitute financial, investment, or other professional advice. The opinions expressed here are those of the author and do not necessarily reflect the views of Schwar Capital. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. The author may or may not hold positions in the stocks or other financial instruments mentioned. Always do your own research or consult with a qualified financial advisor before making any investment decisions. To read our full disclaimer, click here.
Thanks for this update! I find your continued coverage of this company to be informative, and the apparent value of the investment compelling. I bought some earlier based on previous articles, am glad I did, and await further notes (such as entry points!) as circumstances warrant.