The Rise of Fintech Giants: Central Asia

Earlier this year, we identified Kaspi.kz (KSPI) as a standout growth opportunity within the emerging markets sector, focusing particularly on Kazakhstan. Kaspi’s unique "super-app" integrates e-commerce, financial services, and mobile payments, positioning it as a dominant player in its regional market. Since then, we have seen solid performance indicators aligned with our projections, alongside expanding industry trends that continue to boost Kaspi’s competitive edge. Find below our previous report on Kaspi to compare how it has performed since but for today, here’s an updated assessment of Kaspi’s progress, the industry forces driving its future, and the key challenges investors should keep an eye on as we head into 2025.

Performance Highlights: 2024 Progress and 2025 Projections

Kaspi’s revenue and earnings have shown robust growth this year, with revenue and earnings expected to maintain over 20% annual increases for the next three years. While our report initially forecasted a slight deceleration in earnings growth in 2026 to about 5%, current growth trends suggest sustained profitability and a potential premium valuation in the near future. Kaspi’s core products in Kazakhstan remain strong, supported by increased adoption of digital payment solutions and consumer preference for an integrated service platform.

Price Target and Valuation Trends

Our price target continues to assume that Kaspi’s current P/E and P/R valuations remain steady. This implies that Kaspi’s share price will primarily respond to its anticipated revenue and earnings increases. Kaspi’s valuation metrics also show potential for higher valuations, particularly given the company’s ability to outpace traditional metrics seen among U.S. and regional competitors. Despite some early post-IPO volatility, the market now, increasingly appreciates Kaspi’s growth profile.

Innovations Driving Kaspi’s Growth and Industry Influence

Several technology trends are creating tailwinds for Kaspi and other fintech companies operating in emerging markets. Here are some of the key trends:

AI and Machine Learning

Kaspi leverages AI to analyze customer behavior and spending patterns, enhancing its marketing precision and credit assessment processes. These data-driven innovations help create a more personalized experience, which strengthens customer loyalty and fuels growth.

‘Buy Now, Pay Later’ (BNPL) Options

As the BNPL model gains traction worldwide, Kaspi’s platform has integrated this feature to attract more users, particularly younger consumers who favor flexible payment options. This aligns with global trends and is helping Kaspi to scale up its user base significantly.

Open Banking and Mobile Payments

Kaspi is advancing its capabilities in mobile payments, aligning with the global push towards open banking. This provides customers seamless access to a wide range of financial services from within one app, reinforcing Kaspi’s position as a comprehensive digital finance solution.

Market Challenges and Risks

While Kaspi’s growth story is compelling, investors should be cautious of potential headwinds that could slow down growth:

International Expansion and Competition

As Kaspi looks to expand beyond Kazakhstan, it faces a more fragmented and competitive market landscape. Competing with established regional players like Yandex, Wildberries, and Sulpak could increase costs and potential margin pressure.

Regulatory Hurdles

Regulatory requirements in financial services vary significantly across regions, posing a challenge for Kaspi’s planned cross-border activities. A month or two ago the stock was down over 10% over US concerns that Kaspi is facilitating Russian international transactions and a significant portion of their growth is driven by Russian customers who currently face sanctions.

Future Outlook

As we move into 2025, Kaspi’s growth potential remains robust, with innovations across AI, mobile payments, and BNPL expected to further strengthen its market position. Kaspi’s ability to create a seamless, integrated experience for its customers could solidify its appeal and attract a premium valuation. Investors should monitor Kaspi’s quarterly results closely, as they will likely offer more insight into the company’s international expansion strategy and how effectively it manages emerging risks.

Kaspi remains a growth story with unique value in the rapidly evolving fintech sector. Its integrated services model is poised to benefit from increasing digitization across emerging markets, even as macroeconomic challenges and competition introduce new complexities into its growth journey.

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Disclaimer

All analysis by Regal Capital is for informational purposes only and does not constitute financial advice. It is not a recommendation to buy, hold, or sell any securities. Investors should conduct their research, seek professional advice, and consider their financial goals and risk tolerance before making investment decisions. The author and associated parties assume no responsibility for the accuracy or completeness of the information provided. Past performance is not indicative of future results, and investment risks apply. The author may hold positions in discussed securities, which may change without notice.