Kaspi trades cheaply due to macro risks
The bull case argued for Kaspi is that its near-monopoly ecosystem, high return on equity, and strong dollar-denominated historical growth outweigh the significant geopolitical and currency risks that discount its valuation to seven or eight times earnings.
The argument
The speakers discussed how Kaspi operates a highly profitable payments, software, and data business in Kazakhstan. While the underlying business is strong, the stock trades at a low multiple because of its exposure to the Kazakhstani tenge, which is heavily dependent on volatile oil exports, and its proximity to Russia and China.
The thesis, stress-tested
✓ What validates it
- ✓The Kazakhstani tenge remaining stable or strengthening against the US dollar
- ✓Successful expansion and market share gains in the Turkish market
- ✓Dividend yield compressing from 8% toward the historical average of 6% to 7%
▸ Risks discussed
- ▸Sustained low oil prices weakening the Kazakhstani tenge
- ▸Geopolitical instability bordering Russia and China
- ▸Potential bottlenecks in oil transit pipelines through Russia
- ▸Currency risk from expansion into hyperinflationary Turkey
Hear it yourself
"You have these other macro risks. And so really the thing that gives me pause here and the reason that this company trades at, you know, seven or eight times earnings is because of the macro and political risks."
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